When you are speculating or investing, it involves trading. Trading is the process of buying, or selling. We don’t know your purpose behind the trade.
Gambling is an activity that may or may not involve trading. In trading, a commodity can be bought and sold. In gambling, the ticket or the bet you wager can’t be sold. Gambling usually gives greatest outcome in the shortest duration if it succeeds.
Trading
Definition: buying or selling securities or commodities
Gambling
Definition: The voluntary risking of a sum of money on the outcome of a game or other event.
Speculating
Definition: Trading with the purpose of making profits.
Investing
Definition: The act of using money to make more money
When I buy a company share, I can sell it at any time and it is called trading.
When I buy a share without knowing anything about the company, just based on mere rumors, it is called gambling.
When I buy a share and would definitely sell it weeks or months later when it has appreciated in value, it is called speculating.
When I buy a share after understanding the company’s business model, future planning, cash flow management etc and I am very confident that it is undervalued, and will buy more when the price drops, it is called investing.
Photo by flydime
Are you trading? Gambling? Speculating? or Investing?
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