Day trading or investing in a stock market, which one should you do the answer is there are two completely different things. A very big misconception on see online and especially on youtube in a stock market and investing industry. Is the confusion between day trading and investing the general consensus is that you should not day trade? You should just invest, buy and hold and collect the annual return of seven to nine percent instead, and i understand that that statement isn't completely wrong. It stems from the fact that most day traders lose money and cannot even beat the market also in comparison to long-term investing day trading is a lot more stressful.

It involves a lot more work as a full-time day trader myself. Let's get this straight here today once and for all day, trading cannot be compared to investing we're going to dive deep into the differences similarities, the percentage of profits from either day trading or investing. Let's lay out the facts on day trading and investing right now day. Trading is an act of buying and selling stocks in a single day, hence taking advantage of the stocks, intraday price fluctuations or price action.

The stocks could be moving up and down due to fundamental news, earnings, fda approvals or other global political news. On the other hand, investing is the process of committing money to buying assets in the expectation of future appreciation and value, with a goal of generating income or selling it for a profit. For example, this could be buying apple stocks in your portfolio today at 400. Thinking that it could become 800 in three years or more or buying a home in an up-and-coming neighborhood thinking that the real estate in this area is gon na increase in 50 or even more in a few years or hitting that like button to invest in this Channel thinking that it's gon na make it rain lamborghinis in the future, no other investing assets would do that for you, my friends now, let's talk about the key differences between day trading and investing in a stock market.

First of all, the obvious difference here is the holding period of the stocks day. Trading means you're, closing the position within a single day, sometimes in hours, minutes or even seconds. Yes, that's right seconds, but by the end of the day, the entire account is all cash meaning. You have no position left long or short overnight, whereas if you're investing in a stock market you're most likely holding the position long term for months years and sometimes even decades.

The second key difference is the way you see the stocks or the company assets you're holding. If you're investing in a stock, it's most likely because you see the value in the business or the sector, for example, you could be investing in tesla stock because you see the long-term potential in electric vehicles. Maybe you think that in the future more cities and countries will move towards more environmental, friendly modes of transportation and from that thinking you think the valuation of stocks like tesla or neo, which are both electric vehicle production companies, they will rise. You see the big picture.

You think the industry value will double with quadruple in years or decades. Now, as for day trading, i hate to break it to you, but 80 percent of the time. I have no clue what the company actually does. Does the company make money? What sector is the end? What's the price to book ratio, is it going to increase 20 in a few years? All i care about as a day trader is whether the stock can go higher 20 today, or can you move two to three dollars within a single day? Remember we're talking about closing all the position by the end of the trading day at four pm eastern time.

Essentially, in day trading, what treating the stocks that were, buying and selling as trading vehicles that are moving right now, not because of its potential appreciation and value. In a few years we buy the stock now because it's moving up in an uptrend or breaking out or squeezing to the moon. We could also be shorting the stocks, because we know it's a worthless piece of trash. It's only been pumped up by stock manipulators with some bs news, so it can do an offering, at the end of the day and dump on unsuspecting shareholders who end up holding the turrets and also like you just heard in day trading.

We have these more exciting languages, like i just used, whereas when you're investing, what can you really say about this apple stock? Very important, though i'm definitely not saying fundamentals only matter in investing and only technicals matter in day trading. What i'm saying is that in day trading, we need to know the fundamentals that matter short term pre-market or sometimes the moment the news is announced. We don't care what the fundamentals do for the valuation in two or three years, but it's more important that we understand how they are going to move the stock technically right now in day trading. You don't need to be smart, but you need to be observant and have a very sharp response to piecing together.

Information really quickly. Now the third key difference between day trading and investing, and also the reason why day trading could generate so much more percentage return in a short term. If done correctly, is the term leverage when you're investing in the stock market, you could only leverage up to 50 percent in the united states, but that's generally not recommended. This is called margin.

Investing - and i personally do not invest in stocks on margin, but in day trading. Leveraging your capital to make more money is extremely beneficial. You could get up to three to one four to one or even sometimes six to one buying power intraday. So, with the same five thousand dollars capital, you could get fifteen thousand to twenty thousand dollars worth of buying power and thirty thousand, if you choose to so, for example, if tesla is at 16.50 right now, normally, if i'm investing in cash of 5 000, i could Only buy three shares of tesla, whereas if i'm day trading tesla with the intention of buying it for the dip here and selling it for a quick bounce, i could buy up to 12 shares of tesla stock.

Since my broker allows me four to one leverage. When trading a margin account, so if i sell my tesla stock for a bounce of 50 points, then i made 50 dollars per share on 12 shares. That's 500 return only using my original 5 000 of capital on top of that margin, accounts allow day traders to short sale, which means you profit when the stock is dropping on the way down. If you are using a cash account like most people, do when investing you can short sell, while on the topic of leverage and margin accounts for both day trading and investing it's important to discuss the risk associated with it.

It's important not to over leverage and borrowing too much that you cannot afford to lose whether we're talking about investing in stock markets, real estate or day trading, when used properly margin, buying power allows day traders to get more upside returns, using a lot less capital. And that's how traders can build their accounts really quickly? It's not uncommon to see good profitable traders grow their accounts, fifty percent hundred 100 or even 300 percent in a month, but at the same time, that also means day trading on margin has a lot more downside. Using the same example previously, if tesla stock goes to zero, hypothetically speaking - which i really hope doesn't happen, not only do i lose the entirety of my account capital of five thousand dollars. I will also owe the broker nine thousand two hundred dollars because i borrowed money from the broker.

Speaking on the topic of risk, this brings us to the fourth key difference between day trading and investing and here's a serious warning day trading is inherently a riskier practice than investing, especially if you do not hit the like button. It's not uncommon to hear about beginner traders losing 50 to 100 of their trading account in two or three months or if you're short selling a margin you could blow up when a low float. Runner goes 200 percent and 300 against you to the upside, and that's why i've always stressed on this channel if you're not willing to learn first on paper trading for a couple of months and if you're not going to put in the work outside of the market Hours to learn, setups and back test your strategies, and especially, if you're, just going to follow some chat room alerts to buy and sell at the height of the day, breakout and treat this like. Gambling do not day trade.

Now the number five key difference - and this is perhaps the distinguishing factor between day trading and investing - is that day trading is a business. It's essentially a career, just like your normal 9 to 5 job. If you're investing, you can just look at the markets once a month or like i do. I look at my investments every six months to get a sense of what my portfolios are doing.

Investing is meant to be for long term in 10 years or more, and for retirement and day trading is quite the opposite. You cannot just casually day trade in a stock market. I have my active career income from day trading and i take out profits from there and have it deposited automatically into my investments on a monthly basis. Also from the tax perspective, in both united states and canada day, trading income is taxed very differently from investment income because they are not the same in the united states day.

Trading is taxed the same way as employment income, whereas your long-term investment income are taxed more favorably and there's a lot more tax breaks, and it's the same way here in canada day trading is considered business, income and 100 subject to top marginal tax rate, whereas investing Qualifies for the capital gains tax rate, so only 50 percent of that income is taxable i'm definitely not saying day. Trading is better than investing or the other way around. I'm just here to clarify the big difference here. You can definitely do both at the same time like i do.

I invest regularly for the long term using the money from an active income, in fact many profitable day. Traders, i know, are some of the best long-term investors in both the stock market and in real estate day trading is a business. It requires a lot more hard work, upfront, capital months and years of studying and paying the market tuition it's a job and for people who don't want a second job and just want a slow stress-free approach to profit from a stock market and collect that five to Seven percent annualized return just invest in safe blue chip stocks like apple and johnson, johnson or the index fund for 10 years or more do not day trade. It's extremely important to understand that you cannot treat day trading as investing, because if you do, you can actually lose a lot of money.

The most common practice in investing in a stock market is to buy and hold forever, but you definitely cannot do the same in day trading if you buy and hold in day trading that could easily turn into hold and hope or bag holding and we're not talking About the fancy bags like lv or gucci here, so hopefully by now, you understand the big differences between day trading and investing both the potential upside and downside. If you still want to learn more about day trading, i have many beginner friendly videos on my youtube channel. If you appreciate the in-depth analysis, please remember to drop a like and subscribe. Thank you guys so much for watching.

As always, i'm the humble trader and i'll see you guys next week. Hey guys thanks for watching. I hope you enjoyed the video and the bad jokes. If you want to see more day, trading content make sure to subscribe and follow me on twitter and instagram for more.

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