How Day Trading is Different from Long Term Investing
Bulls on Wall Street uses a social networking-based approach to help teach its members the basic skills needed to become day traders. Founded by CEO Kunal Desai nine years ago as a chat room, Bulls on Wall Street today provides aspiring traders with access to an audio and video chatroom, email and text alerts service, and a 60-day education program.
Though the professionals in each line of work seek a profit through financial markets, it is important to note that there are several key differences between traders and investors. The primary distinguishing characteristic between the two is that trading is only considered day trading if the stocks are bought and the positions are held during the course of a single day before they are sold. Positions held overnight do not qualify as day trading. Investing, however, refers to a trading method in which an individual purchases stocks and holds them in a portfolio for a prolonged period of time, often reinvesting profits from their stocks into more shares from the same companies.
Because of the differences in approach, these two types of stock market investors have different criteria for what makes a stock viable. Day traders are less likely to be concerned with the overall long-term potential or specifics of company management, choosing stocks instead based on their movement on any given day. By contrast, investors conduct detailed analysis about a company’s potential for growth for years to come, and do not give special focus on the nuances of day-to-day price fluctuations.