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Trading or investing, how to pick the right one?

Updated: Jan 5, 2022

Lately a lot of people have been getting into trading. The goal of these people is to make money and preferably the most amount of money in the least amount of time. Of course, this is not going to happen. Trading is a way to make money, but only a few succeed. That’s why it’s really wise to think about if trading is something for you. But how do you do that and do you choose for trading or investing? In this article you will learn the benefits of both and you will find out what’s the best path for you to take. Be warned, it might surprise you.

What are the benefits of trading?

Trading is the buying and selling of assets or other instruments, in a short timeframe, in order to make profits. That is usually how people see trading. This is what most people want to do to make money online. However, data suggests that more than 90% of day traders fail. Only around 2 to 3 percent of day traders make a good amount of money. With swing trading, the odds of success are a bit higher. Why? Because day traders make more costs and the impact of costs is way bigger than day traders think. If you want to be a trader and you want the highest odds of success, then swing trading is usually the best way to go about it.

Now you know that trading is very hard, it’s time to look a bit deeper into trading. Trading is a real job and it takes around 4-7 years to become a profitable trader. So, let’s say 1000 people want to learn to trade, only around 20 or 30 of those will be good enough that they can trade full time and it will also take a long time before they can. You have to ask yourself if this is what you want? Can you accept the fact that you will likely fail and it will take a long time to succeed?

Only get into trading if you want to be a full time trader and really like the game. Do you have any other passions or do you like your job and do you only want to get into trading to make extra money? Then don’t, because the odds of failing are almost 100%. You are better off working at something you like, while investing in a structured way for long term wealth.

If this sounds like you, we at CDFX Trading can help you. We have designed a 1-on-1 program where we teach you step by step to become an independent investor. It’s a passive way of investing. This way you can still work at your job, do what you love and let your money grow overtime, to potentially retire earlier, or get a passive income source. Click here to find out more. You can also schedule a free call to learn more about this and find out if you should be trading or investing.

Alright, with that out of the way, what are the benefits of trading?

  • Potential to work from anywhere

  • Create your own schedule

  • Big challenge

  • Potential to earn more than from investing

It’s hard to become a consistently profitable trader, but when you reach it, the benefits are great. I have been trading for quite some time now and I have to say, it’s amazing to be able to work from anywhere in the world. I have my home office and I can create my own schedule. If I want to go on holiday, I can. I just bring my laptop and trade from there, it’s an amazing feeling. However, please realize that it took me years and years of hard work. Next to that, I had to sacrifice a lot. Is that something you want?

For me personally, I really liked the challenge to become a consistently profitable trader. I always had it easy at school and college. I was naturally smart and had a really good ability to focus. Because of this, I never had a challenge, in terms of a mental challenge, until the age of around 19. But then, when I discovered trading, I really had a challenge. I also always was interested in money and wanted to work on my own, so that’s how I got into it. Do you like the challenge?

Investing in an all-country index fund allows you to make around 6-7% on average yearly. People find this return way too low, however, when you think about compounding, this is still a great return. With trading, you can definitely make more per year, but it’s also riskier and it takes a lot of work. Is this something you want?

What are the benefits of investing?

Now that you know more about trading, let’s take a look at investing. Investing means buying an asset for a longer period of time, with the goal to make money from it. So, you invest in something and want it to increase in value, so that you can sell it for a higher price, or let it compound to get more gains. Investing is what suits most people. In my opinion, most people that get into trading do this for one thing: to make money. The reality is, they don’t make money. Most people that trade should quit today and start to get into investing. The thing is, they don’t want to hear it.

Investing is less risky and allows your money to grow in a safer manner. It’s for the long term. The returns are slower, but based on data the odds of you making money with investing for the long term are way, way higher.

The benefits of investing are:

  • Slow but steady returns

  • Passive

  • Suitable for everyone

  • Higher odds of making money in the long run

Great benefits, as you can see. Investing in assets for the long run is how most wealthy people build their wealth. This is how Warren Buffet built his wealth. He wasn’t daytrading, he invested for the long run in companies with great potential. This is the approach that’s best for most people. You build long term wealth, in a passive manner, with steady yearly returns. You also benefit from a way higher chance of making money.

It's no secret that buying the S&P 500 and holding it for years makes money in the long run. There have been done a lot of studies about this. Buying the S&P 500 gives you decent diversification, but there is way more to think about when investing for the long term. Most people that are trading, fail to make the same returns as the S&P 500 makes. Especially with daytrading, only around 5% makes returns better than the S&P 500, so why bother? Only do it if you REALLY like trading. As said before, the odds of beating this index with swing trading are a bit higher, but still very slim. So, once again, only trade if you like the game.

Trading or investing?

So, trading or investing? You now know the benefits of both. I personally do both. I have my total net worth and divided it in portions. A small portion of that is in my savings for a buffer, the rest is in long term investments and my trading account. Money I make trading I let it compound in my trading account, or reinvest in longer term investments, suchs as equities, real estate, cryptocurrency and commodities. If you have a job, you can do the same and put some money every single month in long term investments. So, it’s usually not trading or investing, but only investing, for most people.

If you are a consistently profitable trader, or you really want to become one, then you can take the same approach as I did, but be damn sure trading is what you want, or fail. You have to put all the odds in your favor. Trading or investing both are risky, but if you approach investing the right way, it’s way less risky and you can really build a great amount of wealth.


Trading or investing, you now know both, you know the benefits and you know how you can decide which one is the best for you, trading or investing. With CDFX Trading I help clients to become a consistently profitable forex trader, but I also help people that want to make money online, but have a fulltime job. I teach them 1-on-1 how to build wealth in a safe and passive manner. This is usually, as you know by now, the best path for most people.

In this article, you have found a number of questions about trading and investing. Take your time to really answer those questions, because these answers will help you to determine if trading or investing fits best with your life, goal and personality. Taking action makes the difference, not reading blogs.

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