What is Trading?

Trading involves more frequent transactions, such as the buying and selling of stocks, commodities, currency pairs, or other instruments. The goal is to generate returns that outperform buy-and-hold investing. While investors may be content with annual returns of 10% to 15%, traders might seek a 10% return each month. Trading profits are generated by buying at a lower price and selling at a higher price within a relatively short period of time. The reverse also is true: trading profits can be made by selling at a higher price and buying to cover at a lower price (known as “selling short”) to profit in falling markets.

While buy-and-hold investors wait out less profitable positions, traders seek to make profits within a specified period of time and often use a protective stop-loss order to automatically close out losing positions at a predetermined price level. Traders often employ technical analysis tools, such as moving averages and stochastic oscillators, to find high-probability trading setups.

A trader’s style refers to the timeframe or holding period in which stocks, commodities, or other trading instruments are bought and sold. Traders generally fall into one of four categories:

Position Trader: Positions are held from months to years.
Swing Trader: Positions are held from days to weeks.
Day Trader: Positions are held throughout the day only with no overnight positions.
Scalp Trader: Positions are held for seconds to minutes with no overnight positions.

Credit – https://www.investopedia.com/ask/answers/12/difference-investing-trading.asp