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I'm a bit unclear about the definition of "investing" on PF&M. I've seen a number of questions trading. Is this considered "investing" for the purposes of this board? Please note that by "trading" I do not mean active investment management.

By "trading", I mean activity where the primary goal is to make short-term profits in markets like stocks, commodities, futures, options, etc. that are primarily based on changes in asset prices, rather than what I'd typically consider "investing" (ownership orientation, long-term time horizon).

I'm also not suggesting that these questions are off-topic. I think it's clear that these would at least fall under "strategies for earning and saving more money" as referenced in the Help Center. I am just wondering if the community considers these activities to be "investing".

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I agree with you. While my investing activities have trades, they are very infrequent. Whereas trading implies a higher frequency.

Have a look at the tag wikis (and offer an improvement to make it better as you see fit).

https://money.stackexchange.com/tags/investing/info

https://money.stackexchange.com/tags/trading/info

  • Thanks - those links are useful. I think it's important to draw a clear distinction. – JAGAnalyst Jul 19 '13 at 16:28
  • @JAGAnalyst / MrChrister - When I respond to investing/trading questions, I'm making a similar distinction internally, e.g. when I rebalance my IRA a few times a year, I don't really considering that "trading," even though technically I'm making trades. – John Bensin Jul 19 '13 at 18:23
  • +1 especially for the tag links. We can always improve our use of tags if there is a good case for making changes. @JAGAnalyst Make sure to check out the list of questions for each tag, if you haven't yet. (They're categories on the tag pages.) – George Marian Jul 20 '13 at 0:15
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Yes, we should distinguish between the two.

Technically, to invest, one needs to make trades. That's "trading" in the sense of making trades, but that's not "trading" in the sense of active trading or day-trading. The trading tag should refer to the latter.

It's useful to use a different name when we're referring to these two different contexts -- which is the whole point here: we tag trading when we mean what the OP said: short-term, price-motivated trades. We tag investing when we mean what the OP said: long-term and ownership-oriented trades.

Trading can be investing with a very short time horizon, but often the goal has nothing to do with long-term potential, ownership, or any of the other common considerations of an investor. Similarly, investors might take some of the considerations of traders in mind when entering or exiting positions. In other words, there will be gray areas where the two overlap, but much more often there'll be black-and-white areas that are clearly just one of the two.

  • Thanks. In addition to clarity, I want to avoid recommending "trading" concepts to individuals who are primarily looking for personal retirement/investing advice, especially if they are concerned about risk. – JAGAnalyst Jul 31 '13 at 16:34

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