Investing The Forex Market
To be precise, according to Picardo (2021), investing is where you allocate your money in hope that you will generate income in the future. An example of this can be seen from people who are constantly investing their money to the mutual fund, stock, or even forex (long-term). Thus, investing in the forex market is where you put your money where you project that your money will generate income in the future to fight inflation.
For example, you have $1000 cold money in your hand but you do not know what to do with that money and you want to put that amount of money to fight inflation. Thus, you open a forex account and put that money in that account for long-term investing, so you will not have to monitor the chart as long as you know where to put your stop loss and take profit target.
Trading The Forex Market
Trading on the other hand is where this is involving the buying and selling of goods and services (Hayes, 2020). This can be connected to the forex market where you buy one currency while selling the other currency. Trading itself is an act of active trade. This is like when you are going to the supermarket, you know what to buy next and if you are a supermarket owner you know what to sell on a daily basis.
An example of trading the forex market is when you take a long position of EURUSD pair with a shorter timeframe to enter and exit the market. Thus, you gain a short-term profit from it. Aside from that, with a shorter timeframe, you have to monitor the forex market constantly as the movement of the market can move significantly with a shorter timeframe and harder to predict.
Conclusion
Now you know that investing and trading the forex market are two different entities because when you are investing in the forex market, you passively monitor the forex market as your goal is a long-term gain. On the other hand, if you choose to trade the forex market, you are exchanging one currency for another currency in the hope to gain profit from what you buy or sell where this requires you to monitor the forex market actively and you focus on short-term gain.
Written by Andre I.
References
Hayes Adam. 2021. Trade. Retrieved from Investopedia. (Accessed 28 March 2022): https://www.investopedia.com/terms/t/trade.asp
Picardo, Elvis. 2021. Investing. Retrieved from Investopedia. (Accessed 28 March 2022): https://www.investopedia.com/terms/i/investing.asp