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1. How might long-term investors benefit from vigorous competition among short-term traders? 2. How does trading...

1. How might long-term investors benefit from vigorous competition among short-term traders?
2. How does trading differ from speculating?

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Answer #1

1. The long term investor is benefited from the short term traders' vigorous competition. This is because due to the competition, there will be several transactions of the stock. It will give a clear idea about the range in which the stock is being bought and sold. The competition will also lead to getting the stock at the best possible price from the market.

2. Trading refers to taking an informed decision regarding the purchase or sale of the stock. Specualting on the other hand is guessing about the price fluctuations without any background work or reasoning. In trading the loss can be reduced but in speculating there is high risk of losing the money that has been invested.

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