What is investing? 

You might hear people talking about trading financial instruments, but you 

might also hear them talking about investing in them. The aim in both of 

these activities is similar (let's make some monaaay!), but they're 

somewhat different in their methodologies. 

When you invest in something, you're hoping to get a return on that 

investment – the goal is to get back the money you put in, plus some 

more. For example, you could buy a run-down fast food restaurant for 

$100,000, fix it up, and try to resell it for $500,000 in a few years. Youcould also buy a stake in a small startup, believing that the stake will be 

worth a lot more when the business grows. 

But wait, we hear you ask, isn't that what traders do? Not quite. Yes, a 

trader might buy shares in a business, but they're playing on a shorter time 

frame. Traders frequently enter and exit positions to generate smaller 

returns over a number of trades. Investors, on the other hand, generally 

take a more passive approach – they invest capital into ventures or assets 

that are likely to generate a larger profit on a longer time frame. 

But how do you decide what to buy and sell? You might get lucky randomly 

picking stocks and flipping a coin to decide whether to buy or sell them, 

but it won't net you consistent returns. Most traders instead conduct some 

form of analysis to decide what moves to make next. Broadly, the types of 

frameworks used can be broken down into two categories – fundamental 

analysis and technical analysis. Let's talk about those.