Ask SmallIvy: Is it More Profitable to Trade or Invest?

Dear SmallIvy,

Which is more profitable, trading or investing?



Dear Carlos,

Trading is like going to the roulette table. If you get lucky you can make a lot of money in a short period of time. For example, if you put $100 down on a number at a roulette table, you can make $3,200 in a single role, which is what keeps people coming back to casinos.

Investing is like buying a casino. The odds are in your favor, so while you will not win every bet and there may be some days when you lose money, if you wait long enough you’ll create a positive return. This return will be fairly predictable over long periods of time.

With trading, the longer you do it, the more money you will lose. There is a reason that casinos will give big winners a free night in their hotel. They know that if you come back and play some more, you will eventually lose most of what you win and possibly more. The odds are in their favor and you winning is just dumb luck. Eventually, things will turn the other way.

With investing, time is on your side. If you buy into a great company, something could happen to cause the stock price to decline shortly afterward, but as long as the company keeps making higher earnings, eventually the price will rise if you keep holding the shares. If you buy several great companies, while something may happen to one, the others will increase in price and more than make up for your loss on the one.

SmallIvy Book of Investing: Book 1: Investing to Become Wealthy

So the answer to your question, you can make money very quickly trading and the amount you can make trading in a few weeks could take you many years if you were investing instead, but the odds are against you. If you invest instead, you’ll make far more money in the long run, plus you’ll be assured of making money instead of maybe making money. If you’re interested in learning more about how to use time to reduce your risks when investing, I suggest you check out The SmallIvy Book of Investing. In there I provide a strategy where you concentrate your holding to increase returns, but invest for long periods of time to reduce your risk. As your portfolio grows, you then shift money into mutual funds so that you can hold onto your gains.

Happy Investing,


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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.



  1. Like to do a little bit of investing and a little bit of trading myself. Some weeks have too many great trading opportunities while other weeks are better to focus on a buy and hold. Don’t know your strategy without looking at your link / book but I feel like true long term success is all about remaining flexible in the market.

    • Thanks for reading and for the great comment. I’ve found that anything you think you know about the economy or the markets is already priced in, so trying to buy or sell short-term is really just a roll of the dice. Exceptions are periods like those leading up to 2008 where clearly people were being stupid with credit and I was able to do well short selling, although even there the timing was difficult to determine.

      My strategy therefore is to use a combination of index funds, following the standard diversification strategies except keeping no bonds and to find great companies with a lot of growth potential and hold them long-term. I find it is fairly easy to spot the winners but difficult to get the timing right, so by holding long-term, I don’t need to worry about when great things are going to happen. That’s what forms the Serious Investing Strategy, which I cover in my book.

Comments appreciated! What are your thoughts? Questions?

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