A trading portfolio consists of different investment vehicles. An investor can own different trading portfolios, each geared towards a different investment strategy. A trading portfolio might hold stocks, cash, futures, currency and more.
Trading vs. Buy-and-Hold
Traders traditionally take an active approach to investing, seeking shorter-term gains vs. long-term appreciation. Investors that use a buy-and-hold strategy invest for long-term appreciation.
Trading Portfolios
A trading portfolio generally consists of investments the owner actively trades. The portfolio can consist of more than stocks.
Money Management
In the past, money managers generally managed the activity in a trading portfolio. Today more and more investors manage their own trading portfolios. High-net worth individuals typically still utilize a money manager.
Tax Implications
Tax implications for trading portfolios can significantly differ from buy-and-hold portfolios. Higher tax rates normally apply to short-term capitals gains.
Diversification
Hard and fast rules do not apply. A trading portfolio can consist of actively traded short-term investments as well as long-term, buy-and-hold investments.
