Final answer:
Short-term trading involves buying and selling within a short period, aiming to profit from price fluctuations. Long-term trading involves holding onto investments for a longer period and benefiting from overall growth.
Step-by-step explanation:
The difference between short-term trading and long-term trading lies in the time frame of the investment and the associated risks and returns.
Short-term trading, also known as day trading or swing trading, involves buying and selling financial instruments within a relatively short period, usually within a few days or weeks. Traders in short-term trading aim to profit from short-term price fluctuations and take advantage of market inefficiencies.
On the other hand, long-term trading involves holding onto investments for a longer period, typically several months to years. Long-term investors focus on fundamental analysis and aim to benefit from the overall growth of an investment over time.