2. the stock market fluctuates in the short - term but tends to increase in the long term, with an average…

2. the stock market fluctuates in the short - term but tends to increase in the long term, with an average projected growth of approximately 6% per year. based on what you know about trading and investing, which approach is higher risk? why?

2. the stock market fluctuates in the short - term but tends to increase in the long term, with an average projected growth of approximately 6% per year. based on what you know about trading and investing, which approach is higher risk? why?

Answer

Explanation:

Step1: Analyze trader risk

Traders aim for short - term gains and constantly buy and sell. Their success depends on precise entry and exit points. Since the stock market is highly volatile in the short - term, predicting these points accurately is difficult.

Step2: Analyze investor risk

Investors have a long - term buy and hold strategy. The stock market tends to increase in the long - term with an average projected growth of about 6% per year. Long - term trends are more stable compared to short - term fluctuations.

Answer:

The trading approach is higher risk. This is because traders rely on short - term market movements and precise entry and exit points, which are difficult to predict due to short - term stock market volatility, while investors can ride out short - term fluctuations with a long - term buy and hold strategy.