What is the primary concern for passive traders?

The primary concern for passive traders is indeed the cost of trading versus speed. Passive trading strategies typically aim to mirror the performance of a market index, often prioritizing lower trading costs and minimal portfolio turnover rather than executing trades rapidly or responding to short-term market fluctuations. By keeping trading costs low, passive traders can enhance their overall returns, since excessive trading can erode profits due to commissions and other transaction fees.

Passive traders usually adopt a buy-and-hold approach, which means they are less concerned about the speed of execution and more focused on maintaining their investment strategy over the long term. This contrasts with active traders, who frequently buy and sell securities to capitalize on market movements and may prioritize speed to capture gains or avoid losses.

Choosing a passive strategy allows traders to invest without needing to constantly analyze market conditions or seek out short-term opportunities, aligning their investments to reflect the market's long-term growth while managing costs effectively.