TRADING VS INVESTING
We often considered Trading and Investing as the synonyms of each other when it comes to the stock market.
In this article, you will learn about the difference between- Trading & Investing.
TRADING ≠ INVESTING
When investors first enter the stock market, they think of
rapid buying and selling of stocks for quick profits.
Trading involves more frequent transactions, such as the buying and selling of stocks, commodities, currency pairs, or other instruments whereas the goal of investing are to gradually build wealth over an extended period of time through the buying and holding of a portfolio of stocks, baskets of stocks, mutual funds, bonds, and other investment instruments.
Trading and investing both involve yielding profit in the stock market, but they pursue that goal in different strategies. Traders jump in and out of stocks within weeks, days, even minutes,(as soon as they see profit) with the aim of short-term profits. They often focus on a stock’s technical factors rather than a company’s long-term prospects. Trader's focus is on which direction the stock will move next and how the trader can profit from that move.
Investors have a longer-term profit view. They think in terms of years and often hold stocks through the market’s ups and downs( market share of a particular company). Investments often are held for a period of years, or even decades, taking advantage of perks like interest, dividends, and stock splits along the way.
Both investing and trading imply risks associated with your
funds. However, both buying and selling require higher risk as well as higher
possible returns since the price may go higher or lower in a short while.
Investors study the companies financial statement for years and also keep a track record on the management performance then start to invest.
THANKS!
HRIDYANSH DAVE
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