Trading versus Investing | What is the difference between them?
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What is the difference between trading and investing half knowledge is lethal yes knowing just one part of any concept is worse than doing nothing about it similarly once you decide to acquaint yourself with the stock market world it is important to understand both trading and investing as well as the difference between them this helps you to plan your passive income in a better way let us get started firstly it's important to break a myth
Which people hold while it's stepping their foot in the stock market that is they assume trading and investing to these similar concepts well that is not the case this video highlights the difference between them under trading the shares are held from a few minutes to a few months it is only done for the short term several types of trading include scalp trading intraday trading swing trading position trading etc
If you hold shares for a few seconds or a few minutes then it is termed as scalp trading if you buy and sell the shares on the same day then it is termed as intraday trading if you hold the shares for a few days to a few weeks then it is termed as swing trading lastly if you hold the shares for a few months then it is termed as position trading among these types intraday trading that is the buying and selling of shares on the same day is a very popular method apart from these one of the trading types that have gained popularity in recent years is BTS tea or buy today sell tomorrow in trailing the main idea is to make money by the fluctuation or movement in the price of stocks for analyzing the same traders use a method popularly known as technical analysis which is done by reading charts these charts help them to understand the pattern of stock price and volume this is followed by an analysis of supply demand and the ecology of the traders
If we talk about investing then it is done for long term that is the stocks are held for one year or more in investing the main idea is to buy and then hold the shares for some period of time investment in any share is comparable to a partnership in any company for most of the investors an investor must act like a businessman he or she should try to analyze any company with a mindset and a perspective of a businessman before investing his or her money into it in order to track the in and out of a company the concept of fundamental analysis is used under financial analysis the financial statement of companies are studied in detail it helps to understand the business performance helping the investors to make an evaluative decision whether to invest in the company or not so on one hand we have the traders focusing on the price and volume of the stocks and on the other hand investors focusing on the fundamentals of any firm now why are the fundamentals of any company an important factor for investment the reason is that in the long term the stock price follows the growth of the company thus on analyzing the fundamentals of any firm investors decide whether to invest in the company or not whereas in trading which is done for the short term there is a lot of volatility and fluctuation in stock price thus the traders use technical analysis hope you could grab all the points very well