10 difference between trading and investing | trading vs investing

We often hear about trading and investing in the stock market and many people think that these two words trading and investing mean the same thing while it is not so today we will know what is the difference between trading vs investing

How many people earn millions by trading, then how many people lose all money by trading and how many investors earn more money

But first of all we have to know, what is this investing and trading, how many types are there, in trading and investing What is the difference and which is better for you between trading and investing and can you earn regular income from trading and investing 

We will know the answers to all these questions in this article, so read the article last

What is trading?

Friends trading is also called business, which means to buy something and sell it at an increased price so that profit can be made, similarly by buying a share in the stock market and selling it as soon as the price of that share increases. Making profit is called trading in the stock market.

In trading, a stock or share is held for a few seconds to 6 months, technical analysis is always followed in trading, there can be a profit of 5 %  to 10% in this, the trader is called a trader.Those who trading are called traders. 

Type of trading

Scalp trading

In scalp trading, the stock is held for a few seconds or a few minutes and then the stock is sold when the price rises.

Intraday trading

If you buy shares and sell them on the same day, then that trading is called intraday trading.

Intraday trading is the most popular method of trading

Swing trading

In swing trading, the stock is held for a few days to a few weeks.

    

 Position trading   

In position trading a stock is held for a few months

BTST

There is another popular way of trading which is named BTST i.e. buy the stock today and sell it tomorrow.

What is investing? 

In investing, the investor holds any stock for a period of more than 1 year, which is called long term investment. In this, the shares are held for 1 year to 50 years. and those who are investing called investor

Investors use buy and hold approach and prefer to hold shares for years. Investors see investing in a company as a partnership and are associated with those shares for years! Investors do a fundamental analysis of the company before buying any stock.

Type of investing

Value investing

In value investing, the investor always invests by looking at the future plan of the company, the performance of the company, and the future of the industry, and in this investment, the investor does the fundamental analysis of the company and then holds the stock for the long term.

Growth investing

In growth investing, an investor invests in a company that is a market leader in its field, or has a strong presence in the market, or that gives good returns to its investors over the years.

10 difference between trading and investing 

1. In trading, shares are held for short term i.e. from few seconds to few months whereas in investing shares are held for long turn i.e. from 1 year to 10 or 50 years.

2. Investors like to hold their shares for years, while traders sell the shares at a small profit.

3. In trading, shares are bought by following technical analysis, whereas in investing, shares are bought by following fundamental analysis.

4. Trading is a skill of time in the market whereas Investing is art of wealth creation by holding stock of quality companies

5. In this way both trading and investing are ricks but trading has more   risk  than investing whereas investing has much less  risk as compared to trading

6. Short term period in trading can earn high potential returns whereas investing gives low returns in short term 

7. Compounding interest and dividends in investing has the potential to generate high returns, whereas in trading, compounding and dividends are not related to your profits.

8.Traders are highly-skilled and technical individuals who try to understand the market by following the stock market trends while investors try to understand the business fundamentals of the company they want to invest in.

9. In trading you have to devote your time at least 3 to 4 hours a day whereas in investing you have to give time initially to do fundamental research of the company

10. Short term capital gains tax is levied in trading whereas this tax is not applicable in investments.

11. In trading you have more demand for discipline than investing, in trading you have to be alert

Is Warren Buffett a trader or investor ? 

Many people have a question whether is Warren Buffett  a trader or  investor ?, then the answer is Warren Buffett  is an investor! And he invests for the long term and he also advises people to become investors! They say that if you cannot hold a stock for 10 years, then do not invest in that stock because if you hold a stock for a long period, then you can get a good dividend which is called compounding. Warren Buffett tells that if you invest for long term then you can get power of compounding benefit

Warren Buffett has become so rich today because of power of compounding

Who make more money trader or investor ? 

In share market both trader and investor make good money but in most of the cases more traders lose their money so investor makes more money than traders because the investor gets the benefit of compounding due to his long term and the  investor also gets exemption from capital gain tax.

 

Can I do both trading and investing ? 

Yes you can do both trading and  investing but for this you should have complete knowledge about trading and investing like in trading the share is selected by technical analysis whereas in investing the company's share is selected by fundamental analysis. 

Day trading vs investing

In day trading, traders buy and sell shares on the same day. In day trading the goal of traders is to profit from market volatility in a short amount of time! There is a lot of risk in day trading but profits are also quick

Whereas in investing, you are invested by focusing on the future of the company by ignoring the market flexivation and by investing, you are patient for a long time.

Trader vs investor tax india

Traders are charged short turn capital gains tax due to short term trading i.e. when you bought a share and sold it before 365 days, your profit would be subject to short term capital gains tax which is 15%

But if you are an investor and invest for more than 365 days then no capital gain tax will be levied on you! The more you earn from the share market, the more will be yours! The government will not charge a single rupee of tax from you.

Also Read

Kavach personal loan

 General knowledge

Kutumb App kya hai