Investing vs Trading


Investing and Trading are completely different ways to make money in Market. Majorly Investing is focusing on Capital gains for a long period of time and Trading is focusing on short term capital gains. Investors are relying on the performance of Company and its fundamentals. Traders are mostly making money from the news coming in market and taking use of technical analysis to  make money. Usually Traders are making money in the falling market and Rising market also. 


  • Investing is Long Term Procedure and it is majorly used for Retirement Purpose.
  • Trading is Short Term procedure. Its done to maximize profits on falling and rising markets.
  • Investors are not affected by short term losses as they are focusing on Long term capital gains. Traders are using short term fluctuations of markets to make money from it.

INVESTING




Investing is a long term activity and its used to make wealth for your retirement or for your next generation. Investing can be done in anything like Stocks, Gold, Mutual Funds, Bonds etc. Dividends, Splits & Bonus are cherry on the cake for Investors.

Investment are done for long term holding activity so investors don't mind short term fluctuations. They focus on company profile, Balance sheet, competitive advantage, Board of Directors and their vision. So if there is any small fall in market due to Bad news they don't mind.

Investors are always seeking for growing their retirement account and they are holding particular stock for long period of time until and unless any fraud or mismanagement in company is observed.

TRADING




Traders are completely involved in market and seeking for any chance to make money from news coming from market (either Good or Bad news), any corporate activities or any intimation from technical analysis. Traders buys and sells for  his livelihood. Investors focused on Long Term capital gain and Traders focused on short term capital gain of at least 10% that may vary from person to person depending upon his trading skills.

Traders are mostly using Technical analysis tools for buying and selling intimation. They use certain indicators such as Moving averages, RSI (Relative Strength Index), bollinger band and many more. Every trader have different trade setup and different techniques. Traders have to maintain their emotions while trading so that they can make a good trade and don't loose it all in panic. Every trader uses stop loss for reducing losses in loosing trades. They able to make money from Rising market as well as from Falling market by the use of Short Selling Method.

Traders are differentiated by their trading styles; and these styles are basically dependent on Time for which they keeps their position in trade. 

Following are the Types of Traders:

  • Position Traders: They hold positions for a period of months to as long as year.
  • Swing Trader: Hold position for period of a Day to Weeks.
  • Day Trader: They trade in a day only or they can also make a position through BTST(Buy Today Sell Tomorrow) keeping their position overnight.
  • Scalp Trader: Scalp traders use very less time frame for trading, They keep their trade open for seconds to minutes. 

All this Trading styles may vary from person to person depending upon some important factors; these are- Risk taking ability, Amount for trading & experience.


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