Investing v/s Trading

If you plan to enter the world of stock markets, you need to know about two approaches, each having its benefits and risk. According to the general notion, trading refers to buying and selling stocks or other financial instruments for short-term profits, while Investing is buying long-term gains. Still, there is a lot more to understand before picking one between the 2 for you. This article is aimed to educate you on the difference between these two approaches.

1. PERIOD

Trading is a method to capitalize on short-term gains of a stock price. There are multiple styles of trading, each having a different time horizon ranging from short term to medium term.

1. Scalping – Entry and Exit are made within seconds or minutes.
2. Day trading/ intraday – Entry and Exit are made within one day; no positions are carried overnight.
3. Swing Trading – Entry and Exit are done in several days or sometimes weeks.
4. Positional trading- Entry and Exit are done in a maximum of 1 year

Investing is a buy-and-hold method where investors invest their money for more than a year, decades, or even more extended periods.

• RISK & REWARD

“Higher the risk Higher the reward,” Both Trading and Investing have their own risk. But trading involves higher risk compared to investing. Investors are not concerned about short-term price fluctuations. As per Legendary investor Warren Buffet, “the stock market is a device for transforming money from impatient to the patient.”

• SKILL REQUIREMENT

Traders have to be highly skilled to take advantage of price movement. Day trading is a time-consuming activity that requires the trader to speculate actively. To master these skills, you can visit CMIL, where our courses make you an expert in technical analysis. On the other hand, Investing is considered an art where the world’s 8^th wonder (according to Albert Einstein) compounding plays its magic.

BOTTOM LINE

Money kept in saving accounts attempts to beat inflation, but you need to explore the massive opportunity in the stock market to create wealth. But the complex world of stock markets and “internet stock market gurus“ can break your confidence rather than motivating you. We at CMIL offer top-notch trading courses that can help you become an expert in technical analysis, risk management, and money management.