Difference Between Trading and Investing

Do you invest your cash in the stock market? or are you interested in it? If your reply is yes, then you must have probably heard these two words 'trading' and 'investing' and many people may not even be aware of the difference between these two words. But don't worry, after reading this post, you will understand the difference between these two terms and will also be able to choose which of these can prove to be a better option for you.

What is Trading?

Trading is a method during which a person buys a stock for a short period and sells it after a short time, even if it is for a day or a week. and such people are called traders. Traders benefit from both rising and falling markets because they enter and exit from the market by taking smaller but more frequent profits over a shorter time frame.


What is Investing?

Investing is the process of buying and holding stocks for a long period, And those people who do this are called investors.
Investors aim to gain profit by holding stocks of a company for a longer period it may be a year a decade or even more, Their growth may be less visible in the short term, but due to the law of compounding, in the long run, they can make decent profits, if the companies invested by them turn out to provide a good return.

key difference between traders and investors, by the following table.

Traders Investors
Short Term Long Term
More Time, More Skills Needed Less time, Fewer Skills Needed
Profit Mindset Growth Mindset
Buying/Selling Market Waves Buying and Holding
More Technical Analysis needed More Fundamental Analysis is needed
More Risk Involved Less Risk Involved
Benefits from Volatility Benefits from Stability

After looking at the above-mentioned points, you must have understood the difference between these two, but still, it may come to your mind which of these two is the better option? 

Investing or Trading which one will be a good choice for you? 

Without wasting your precious time let me make it clear to you that if you are a busy person who has a variety of things to do in a day and you don't have much time, knowledge or experience or you are not able to do technical analysis If so, trading is not for you. Investing will prove to be a better option for you as it takes less research and time. You can do your daily work while investing in stocks. Where trading takes time, it requires good knowledge and expertise. 

Conclusion: Hope this post of ours proves to be helpful for you, and you all understood the difference between trading and investing and also got an idea of which of these options would be right for you.
Thanks :)

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