Trading & Investment

Have you every experienced of a Roller Coaster Ride? How the ride amuses you with the peaks & troughs of its track. Somewhere it rides you to the peak than higher peak , than drastically fall you in the lower troughs. 

Same characteristics would be found in stock market. When you ride on a stock, it gives you the peak of its price troughs of the price again & again. In the stock market prices move in a Zigzag pattern. Sometimes the motion is fast, sometimes the motion is slow. 

Trading is something when you try to predict the market fluctuation and set a trade accordingly to the market sentiments to make a profit in your wallet, continuously. Trading is just like a profession in which you apply your knowledge & Experience to trade regularly to make your efforts count. Traders are trying to scalp tiny profits regularly from the market fluctuation. In this process profits & losses are the integral part of trading. To make a regular income from market, you have to develop a Strong trading mechanism with an efficient trade management tactics. 

In the other hand investment is completely different from trading. Everything in this world has its own worth or value. So the stock of any company is also have its own intrinsic value in it. Rapid market fluctuations arise from the temporary market sentiments of demand & supply but at the end The price of the stock is a reflection of its own intrinsic value. The value derived from its business profitability & efficiency. If a business is growing in terms of profits & is making a strong presence in market, it will create more value to its stock price. 

So the investment is something to park your money in stocks for long term in expectation to realize a substantial growth value in terms of capital appreciation with time. Investor always looks for increase in Value of their investments. They track the business fundamentals and put their money in the company which they supposed to grow with time.

Now we can summarize the difference in trading & investments in few points …… 

  • Trading is short term tactics to earn regular income in stock market & investment is long term exercise to expect or realize an increase in value. 
  • Trading is a more risk inbuilt then investment. 
  • The mindset of a trader and investor is completely different , trader focus on a short term opportunity & investor looks for a long term opportunity in market. 
  • Traders mostly rely on technical analysis & investor mostly rely on fundamental analysis. 
  • Trading is a profession, but the investment is more of to create your wealth for long term.

StockAce Team

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