Know everything about difference between trading and investment

Difference between Trading and Investment:-

Stock market can make you financial independent and help you become billionaire. We all have read these somewhere, but do you know that these can be achieved with full knowledge in stock market.

Every country wants their population to be engaged in either stock market, mutual funds or in bank investment. So let's today discuss how stock market helps you make money and how it works efficiently.

The most important two words in stock market are trading and investment. India has about 7 cr demat account where everyone is directly or indirectly linked to trading or investment. 

Now I will explain you trading and investment properly in simple words. Let's start with trading first.

Trading:-

Trading is basically buy and sell of stocks for short span. Here our motive is just to gain very higher returns in short period of time. It is also known as short term trading. We can earn here daily 10k easily with 1 lakh capital in commodity market and options. But risk is too high and returns are less than investment.

This is also called intraday in stock market. Market starts at 9.15 am and closes at 3.30 pm. If we buy at 11 am and even we didn't sell it automatically gets square off i.e sell at 3.30 pm. That's the funda of intraday. 

If there is trading on swing and positional basis then it can there upto 2 months. So experts says that duration of trading is upto 5 min to 2 months. Here basically there is only one rule buy and sell. 

Most important thing here to be expert in trading is technical analysis. Technical analysis is chart pattern to understand how market is working currently. 

There are some important terms in technical analysis. They are

1. Uptrend

2. Downtrend

3. Support and Resistance

4. Price and action.

5. Bollinger Curve 

6. Moving average

If you want to do trading and has less capital then go with options bank nifty, where you can just start with small capital of 10k.

So now I had explained you trading no you will ask how to become expert in it. The only way to become successful in trading is to first learn investment. For every field there are stairs to walk and in stock market first you have to learn investment and then become Intraday expert.

Let's now discuss Investment here.

Investment:

• Investment is the long term process but here returns are 10 times more than trading. Here buy and hold is done.

• Holding time differs for every one, some go for 10 years while I would prefer for 20 years. Some people follow sustainable development and buys for next generation. 

• One should be expert in fundamental analysis to do investment. Here you should be able to read balance sheet and News according to condition. It is totally long term investing pattern.

• For doing investment first go with mutual funds and later on with equity stocks. One should invest in companies whose products we are using like jio sim. We should check P/E ratio and board of directors of that company with it's history since establishment.

• I would suggest the way market should be enter is first investment and then trading. This is the real chronology of stock market. One should learn how stock market works, how money is made through it and then start trading.

• This all basics you can learn in investment. Which will later on make you expert for intraday trading or either for swing and positional. 

• So I guess I might had explained you all basics of difference between trading and investment. If you have any doubt do let me know in comments section I will surely help you out there.