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The basic difference between investment and trading is the “holding time period” of the stocks bought.
Investment:
If the stocks bought are held for a period of years, or even decades then it is called investments.Ā The goal of investing is to gradually build wealth over an extended period of time through the buying and holding of a portfolio of stocks, baskets of stocks, mutual funds, bonds and other investment instruments.
Trading:
Trading, on the other hand, involves the more frequent buying and selling of stock, commodities, currencies or other instruments, with the goal of generating short term returns.
Investments are done on a longer term perspective while trading involves buying and selling stocks for short term to realize profits. Trading involves knowing the recent price trends and taking appropriate positions to realize profit. Trading can become gambling by the participant if not done with knowledge and discipline.
The goal of investingĀ is to gradually build wealth over an extended period of time(usually years) through the buying and holding of mutual funds, bonds etc
Trading, on the other hand, involves the more frequent buying and selling of stock(usually intra-day or within weeks) with the goal of generating returns that outperform buy-and-hold investing.
Investment – In general,holding any asset/shares for a longer term anticipating a capital gainĀ is termed to be an investment . Objective – Long term perspective.
Trading – Buying any product/share with an intent to sell immediately or in a short term is called as trading . Objective – Short term perspective.
Investment is where a person buys shares of a company and holds it for a longer duration. Performance review of the shares is done periodically and a decision to retain or exit is taken .
In trading, the shares are bought to make gains in short durations. The shares bought for trading areĀ held for a maximum of one month
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