What is the difference between Investments and trading?

[Vijayavani]

When we invest our money on any security for making profit maybe a short term like 2 to 3 months or long term of 2 to 3 years, it is termed as investment, but when we buy or sell a stock within a day for earning profit, it is trading.

[Dr Faiz]

Investments are usually done with a long term perspective. This could mean a few months or even years . Generally investments don’t require active participation in the market on a daily basis . It could mean a  approach where a certain company is analysed technically and decision is made over a period on its behaviour and then shares purchased to hold over a period of growth. Trading could be intraday trading or a short term

investment for a few days so that profits can be booked early depending on the volatility of the markets or reaching the exit price .

[Dr. Karthik Jayachandran]

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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”><b><span style=”font-size: 16.0pt; mso-bidi-font-size: 11.0pt;”>Factors </span></b></p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”><b><span style=”font-size: 16.0pt; mso-bidi-font-size: 11.0pt;”>Trading</span></b></p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”><b><span style=”font-size: 16.0pt; mso-bidi-font-size: 11.0pt;”>Investing</span></b></p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>Period</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-A method of holding stock for <b>short duration</b> of time, it could be <b>a week or more often a day.</b></p>
<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Traders hold the stocks till the short term high performance</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-is an approach that works on buy and hold principle</p>
<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Investors invest their money for some <b>years, decades or even longer period</b>.</p>
<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Short term market fluctuation are insignificant in the long running investing approach</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>Capital Growth</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Traders look at <b>the price movement of the stock in the market</b>. If the price goes higher traders may sell the stocks.</p>
<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Trading is the skill of timing the market.</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Investing is <b>an art of creating wealth</b> by compounding interest and dividend over the year by holding quality stocks in the market.</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>Risk</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Comparatively involves <b>higher risk and higher potential returns</b> as the price might go high or low in a short while</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-<b>Comparatively lower risk and lower returns in a short run</b> but might deliver higher returns by compounding returns and dividend if held for a longer period of time.</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>Comparison with cricket match</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>One day match</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>Test match</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Traders are skilled, technical individuals who time the market and learn market trends to hit higher profit in the stipulated time.</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Investors analyze the stocks they want to invest in. investing also includes learning business fundamentals and commitment to stay invested for a longer time</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Related to <b>psychology of the market</b>.</p>
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<p class=”MsoNormal” style=”margin-bottom: .0001pt; line-height: normal;”>-Related to <b>philosophy that runs the business.</b></p>
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[S Suresh]

The difference between investments and trading is very simple; when someone puts there money or the process of putting their money into a business for the sake of profit is called investment. Trading is the process in which one can buy or sell the stocks/goods.

[Rajesh kumar]

Shares which are bought for the long term, i.e.., the money we invest in company and that is used by the company for their growth and business expansion, minimum  3 to 5 years.

Trading is the process by which we make profit within minutes by the price variation of the stock.

[Author]

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