There is a growing awareness of the stock market in India. At this point, without too much knowledge, many people who want to become investors end up being a trader and those who want to become traders get stuck with their wrong choice and become investors.
Those who want to stay invested in their shares for a long period are known as investors.
Those who buy stocks and sell them in a short period of time are known as traders.
Investors should not have the mindset of traders and traders should never turn into investors because of the situation.
Difference Between Stock Investment and Stock Trading
Holding period
A person is classified as an investor or trader based on the number of days or months or years of holding the stock. When the holding period is a short period ranging from one day to one year, you become a trader. Whereas if you hold the stock for more than 3 years, you are an investor.
The following are the types of traders
1: Positive Trader - Positions are kept from few months to years
2: Swing Trader - Positions can hold for days to weeks
3: Day Trader - All days are held with positions only overnight
4: Scalp Trader - Positions are held from seconds to minutes
Aim
Whoever deals with the stock makes a good profit. Brokers exploit little value changes and yield gains. Target is an important factor for traders. They should always have a target before buying a stock. While investors never prioritize small price fluctuations. They aim to get good returns from stocks from time to time apart from enjoying benefits like dividends and bonuses.
Tracking market
Traders select stocks based on technical analysis only. They analyze stock charts and patterns and conclude whether shares should be bought/sold or abstained from. On the other hand, investors conduct fundamental analysis, study the financial records of the company as well as consider the performance of the sector. They consider various financial ratios and parameters in the financial statements before investing in stocks.
Fund
Traders not only rely on money in their hands but also take loans from brokers and do margin trading. The more debt they take, they lose their rights on the stock. But investors rely solely on their own funds and therefore have full rights over the shares.
The profits
If a trader is sufficiently good, he takes advantage of both rising and falling markets and earns a small number of profits. While an investor will make huge profits on choosing the right shares, but at the expense of waiting longer.
Market fluctuations
Market moves will have a huge impact on traders. Those who take advantage of these movements are skilled traders. Investors do not pay attention to temporary fluctuations in the markets. They often get good returns when they ignore the changes and wait for their long-term benefits.
Stock pick
Traders never cling to a stock or a particular sector. Depending on the market trend, they choose sectors and stocks that are likely to give returns in a short period of time. They trade based on the current situation. But investors often prefer some areas more than others. They continue the stocks for a long time and gain. Performance and company leadership, profit, research cost allocation, and financial ratios are some of the factors that investors often consider before selecting stocks.
The risk
Traders never hesitate to take high risks. If they anticipate that a stock is likely to bounce back, they often buy the stock in bulk. But investors think twice and will not take huge risks. If the investor feels that the company is not performing well then the investors sell their holdings.
Dedicating your time
To be an active trader, you must make yourself available during the entire market hours. It is important to watch movements closely to avoid damage. While investing is the best option for other full-time jobs and you cannot afford much time to be a businessman. You can keep an eye on the market and watch the news over the weekend or over the weekend to track your investments.
Tax benefits
Investors have a tax advantage over traders. Long-term capital gains for shares listed on the Indian stock market are tax-free (over 12 months) and sold through a stockbroker. Even dividends are tax-free. But currently, 15% tax is levied on short term gains.
Before joining the stock market, you should decide whether you are going to become a trader or investor.
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| What is the Difference Between the Stock Investment and Stock Trading? |
Those who buy stocks and sell them in a short period of time are known as traders.
Investors should not have the mindset of traders and traders should never turn into investors because of the situation.
Difference Between Stock Investment and Stock Trading
Holding period
A person is classified as an investor or trader based on the number of days or months or years of holding the stock. When the holding period is a short period ranging from one day to one year, you become a trader. Whereas if you hold the stock for more than 3 years, you are an investor.
The following are the types of traders
1: Positive Trader - Positions are kept from few months to years
2: Swing Trader - Positions can hold for days to weeks
3: Day Trader - All days are held with positions only overnight
4: Scalp Trader - Positions are held from seconds to minutes
Aim
Whoever deals with the stock makes a good profit. Brokers exploit little value changes and yield gains. Target is an important factor for traders. They should always have a target before buying a stock. While investors never prioritize small price fluctuations. They aim to get good returns from stocks from time to time apart from enjoying benefits like dividends and bonuses.
Tracking market
Traders select stocks based on technical analysis only. They analyze stock charts and patterns and conclude whether shares should be bought/sold or abstained from. On the other hand, investors conduct fundamental analysis, study the financial records of the company as well as consider the performance of the sector. They consider various financial ratios and parameters in the financial statements before investing in stocks.
Fund
Traders not only rely on money in their hands but also take loans from brokers and do margin trading. The more debt they take, they lose their rights on the stock. But investors rely solely on their own funds and therefore have full rights over the shares.
The profits
If a trader is sufficiently good, he takes advantage of both rising and falling markets and earns a small number of profits. While an investor will make huge profits on choosing the right shares, but at the expense of waiting longer.
Market fluctuations
Market moves will have a huge impact on traders. Those who take advantage of these movements are skilled traders. Investors do not pay attention to temporary fluctuations in the markets. They often get good returns when they ignore the changes and wait for their long-term benefits.
Stock pick
Traders never cling to a stock or a particular sector. Depending on the market trend, they choose sectors and stocks that are likely to give returns in a short period of time. They trade based on the current situation. But investors often prefer some areas more than others. They continue the stocks for a long time and gain. Performance and company leadership, profit, research cost allocation, and financial ratios are some of the factors that investors often consider before selecting stocks.
The risk
Traders never hesitate to take high risks. If they anticipate that a stock is likely to bounce back, they often buy the stock in bulk. But investors think twice and will not take huge risks. If the investor feels that the company is not performing well then the investors sell their holdings.
Dedicating your time
To be an active trader, you must make yourself available during the entire market hours. It is important to watch movements closely to avoid damage. While investing is the best option for other full-time jobs and you cannot afford much time to be a businessman. You can keep an eye on the market and watch the news over the weekend or over the weekend to track your investments.
Tax benefits
Investors have a tax advantage over traders. Long-term capital gains for shares listed on the Indian stock market are tax-free (over 12 months) and sold through a stockbroker. Even dividends are tax-free. But currently, 15% tax is levied on short term gains.
Before joining the stock market, you should decide whether you are going to become a trader or investor.
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