Differentiate between investing and trading.

Banking & FinanceManagementCompanies/Organisations

The major differences between investing and trading are as follows −

Investing

  • Creates wealth over a long period of time.

  • Buying and holding.

  • Market fluctuations has no effect.

  • Add on benefits − bonus, dividends etc.

  • Fundamental indicators are EPS, price to earnings, current ratio etc.

  • Long term period.

  • Creates wealth by compound interest and dividends.

  • Low risk.

  • Industry, economics, financials, competitors etc. will be affected.

  • Very few brokerage charges.

  • Makes sound investments.

Trading

  • Generates profit frequently.

  • Buying and selling of stocks.

  • Daily market fluctuations will effect.

  • No add on benefits.

  • Technical indicators: moving averages, stochastic oscillators etc.

  • Short term period.

  • High risk.

  • Psychology of market, money management, risk rewards etc. will be affected.

  • Have brokerage charges.

  • Requires active environment.

raja
Published on 24-Jul-2020 07:37:02
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