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Differentiate between investing and trading.
The major differences between investing and trading are as follows −
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.
Industry, economics, financials, competitors etc. will be affected.
Very few brokerage charges.
Makes sound investments.
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.
Psychology of market, money management, risk rewards etc. will be affected.
Have brokerage charges.
Requires active environment.
- What is difference between profit and loss account and trading account?
- Differentiate between ADR AND GDR.
- Differentiate between invoice and bill.
- Differentiate between company and firm.
- Differentiate between finance and accounting.
- Differentiate between EBIT AND EBITDA.
- Differentiate between revenue and turnover.
- Differentiate between turnover and profit.
- Differentiate between offer and quotation
- Differentiate between hedging and speculation
- Differentiate between investment and speculation
- Differentiate between inflation and deflation
- Differentiate between recession and slowdown
- Differentiate between FCFF and FCFE
- Differentiate between lease and rent