People often think that trading and investment are the only thing. Due to this confusion of people, they often try to make a quick profit by adopting trading strategies, but the truth is that these are two different options for making money in the stock market. If you want to make money from the stock market, you must know the fundamental differences between trading and investment.

Usually investors always consider trading and investing, but this is not true at all, as actually trading and investing are different. These are both completely different ways to make money in the stock market. It is believed that trading focuses on making fast profit, while investment focuses on making long -term money. If you want to choose the right direction in the stock market, let’s first understand the difference between the two (Photo courtesy – istock)

The difference between trading and investing

Trading means buying financial assets such as shares, commodities or currency for a short period of time and then selling them. The purpose is to make immediate profit by taking advantage of the rising and falling prices in the stock market.

Talking about investment, this is a long -term process. In this, people hold shares or other property for years or decades. Investment work is to generate wealth over time through capital growth, dividends and compounds.

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What is the distance

In trading, purchases and sale are frequent, which takes advantages of short -term movement. Trading has a higher risk because there is a lot of volatility in the market. Investing, shares or property are long -lasting, which gives the benefits of long -term growth and dividends. Trading is based on technical analysis, while the investment is based on the analysis.

In trading, shares are held for a few hours, for a few days or a few weeks. Through this short holding, the profitable profit is achieved by taking advantage of the movements in the market. Investments, investments are held for many years, while investors are not afraid of short -term decline and give their investment time so that they will grow and get benefits in the future.

How to use exactly

On the one hand, trading is constantly selling, so you will not get the true magic of the cycle in it. On the other hand, in investment, you continue to invest for years, which gives you a strong benefit of compound in the long run. In trading, shares are sold 3 years ago, which is why they are considered a short term capital gain, and in investing, you take the shares for more than 3 years and the profit comes under the long -term capital profit (LTCG). Although these are the types of investment in both markets, so there is a risk of both

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Note – You should choose one at your convenience. Because the risk of trading is higher, so if you want a long -term cycle, choose an investment option. The rest, of course before investing, consult a specialist.