Difference Between Trading And Investing
The main dissimilarities or differences between trading and investing can be pointed out as follows:
1. Introduction
Trading: Act of buying and selling of shares and other financial securities to gain short term profit.
Investing: Act of allocating capital or fund in different projects or investment instruments to build wealth and future gain.
2. Goal/Objective
Trading: Immediate Profit
Investing: Future returns
3. Period
Trading: It is a short term activity
Investing: It is a long term activity
4. Risk
Trading: It involves higher level of risk
Investing: It is less riskier than trading
5. Principle
Trading: Based on buy to sell principle
Investing: Based on buy to hold principle
6. Frequency
Trading: More frequent
Investing: Less frequent
Also Read:
Also Read:
7. Tools Used
Trading: Technical analysis, moving averages etc are considered while trading shares and securities
Investing: Competitive edge, price-to-earning ratio, management forecast etc. are considered while investing
8. Relation
Trading: It is related to daily trend of the market
Investing: It is related to future earning potential.
Trading Vs Investing (Comparison Chart)
I hope this post is helpful to understand the difference between trading and investing and to make comparison between them.
Trading Vs Investing (Comparison Chart)
Basis For Difference
|
Trading
|
Investing
|
Introduction
|
Buying and selling of financial securities in order to gain profit
|
Allocation of fund in different projects to build wealth
|
Goal
|
Short term profit
|
Future gain
|
Period
|
Short
|
Long
|
Level Of Risk
|
Higher
|
Less
|
Principle
|
Buy to sell
|
Buy to hold
|
Frequency
|
More
|
Less
|
Tools
|
Moving averages, technical analysis etc.
|
Management forecast, price earning ratio etc.
|
Relation With
|
Market Trend
|
Earning Potential
|
I hope this post is helpful to understand the difference between trading and investing and to make comparison between them.
