Are you the kind of person
- who enjoy the thrill of uncertainties?
- who says yes to calculated risks?
- who wants to play with the fluctuations in the market?
Then probably trading would be a better fit for your choice.
Trading versus Investing, a brief comparison
Well, trading and investing are two different methods of profiting from the stock market.
- Method 1: Investing– Here you find those stocks which would be beneficial in the long run. Then buying the stocks, holding it for long, ignoring the day to day fluctuations. It’s a more relaxed approach compared to trading.
- Method 2: Trading– This is about making profit from short term fluctuations of the stock market. You won’t be holding the stock for a long, but you would be keenly looking into the ups and downs of stock prices and do a trade at the right time. Here you need to invest your time too compared to method 1. Also with frequent buying and selling, transaction cost (which is a small percentage of order value, actually not much significant) also comes into picture compared to less frequent buying in Method 1. Check here for calculating the brokerage
Short term trading over long term investing feeds your risk appetite.
if you are interested in frequent buying and selling stocks,
if you have more time to invest and loves doing that,
if you have a sharp eye to catch the surges or drops (short selling the stock- by selling the stock before buying)
if you can capture the market sentiments well in advance,
if you love to analyze the chart patterns,
definitely you would be rewarded with higher returns in a short span of time via trading.
Are you a Trader or an Investor?
So what’s your choice…Long term investments or making profit from short term fluctuations of stock market?
Well, you can even think about some balance in two methods depending upon your interests and capitals. Like method 2 as your monthly salary (active income) while method 1 as your retirement plans(passive income)
Disclaimer: The views and investment tips expressed here are purely based on my intuitions out of the mathematical analysis done. What suits you better is something to be decided by you. Above every recommendation, it’s your logical intuitions that matters the most along with your investment objectives and risk tolerance. After all, it’s your money at stake.