how trading is different from investing and which one is more profitable?
Trading and investing are two genres of earning profits in the equity market. However, both are quite different from each other. Here’s a brief discussion on the points of differences between the two.
The major difference lies in the time span of both. Where trading involves buying and selling stocks in short time gaps, say a day or a week, investing is based on the buying and holding principle, that is, investors invest their money for time that can extend to even a decade. Secondly, traders benefit out of the price fluctuations in their stocks. When a stock’s price gets higher, they may sell it and book a profit. But investors have to be creative and build such an investment portfolio that can make them earn good return in the long run.
Trading is affected by the daily market cycles, whereas investing is not affected by them to that an extent. Therefore, the risk involved in trading is much more than investing, and so is the return. Going further, trading is all about grabbing hold of the best opportunity coming your way, executing the order then and there and booking the profit. However, with investing you have to be a little patient and let the stock reach its full potential to earn good returns.