Many of the people are confused with between the words trading and investing. But for their information these two terms are not same.
The biggest difference between them is the length of time you hold onto the assets. An investor is more interested in the long-term appreciation of his assets with huge profit.He’s not generally concerned about short-term fluctuations in prices, because he’ll ride them out over the long haul.
An investor relies mostly on Fundamental Analysis, which is the analytical method of predicting long-term prospects of a particular asset. Most investors adopt a “buy and hold” approach to assets, which simply means they buy shares of some company and hold onto them for a long time. This approach can be dangerous, even devastating, in an extremely volatile market as per BSE and NSE’s indexes.
Many investors suffer such losses regularly, hoping that in five or ten or fifteen years the market will rebound, and they’ll recoup their losses and achieve an overall gain.
Traders, on the other hand, are attempting to profit on just those short-term price fluctuations. The amount of time an active trader holds onto an asset is very short: in many cases minutes, or sometimes seconds. If you can catch just two index points on an average day, you can make a comfortable living as an Trader.
Traders rely on Technical Analysisfor making decisions. It’s a form of marketing analysis that attempts to predict short-term price fluctuations.
Good stuff…