Investment vs trading in the stock market is long-term holding for growth, trading is short-term buying/selling for profit.

What is Investment vs Trading in the Stock Market?

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8 minutes, 27 seconds Read

Introduction  –

The Investment vs trading in the stock market involves long-term holding and dividends, while trading focuses on short-term buying and selling. Ever since the role of computer in the stock market has increased, the meaning of investing in the stock market has changed, as today’s topic of our stock market is investing or trading. Before seeing this let us see how the stock market works in this age of the internet. Because the stock trading that was done before 1990 and the stock trading that is done in today’s era has seen a lot of changes.

So today we will see here how investment and share trading goes in the stock market with the advent of technology. Let the small investor see what to choose from, investing and trading and why.

A change has been seen with the advent of technology in the stock market, that is algorithmic trading which is trading by automation, which is completely different from emotional trading of human beings which does not react emotionally to any news or up or down on fed information. Doing trading for which such financial companies invest crores of rupees. We will also learn about this algorithmic trading and we will be able to decide what will be better for us.

What is Share Market Trading ? –

Share trading It is speculative i.e. news, technical data analysis, and stock trading depends on how the market is trending and it is a small time investment, mostly 80% trading is completed in a day i.e. Any securities which It is bought on the same day and sold on the same day and kept for a maximum of two to four days. In this, there are more big investors and expert investors who know about the smallest thing about the stock market. This means investing a new investor in share trading i.e. Suicide means that the loss is almost certain.

We need to know why share trading is promoted more than share investing. With share trading, every trader buys and sells more and more, due to which brokerage and trading taxes have to be paid, which in long term investment is the cost of initial purchase and last sale means two times.

Therefore, if the share trading is more, then the brokerage houses run in the market, so we have to decide whether we should invest or do trading. Big trading houses spend crores of rupees to set up algorithms, which small traders cannot do, the accuracy of these algorithms is much higher than humans. Therefore, your success in share trading is almost negligible. Otherwise, your research about the market should be completely new and effective, which is almost impossible. That’s why you need to know this reality of the share market while investing.

What is Share Market Investment ? –

Share investment is done on this fundamental information, in which the specification is almost negligible and the risk is also very less. The people who lose money in share trading are the money of the people doing share trading, share investors invest their money on a long term basis, so there is no problem on their investment.

Investing in the share market means a real game that gives income on the compound effect on their investment. Share Investment This is such a long investment of five years or more, so this investment is based on the direct growth of the company and not on the fluctuations of the market. Since the investment is based on the fundamentals, it is considered a good investment which trading is called speculative / speculative investment.

If there is profit in the speculative market, it is marketed all over the world, but if there is a loss, no one knows about it, but we have seen many traders who have gone bankrupt, because of this, the big investors in trading before the spent millions on algorithm technology. They spend money and their investments also get huge, due to which there is a stir in the market. Our investments are very small, so our investments in the market remain ineffective and we are not able to survive in front of technology. That is, if seen in a way, long term investing and short term trading can be said in this, I just want to tell you the fact that You will understand whether to invest or trade, the decision is yours, just analyze.

Jim Simon & Warren Buffet Investments  –

Warren Buffet started investing in shares at the age of 11 and today he is 90 years old, that is, in his 80 years of share investment, he called 20% profit or profit from share investment which works like a compound effect. That’s why he is included in the top 5 Aamir people in the world today. On the other hand Jim Simon started his stock trading after 40 years of his age and after initial failure almost thirty years continuously profit from share market at more than 60% rate. Now this proves that it is profitable to do share trading, but we need to know the reality behind it, which they used.

He was a mathematician, engineer, scientist, he did decoding work for the intelligence organization. When he started working in the stock market, he did not first hire any share market expert, he hired computer programmers and scientists, mathematicians, who analyzed the data and understood the market, for this he spent crores of rupees and created an algorithm that used a lot of information. And by developing it, he achieved this position in share trading.

Now we have to decide by looking at these two, on the basis of whose strategy we have to invest. Anyone can become successful in the stock market by following Warren Buffet’s rules of investing, but it is not as easy to follow Jim Simon because he is a mathematician/mathematician who his way of thinking is different from normal people because he is a genius. Hey and such geniuses are very few in the world and it is not possible for everyone to follow their intellect.

Share Market & Algorithm  –

Since the computerization of the stock market, the method of investing has changed and automation has led to share trading, which has the ability to give more results than the emotions and the ability of man, he does not get tired and the computer does not suffer from forgetfulness. Therefore, it has important feeding data, which is an expert in analyzing and taking action. By spending crores of rupees, big financial companies and mutual funds prepare this system which gives very accurate results from man.

There can be a loss of crores of rupees in the share market due to the delay of seconds, so this technology trades faster than the man, so our ordinary traders find it very difficult to get a profit in the share market in front of them.
Before knowing how the algorithm works, let us understand what the algorithm is, “Algorithm means” a set of rules follows by machine to achieve particular goal” It means that computer has a language “Programming” in that language Information is given to the computer and programming is provided to perform, ie set of rules, which it only follows without emotion.

As the Google search engine provides us information, what should be the search process for it, this program has to be set up on the computer, then the computer starts performing automatic. Nowadays, many companies have been successful in the market by using it. For example, Amazon, Tesla, IBM, in this way a lot of data is collected in the stock market and provided to the computer system and a probability system is created, it is called an algorithm. For this, the company spends crores of rupees, trading small investors in front of it means making profit in front of the experts.

Investment Amount and Strategy  –

Finance companies and mutual funds spend thousands of crores of rupees every day in share trading, they spend a lot of money, expertise, technology and a lot of funds, it is their strength in front of ordinary investors, so our investment strategy should be different.

If we want to invest in a big company, then we need a lot of money to invest, but we have limited amount in it, we want to get good profits, so our strategy should be according to that. For this, you can increase the value of your investment by making amendments about a small good company.

Trading shares with small amount means investing money at high risk which is called speculation and it gives failure. Like a big investor company, we cannot spend on technology, experts, all these things, so you can take this decision to invest or trade accordingly.

Conclusion –

In this way, we have seen here what is an investment and trading and which option should we choose from it. Jim Simon has earned a 66% profit on 51% probability for continuous 30 years from share market, but his way of thinking is like a genius, so if we want to earn money from that method then we should have a ability to hire such experts. In fact, we cannot, so I personally believe that Warren Buffet’s Fundamental Investment Strategy is the best investment method for us.

People who play betting or lottery, they get lottery once or twice in their life, but they keep on losing money for the rest of their life, investing and trading in share market is like this. We can do long term five years – ten years – fifteen years – twenty years by preparing such slabs and making little investment under fundamental rules and once you have accumulated a good amount of money, hiring experts, making software, investing by doing such things can develop.

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