What is the difference between investing and trading?
Be it trading or investing both of them have a fair amount of risk involved. Going by the words trading is usually a short-term process as compared to investing wherein the duration is in years.
Investing is usually for the long term and is basically compounded growth over a period of time. Some common investing instruments are fixed deposits, gold, bonds, ETFs, and real estate. While investing we mainly focus on one fundamental thing which the company should have a higher market capitalization.
An active investor is someone who focuses on undervalued companies. Also, he checks the relative valuation of the company regularly and books profits and exits quickly.
Traders are opportunistic people in the markets and they operate on daily/weekly/quarterly profits. Trading is more like a business you can expect heavy losses if you don’t do it in a correct manner. Traders identify opportunities in a very short period of time ranging from a minute to an hour and from a day to a couple of weeks. These days algorithmic trading is also done in order to minimize losses.
