5 key Difference Between Stock Trading and Investing

The difference is as follows:

1. Definition-

Trading: Frequent buying and selling of shares with an aim to generate more profits in a shorter period is called Trading.

Investing: In this approach, an individual believes in the principle of buying and holding for a longer period of time to gain greater revenue. People who invest for a longer period time knows, "longer they invest, greater they gain".

2. Capital Growth-

Trading: It is 100% art as it totally depends on price movements when the price goes up, the trader sells it immediately. It required a lot of experience. If you are good at it you can create an unlimited amount of money. 

Investing: When you invest for a longer period of time you put your money to work on a compounding principle. Where you gain interest and dividends over the period of time in addition to the principal amount.

3. Risk-

Trading: It is highly Risky.

Investing: It is non-risky.

4. Period:

Trading: It is for a shorter period of time.

Investing: It is for a longer period of time.  

5. Knowledge Required:

Trading: To do trading technical knowledge is a must.

Investing: To do investing fundamental knowledge is enough.

Also Read:

All about the Share Market.