trading vs investing.Which one is better

When you enter the world of the stock market you will see three types of people one is investor, second is trader and third spectator. Spectator just watches the stock market. Traders and investors have only one motive in mind i.e to earn money from the stock market but the way they both try to earn money is quite different.
Traders try to take profit in the short term which is either weeks, days, hours and even minutes whereas investors try to take profit in the long term. In this article, we will discuss what traders and investors try to see for making a profit in the stock market and compare both of them.

TRADING: Traders watches the chart and apply various indicators to know when to enter the trade and when to exit the trade. They are not concerned about the management of the company or financial statements of the company. Traders plays with the sentiments of the market and book their profit. The person who wants to be trader should keep in mind that trading does not always go as they thought, they might get loss so they must know how much loss they can bear and should exit the trade no matter what. They should come with a game plan to know about everything they are looking for trade. Emotion is something which should not come while trading.

    

INVESTING: Investors investing for long terms are concerned about the company management, market share, financial statements etc. They look for companies that are below their present value. They try to find the real value of the company and its worth in future using various techniques and formulas. One of the technique is the dividend discount model. Investors are least concerned about the short term analysis and what is happening to the price of the stock in the short term.  Investors look for the time value of the money. The person who wants to become an investor must learn how to read financial statements and how to know about the management. If you don’t do the analysis correctly then you can lose your money in the long term so it’s important to do the analysis correctly.

CONCLUSION:

Even though trading and investing are quite different in terms of timing and tools we use. It is quite hard to choose which one is better as in the real world both of them have shown results. One thing that one can say is that it is always good to use them both as you will then get the upper hand. In technical analysis traders sometimes use financial ratios and also analyses the company for making their strategy. Sometimes investors see that they can book short term profit based on technical analysis. 

Hope you like the article. Comment below about what you think is better trading and investing. Which one will you choose?.