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Many people think that the terms stock trading and investment have the same meaning in relation to the stock market. But that is not the case.
Let’s see today How is the different stock trading and investing?
People who trade in the stock market on a daily basis are called traders.Traders use Technical Analysis to analyze stocks.
Technical analysis is the analysis of price and volume price patterns with the help of charts. And then there is the attempt to understand the supply and demand of the stock as well as the mindset of the traders.
Types of Stock Trading
In trading, shares are bought and kept for a short period of time, from a few seconds to a few months.
But there are different types of trading.
- Scalping trading
- Intraday trading
- Swing trading
- Position trading
- BTST Trading
In this, shares are held for a few seconds to a few minutes.Scalping trading is a profit when there is a small change in the price.
Similarly, resale profits are made.
The day we buy shares and sell them on the same day is called intraday trading.
Intraday trading is one of the most popular types of stock market trading.
In swing trading, the shares are held for a few days to a few installments, that is, they are held, and the profit is drawn in swing trading according to the change in the share price.
They are held for a few months by buying shares in position trading.
Example : Suppose a share of a company is worth Rs.1000. If you study the basics of that company and you think that this share can go up to Rs.2000 in the next 5-6 months, then you want to take that share and sell it after seeing the profit in 5-6 months.
BTST is also a popular form of stock market trading.
BTST stands for Buy Today Sell Tomorrow.
In this, traders are trying to make a profit from the daily changes in stock prices.
Investing involves investing in stocks for a long term i.e. for more than one year. People who make such long-term investments are called investors.
Investors are thinking of buying these shares and holding them for a longer period of time. When investors invest in a company, they look at that investment as a partnership in that company and that investment lasts for years.
Investors are always thinking like entrepreneurs. Just as an entrepreneur understands and invests in an industry, so do investors.
Types of Investing
Investing is more about studying the company than the shares. For this, it is studied by analyzing the basics of the company.
There are two types of investing.
Value investment is a type of investment in which shares are bought. Value investing is the study of the fundamentals of different companies and investing in stocks of good companies that are available at low prices.
growth investing is a method and strategy of investing in which the emphasis is on increasing the capital of the investor.
Investors who make such investments are usually investing in companies that are going to grow, whether the company is small or large.
Traders focus on the price and volume of the stock.There are more fluctuations in the share price in the short term so traders are doing technical analysis instead of fundamental analysis.
In which price and volume price and volume are analyzed with the help of candles and charts.
Investors focus on the major changes of the company and also check company performance.In the long run, the share price depends on the company’s expansion, so investors do a fundamental analysis of the company’s fundamentals. This type of analysis is based on external events and influences, as well as financial statements and industry trends.
Tax on profits
In trading, shares are held for a short period of time, so if you hold the shares for less than a year, you have to pay short-term capital gains tax on the profits. India’s short-term capital gains tax is about 15%. But this tax does not apply to intraday trading.
Investors have been holding these shares for many years.If you hold the shares for more than one year, you are exempt from capital gains tax.This is one of the benefits of being a long term investor.
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