Banking Blog

Busting Investing Myths Series

5) Trading and Investing is one and the same

People who are new to stocks, often mix up Trading and Investments. Even though both Trading and Investing aims to make money of Market, Both methods are quite different.

Traders try to make profit within few hours, Day or month. They try to take advantage of small mispricing in the market. Once the temporary mispricing is corrected, a trader will move on to find the next temporary mispricing. They focus on technical aspects of the stocks such as Support and Resistance. It is actually a job which can be full time or part time.

Investors on the other hand try to find fundamentally strong companies which can provide good growth over years or consistent dividends. Investors usually hold on the stock over temporary ups and downs as they are confident on the performance of the company.

It’s better to understand what is good for you and stick. Even though it is possible to do both Trading and Investing, It is better to avoid doing both at the same time, especially if you are new to stocks.

If you are planning to do both Trading and investing, Make sure you have separate account for each and set limit on money you will trade.

Read about all 7 Investing myths