The Difference Between Trading, Investing Trading and investing are often considered to be the same thing. That’s not true though.
There are a number of things that underlie the difference between trading and investing.
Some people still don’t know the definition of investment and trading, both of which can add to your wealth. But both have different definitions of meaning. The following is an explanation of the meaning of the two.
Investment is defined as the act of pouring out funds by investors to collect assets and earn profits in the future.
While trading is someone who invests his funds to gain profits by taking advantage of price changes in a short period of time.
In trading, the principle that is held is buy and sell. So, a trader will buy an asset to be able to sell it again in the future.
Meanwhile, investments have the principle of buy and hold. Where an investor will buy an asset and keep it until the investment goal is met.
The focus of analysis of trading is technical matters such as charts, charts, and movements in them.
Meanwhile, the analysis conducted by investment focuses more on fundamental matters such as cash flow, development prospects, financial reports, and others.
The risk in trading is enormous. This is because of the very fast movement in asset trading activities.
Meanwhile, the investment risk is very low because the purchased assets are carefully selected by investors first.
4. Period Of Time
In trading, the period of time an asset is held by a trader is very small. It can take seconds to several months.
While in investment, an asset will be held by investors for a long period of time. It could be in a few years to decades.
5. Capital Growth
The focus of capital growth in trading is to make short term profit. If you do the right analysis and strategy, your capital will increase too.
Meanwhile, investment focuses on adding wealth in the long term by minimizing risk.
An investor aims to obtain dividends as passive income.
6. Efforts Made
In trading, a trader must often do an analysis for everything he does.
Even buying and selling assets must be analyzed first.
Meanwhile, investors will more often do analysis at the beginning of an investment or when choosing an instrument.
In addition, investors will also make decisions based on the prospects for the company’s development.
7. The Measure Of Success
The measure of success in trading is the profit generated from the sale and purchase of assets.
Meanwhile, the measure of success in investing is the achievement of an investor’s investment goals.
Trading is an activity that can be done to make a profit in spare time.
However, it can be concluded from the Holiday Nexus explanation in this article that extra care is needed so as not to experience unwanted things when trading.
Well, of course you also need a lot of discussion and ask and answer questions about.
Apart from profits, of course there are a few things that a trader should be aware of :
1. Big Deposit
The services of some trading brokers can indeed be accessed without a large fee, and trading can be started from a small amount.
However, there are also brokers who require us to deposit large amounts of money.
This brings great advantages, but also disadvantages that cannot be underestimated.
If you intend to trade, you must be brave to face risks because there is no institution or institution that guarantees deposits.
2. Wrong Choice Of Broker
When looking for an online broker, we can be wrong.
There are many brokers to choose from online, the numbers run into the hundreds to thousands.
They offer various advantages.
Traders, especially beginners, have to be really careful and do enough research before choosing to trade with a broker so as not to lose.