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Monday, November 5, 2007

Stock trading versus stock investing


In my previous post I have detailed about stock trading and stock investing, but still once again I would like to summarize it in brief.

Stock trading is basically and usually done from short interval of time. Stock traders who usually prefers to do stock trading buys the stock for very small interval of time and exist immediately once their target price is achieved or their predetermined profit get triggered while stock investing is done keeping in view the long term returns which is basically performed by stock investors.

The is a huge difference between trading in stock and investing in stock

• Trading in stock is basically a business done on day to day basis to make profit while investing in stock is an investment done in stock only for long term returns.
• Trading in stock involves lot of risk while investing in stock has low risk if the stock pick is just right.
• Trading in stock done by stock trader does not make use of Fundamental Analysis of stock but they usually like to use Technically Analysis to predetermine their entry and exist point, while stock investor who usually invest in stock make use of Fundamental Analysis and very less of Technical Analysis.
• Trading in stock requires very high technical skill, experience, patience and mentality to accept losses if the stock triggers against their way, while stock investing requires basic fundamental knowledge and person from any category can do it very easily.
• % of success in trading stock is less while % of success in investing stock is very high.
• Stocktrading needs continues monitoring and needs to keep in touch with their stock portfolio on day to day basis while Stockinvesting does not require that much of monitoring or does needs to be in continuous touch with their stock portfolio.

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