Difference Between Trading and Investing

What is Trading?

Trading refers to the dealing with bonds, i.e.agreements, futures, options, buying and selling of shares, debentures, etc., between merchants, for the intention of obtaining a profit. In the stock exchange, the money is transferred by the purchaser to the seller, to transfer the stock, who give their consent on a specific cost price. For efficient dealing, the stock dealer must have a solid education of market aims and how it works.

What is Investing?

Investing can be defined as the method of placing down a definite aggregate of money, in a plan or scheme, project, to produce profit or income out of it in prospect. Investing objects for gathering money, by saving it aside, to spend it on multiple investment avenues, in anticipation of gaining more money.

Also Check: What is Investment?

This article is a ready reckoner for all the students to learn the difference between Trading and Investing.

Comparison Table:

Parameters Trading Investing
Meaning Trading refers to the trading of securities, i.e. bonds, buying and selling of shares, futures, options, debentures, etc., between merchants, for the intention of obtaining a profit. Investing refers to distributing money to either a project, policy, plan or a scheme which is capable of generating future returns.
Term Short to medium Medium to long
Tool Technical analysis Fundamental analysis
Associated to Day to day market trend Long term profitability
Risk involved High Low
Taxation Short term capital gain Subject to the investment is held for more than a year, though it is not taxable.

The above mentioned is the concept, that is elucidated in detail about ‘Difference Between Trading and Investing’ for the Commerce students. To know more, stay tuned to BYJU’S.

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