Almost everyone has come across the term investing, trading, stock market, mutual funds and many such share market related terms which we would like to understand in a lucid and simple language. One such jargon is Trading. Let us go through what trading actually means and how different is it from Investing. Let us dive into the topic – trading versus investing.
Trading is the act of making a position in a financial instrument and exiting the position quickly. The time duration over which the position is held may vary from few seconds to few months at best.
Investing is an act of buying financial instruments and holding on to them for years and years. The time duration over which the financial instrument is held can vary from few years to even a few decades. While investing, the investor purchases an asset class and holds on to it.