What is Trading? This question mostly haunts the newbies to the stock market. Today many small retailers are in the stock market who do not understand the difference between trading and investment. If you also do not know the meaning of the word trading. So in today’s article we will explain you in detail about trading meaning. That’s why today’s post is very important for you, so read till this end. Then let’s find out.
What is Trading?
To explain trading in simple words, that is, to earn profit by exchanging any goods or services.
Stock market trading is also similar. Like we earn profit by buying and selling something. In the same way, profit is earned by buying and selling shares of companies instead of commodities in the stock market. The trading time period is 1 year. This means that the stock has to be bought and sold within 1 year. If you sell the stock after one year, then it is called investment. This is a kind of online based business.
For example, if we are buying shares in the stock market, then there will be some other person like us who will be selling those shares. Now let’s add this to our daily life. Suppose you bought an item for ₹ 50 from a wholesale store and later sold it to the customers after paying ₹ 60. If you do this daily then it is called trading.
Exactly the same happens in the stock market as well. You buy the share and sell the purchased share after the price increases within 1 year. So it is called Stock Market Trading.
Trading is said to be quite risky because in this no one knows what will be the movement in the share price after some time. If the news related to the stock is good, then there will be a rise in the share price. On the other hand, if the news related to the stock is bad, then there can be a slowdown in the share price.
What are the types of Stock Market Trading?
Trading in the stock market is divided into four parts.
What is scalping trading?
Scalping Trading The trade that is to be traded for a few seconds or minutes. This means that those traders who buy and sell shares only for a few seconds or minutes. Such traders are called scalpers. Let me tell you that scalping trading is the most risky.
What is Intraday Trading?
Intraday Trading The trade that is to be traded for 1 day. This means that those traders who buy shares after the opening of the market (9:15 am). And sell the stock before the market closes (3:30 pm). Such traders are called intraday traders. Let me tell you that intraday trading is slightly less risky than scalping trading. To know more about Intraday Trading read the post given below.
What is swing trading?
Swing Trading is the trade that buys and sells shares for a few days. This means that those traders who sell the shares after buying for a couple of weeks. In this, the trader does not have to look at the charts throughout the day. It is better for those people (jobs, students etc) who cannot devote their full day to trading.
What is Positional Trading?
Positional Trading A trade that is held for a few months. This is done to capture the long term movement of the market. in order to make a good profit. The daily up-down of the stock market does not affect them much. It is less risky than all other trading.
What is the difference between Trading and Investment?
- In trading, shares are bought for short term. Whereas in investment, shares are bought for a long time.
- Knowledge of technical analysis is essential in trading. At the same time, information about fundamental analysis should be obtained in investment.
- The period of trading is up to 1 year. Whereas the investment period is more than 1 year.
- People doing trading are called traders. Where do the people who make investments go to the investors.
- Trading is done to earn short term profits whereas investment is done to earn long term profits.