Trading and investing are two different approaches for generating profits in the stock market. Both participants aim for profits. Where investors look for big returns over a long-term period. They generally buy and hold. On the other hand traders always have a mindset to take advantage of rising and falling markets by taking short-term positions.

Investing

In the simplest term definition of investment is putting money or capital in order to gain profitable returns over a period of time. And the act of putting money or capital in something called investing.

Methods of investing.

There are mainly four types of investing used by all across the world.

Stock market
Bond
Real estate
fixed deposit

The purpose of investing is to take long term positions and hold to gradually build the wealth. The duration of the investment often varies depending upon the nature of the market. The duration can last years and even decades. Whenever the market fluctuates in between, they sit tight without worrying about the market.

Investors are more concerned with market fundamentals and micro economics. They are not obsessed with tracking the performance of their holdings on a daily basis.

Trading

Trading is basically an act of buying and selling of the financial assets more frequently.

Types of trading

Positional trading
Swing trading
Day trading
Scalp trading


They make profit when the price of their position goes right and they lose when the price of their position goes wrong.

Traders seek for returns maximum 10% to 15 % from each position. Sometimes they exit the position at the zero profit and loss as well , depending upon the environment of the Market.
Unlike investors, traders take advantage of reverse Market by selling at higher price and buying at a lower price.

If we talk about stocks Markets in general , according to a data there are more than 1cr active traders in India. There are a lot of tools are available which helps a trader to predict the market to some extent. Such as

Indicators
Price action
Technical analysis
Delivery position data

Which is better ?.

It depends on one’s willingness to take risks, ability to wait patiently, and level of knowledge and experience. investing in the stock market is a good option for someone who wants to start and learn about how companies work while also potentially making money. While trading is suitable for individuals who want to make quick profits by analyzing stocks and taking advantage of small price movements. It involves actively buying and selling stocks within a short period of time to capitalize on short-term fluctuations in the market.

According to recent data published by Nitin Kamath, the owner of India’s top broking company, it shows that 95% of traders are not able to outperform the returns of fixed deposits (FDs). This suggests that the majority of traders struggle to consistently generate higher returns compared to more traditional investment options like FDs.

Investing in the stock market generally carries a lower risk of loss compared to active trading. When you invest, you have the opportunity to earn dividends, which are a portion of a company’s profits distributed to its shareholders. Additionally, investing typically requires less time and effort compared to active trading.