Trading is relatively easy to understand as compared to a stock market. It is simply buying and selling things. There is always a buyer and seller of the good and both parties assume that they are entering into a deal. As a trader, they try to get profits from buying and selling. The simplest way to think in terms of buying or going long as you would say in trading. You buy a thing at a particular price thinking that it’s the price in the market will increase any time and you can sell that product at that time to earn more profit. Similar thing happens in stock market, buying a share when it’s the price is low and selling it at a higher rate. Investment is a bit similar to trading but there are many differences like
- In investment, you hold the share for a long time like a year, 5 years, or even more, but in trading, you keep the share for a short time like a minute or a week or some months.
- In investment, we generally focus on the shares of best companies to invest because you hold the same share for a long period of time but in trading, people generally buy shares without focusing on the level of the company.
- In investment, you get your profit after a long time and the risk is also low because you have invested in the best companies. But in trading, you just wait to sell your share when it’s the price in the market raises and the risk is higher because the company might not be the best in which you have invested.
- To study the different companies before buying a share in at and investing is known as Fundamental analysis which happens in investment but in trading, investor mostly focuses on the price if the share and not the company which is known as technical analysis.
Types of trading
There are basically four types of trading.
- Scalping trading- In this type of trading, you buy company shares and hold it for some minutes and when it’s value increases in the market, you sell it to earn more profit.
- Intraday trading- In this type of trading, you buy a share and keep it for some hours and sell it when it’svalue increases.
- Swing trading- In this type of trading, people generally hold shares for some days and then sell it when they get more profit.
- Position trading- In this, you buy the share to keep it for some weeks or months and sell it when it’s value increase in the market.
Inall types of trading, people generally focus on the price of the share and invest from stock buying app immediately without verifying the company. There is no such trading market like NYSE: ZTO at https://www.webull.com/quote/nyse-zto, which is a type of stock market. But in both the trading and stock market, the main aim is to make a profit. Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.