What is trading and investing in stock market?

Trading is constant buying and selling of an instrument with an intent to make profit. One can trade Intraday, Overnight trading or short to medium term trading also. it depends how one views the market and the stock trends. In Intraday trading, there is no delivery of stocks takes place as they are squared off before the end of the trading day and the profit/loss is adjusted from margin money when the settlement is done. Some traders do take delivery for short period and deliver when their target is achieved. Investing is committing money into an instrument for a certain period. Investors take delivery of the stock/shares and hold them for a certain period. Investors generally choose a period where they take advantage of the tax breaks available to them. In case of stocks, to gain long term tax benefit the minimum period of holding one year. anything less than this period is deemed to be short term and taxed accordingly. read less

any stock not held for a year long period is not considered as an investment by the Government and is not excepted for tax deduction. Secondly investment mean you have a proper fundamental reason that a stock is going to give you yearly returns(in dividends or in bonus shares) and you also expect the stock to grow on value against inflation. Hence it becomes an asset for you that you can sell or mortgage it when ever at a later stage( a long period). So investment is like buying a shop in a mall. Your primary aim is to get some return and also you want your property to grow on value so that it becomes an asset and is useful for you to derive money at a later stage by selling or mortgaging the shop. tax exception is mere bonus, not the reason for investment. Trading is like buying perishable goods(vegetables, fruits, fish) from wholesale market and trying to resell it for some profit in a short tenure of time. your reason for purchase of any instrument(stock, bond, currency or commodity) is merely to utilize the short term price fluctuation and cash it on your favor. its also called speculation. Hope you understood it. read less

Basically trading means intraday trading i.e you have purchased one share of reliance @985 and after some time it increased to 1000 during the day. You sold the stock and make a profit of Rs 15 . without taking the delivery. This is called trading. If you take delivery for long time assuming that the stock will increase up to 1200 after 3to 4 months. This activity called as investment. read less

To answer this question briefly, trading and investing are not correlated they are distinguished by the following factors, 1.time span of your position in assets any holding more than 6 months is usually considered to be a classification of investment 2.your methodologies (fundamental/technical) trading is profitable on following technical analysis and investment is great on fundamentals (balance sheet analysis,ROI,P/E calculations,etc..,) 3.based on your returns & risk expectations higher returns in very short period of time can be achieved through trading with your accompanied risk investments on the other hand is subtle yet gives great returns in long-run with calculated amount of risk. 4.your knowledge having great knowledge will pave way for you to choose your path trading/investment can be accomplished successfully with requisite knowledge however staying long-term on markets (in terms of investments) you need to be a savvy when & where to enter & exit the markets. wishes for your trading career, Regards, Smart Investing read less