Draw a thick line between "trading" and "investing".
Getting a stock trading account is quite easy these days. There are many #apps that provides a secure trading experince to their user at free of cost. There was a time, when stock trading used to be a monopoly at the hand of the banking and financial institutes. But slowly the technology has made it easily accesible for everyone. But merely getting a stock trading app is not important. A person should understand the basic difference between "Trading and Investing".
Today, I was checking my mail, when I notice some emails from my demat service providor. I am not a frequent trader so generally avoid their email. The email contains some stock recomnedation on the basis of their own research. There are few stock names in the list with their 'current market prices' as well as 'target prices'. The target prices is much more than their CMP. For once I was carried away finding it as an oppurunity to cash on their free stocks recommendation. However, on a closer analysis, it comes out be a stock trading ideas. And this is where a person needs to understand their basic differences between the two.
investing is a long term strategy focused on wealth growth through capital appreciation and compound interest, while trading is a short term approach focused on profiting from quick price fluctuations in financial assets. Investing requires patience and a "time in the market" approach, whereas trading requires active management, technical analysis to predict market timing, and a higher tolerance for risk.
With the growing app based user, there are chances that most of them find the option of free research recomendation very lucrative. Who does not want to see their money grow quickly? But defining a line between #investing and #trading is important. Not all stocks are meant for investing and not all stocks are meant for trading. It is important to differentiate between trading and investing because they serve different financial goals. Trading requires a closer eye on the market event and analysis.
If a person gets carried away with the stock recomendation, and unable to keep a track of those stocks they might end up losing all their money. Stocks are not only about money multiplication. If an investor does not have time for keeping a track of the stocks, they should choose to do investment on strong fundamentally stocks. The message received on mails or WhatsApp can be considered for taking a chance on trading. They have nothing to do with investing.
In good faith - Peace!!
I would not make such a strict separation between those two terms. Even if you keep a stock longer, eventually you want to trade it to e.g. take out some profit or in case of unexpected events. Also investing bears risks, not only trading. You should be careful with both. Every stock can be traded. Some are less, some more volatile.