Trading or Investment Business?

So, is it More Profitable to trade or Investing? Business development happens so fast. Many new businesses have sprung up that can make money, one of which is the trading business.

The term trading is not a foreign term in business and trade.

The trading business is now busy being discussed. There are many stories from successful people like crazy rich or influencers who have made a lot of money from this business.

Many say, you can make a lot of money in a short time.

This is certainly very tempting and attracts the attention of many people. Similar to stock investment which also promises big profits. Both are new business trends for millennials.

Moreover, the two businesses sound more up-to-date and suitable for young people who are super flexible. He said, the business of trading and investing in stocks can make you rich in a short time!

Unfortunately, many young people lack understanding and are desperate to get into this business. As a result, instead of making a profit, they suffered a lot of losses.

Before you pour your money into a trading business or stock investment, there are some things you need to know.

What is Trading Business?

According to Investopedia, trading is a basic economic concept that involves buying and selling goods and services, with compensation being paid by buyers to sellers. It can also exchange goods and services between parties.

In money markets, trading refers to the buying and selling of securities, including stocks, mutual funds, cryptocurrencies, and more.

Meanwhile, according to Cleartax, trading involves strong participation in the money market compared to ordinary investments.

The success of trading depends on the trader's ability to make a profit over a certain period. A trader is a person involved in buying and selling financial assets in the money market.

A trader can sell assets for himself, on behalf of another person, or behalf of an institution. Traders engage in short-term buying and selling of equities.

A trading business is a business that is run in the money market. This business promises big profits in selling assets.

However, to get the maximum profit you must be able to read market movements well.

Trading VS Investment Business

After knowing the meaning, now is the time to compare the trading vs investment business.

In short, an investment is an asset acquired to generate income at a later date. This income can be obtained from adding value or selling assets.

So, what is the difference between trading and investing? Summarized from Groww, here's an explanation:

1. Business Risk

Trading business has a higher risk than investing.

This is because traders try to profit from market volatility (price levels) in the short term and are very difficult to predict.

Meanwhile, investments are less risky because investors will avoid making decisions during short-term volatility.

The investment approach is to buy assets over the long term. While trading buys assets for the short term.

2. Timeframe

The next difference can be seen in the duration of the business. Trading is done in the short term while investing is done in the long term.

The goal of investing is to grow in value in the future. Meanwhile, trading aims to open up profit opportunities by spending as much as possible.

Investors will maintain their investment assets for years. Meanwhile, traders only maintain their assets for a few minutes to several months.

3. Capital Growth

Investments focus on creating profits in the long term and reducing risk. While trading focuses on making profits in the short term.

Investors aim to get passive income in the form of dividends and bonuses through capital gains.

Meanwhile, traders will continue to develop strategies every day so they can grow the value of their assets.

4. Efforts Involved

Investing involves more effort in analyzing market movements. Once you start investing, the effort required becomes less. Great effort is only put in at the start when selecting the right investment assets.

Meanwhile, trading requires regular and continuous analysis. This is done to read market movements and make profits in a short time.

The analysis is needed every time you buy and sell assets.

5. Style Analysis

Investments are made using fundamental analysis techniques. That is, an analysis is made of profit ratios, cash flows, and prospects.

While trading using technical analysis. This analysis involves charting and past value movements. Decisions are made based on the patterns formed in the charts.