Stock market is widely used method of investment. It has proven very beneficial for thousands of people and at the same time many people have lost their money in stock market. Many enthusiasts see people getting rich through stock market and they want to experience that. They want to make quick money and in order to do that they go for stock trading instead of making an investment.
Trading basically means the buying and selling of stocks within short period of time. Traders buy stocks at low price and as soon as the price of their stock goes up they sell it. This sounds like a ideal way to earn profit but it is not that simple. If it would have been that easy then everyone would have made become millionaire by now. There are so many things to learn about stock market that as a beginner you should never choose trading before investing and spending time to learn stock market.
Without proper knowledge about the stock market and the stocks that you are going to buy you cannot do trading with profit. It looks very easy and appealing from the outside but once you start doing it yourself you’ll understand how complex everything is.
Ways of Trading: Long-term and Intraday
Reasons to avoid trading before investing
- If you start doing trading before investing in stock market then you are risking your money. The prices of stocks goes up and down every minute and you could end up loosing your money instead of making profit.
- Trading should be done with the profit that you have made from your investments. In this way you’ll not lose your initial amount even if the trading stocks’ prices goes down. For that to happen you have to make investment first and start trading after earning profit from your investments.
- The knowledge about which stocks to buy and which to sell can only come after you understand how the market works. Without understanding of stock market the trading will feel like gambling and trading should not be like that.
- With investing money in stocks the chances of making profit are better than starting with trading.
- The buying and selling stocks within short period of time could result in you missing out on huge profit. Sometimes it happens that you sell your stock as soon as its price goes up and it continues to grow. With this you miss out on a huge profit which you’d have made if you have invested for long time.
Due to these reasons its always better to invest first and trade later. No doubt, trading right stocks at right time can give huge benefits but there is also risk involved with that. Always trade with the profited amount. This will help you to minimize the loss and increase the profit. Hope this was helpful to you. Good luck with your investments.