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There are two ways you can get involved in stocks and that is by investing and trading. People often confuse both as the same thing but they are very different from one another. When you invest in stocks you either Buy or Sell a certain company stock that you think will rise or fall in the long run. You will be holding the stock for quite some time. Usually an investor holds the stock for at least a month to years. Because of this, it is important for the investor to know the real situation of the company and this is done by analyzing the news, company’s financial statements and even rumors/gossips (about the company to the CEO). This type of analysis requires time, skill and experience. The investor must have a knowledge accounting to understand the financial situation of the company. He also must have knowledge in economics to know the external factors that is affecting the overall stock market. On a brighter note, one does not need to have all these skills to be an investor because there are a lot of financial companies that do analysis on these companies and is done by professionals. Usually, a subscription fee is needed to obtain these information and is done by banks like Nomura, Golden Sachs, Citi Bank, etc. Stock brokers most of the time also give their analysis for free but you must have an account with them. Investing is a great way to keep your extra capital and wait for it to hopefully appreciate. It may sound like a complicated and slow way to grow your money but its actually one of the best ways to appreciate your capital.
Meanwhile, trading stocks is a very different thing. When you trade stocks you either Buy or Sell a certain company stock for less than an hour. You will open and close positions at a very fast rate and at multiple positions. This is a very quick way to earn money but at the same time it is dangerous if you do not know what you are doing. Unlike investing, trading does not require a deep understanding in economics and accounting because you are only holding the stock for less than an hour. What is important is to have knowledge in technical analysis. In this type of analysis, you must understand the chart movement and somehow predict where the price is going. There are tools that can help in technical analysis and that are indicators. Indicators help and guide traders which direction the stock price will go. It may sound inviting to be a stock trader because of its quick monetary reward but this type of trading is not for the weak heart. Prices move per millisecond and the trader must make quick decision and have good reflexes. Traders often experience accelerated heart rate because of this. It is a stressful may to grow your money if you do not enjoy quick and sudden movements. Despite that, trading is still a great way to earn money at a very fast rate as long as your heart can take it.
Investing and trading are both ways to get involved in the stock market and they both have their pros and cons. You would only know what is right for you if try both. There are a lot of brokers that will let you open an account with minimal capital. So, instead of parking your money in the bank try the stock market to grow your wealth.
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