What is the difference between investing and trading
We start all this on the basis of a tremendous analysis done on 21 years of real market data. Friends, whether we are investing or trading, profit is made when we provide shares at low price and sell them at high price.
Psychology While in investing, investment is made to make profit in the long term along with the business growth of the company, whereas in trading, an attempt is made to make profit in the short term only from the price moment of the company.
Now it is not the case that either one of the two One method is right and the other method is wrong and the risk return and chances of making profit of both are very different. Talking about investors, a big profit in the stock market is made when we invest in good companies for the long term because of consistent growth.
Due to this, a company can become very big in the long term due to which its share price can increase by 100 times or even a thousand times. On the other hand, traders believe that
This is the best way to make profit in the stock market
We should buy shares of those companies, their share prices are already going up and when their share prices go up a little more, we should seal it and make profit and if we do this again and again, we will make good profit in a year.
So far, both these studies, whether in investing or trading, seem absolutely logical to us, so now let us know about the research done on 21 years of market data and let us see what information we get from there. So friends, this research was done in America and market data was taken from January 1, 1996 to December 31, 2016.
In this analysis, it was believed that on January 1, 1996, both a trend and an investor came into the stock market with one lakh dollars. It is believed that he invested his entire $100000 in the index fund on 1st January 1996 and then he saw his investment back after 21 years on 31st December 2016.
The same trend also took place in the market with that dollar on 1st January 1996 and He also bought and sold index funds but it was believed that he traded at very low prices every time.
And sells it at a very high price. for 21 years continuously the index has been kept at a high level and then it is sold immediately and then the time has come for the results and the returns of both the trend and investor for 21 years on the basis of real market data.
If seen, the investor had made a compound return of 8.12% in these 21 years, it became Rs 515000 in 21 years, and in 21 years, about 5292 trading days were sent, that is, in 21 years the market was open for 5292 days and there was trading in the market for so many days.
You absolutely understand that it is impossible to be 90% right in trading. The world's best traders are also 50% right in their trades, but in this research it was believed that if the trade is best in 99.91% of the days and only Misses 0.09% days.
If the trade misses only five best trading countries out of 5292 days then his component return for 21 years will be only 6% and his one lakh dollars will become 340000 friends in 21 years.
You must understand the thing carefully
the trend has got a return of 6% when it has missed only 5 best days in 21 years, but we and you understand that in the real world the trade will miss many more best days.
If he misses only 30 vestiges out of 5292 days in the trade, then he will not make any profit. If he misses only 30 best days in 21 years, the overall return of the trade will be - 0.51% and his $100000 in 21 years will be only $90000.
friends, there is a trend here which I have been continuously watching charts for 21 years, watching volumes, doing all kinds of analysis and trying to hyper sell by riding on the index. Even after doing only 5 best businesses, he is not considered an investor. Couldn't beat the one who probably invested in the index by spending only 1 minute and didn't even look at his investment for 21 years. So friends, this analysis of data teaches us that it is very, very difficult to make profit in trading, it is not so.
Making profit in trading is impossible but when the work can be done easily then why make it difficult for yourself. It is said about trading that trading is the most difficult way to make easy money, so friends, I have full hope that now you You must have understood well that we should trade in the stock market.
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