You get two options to enter the stock market and make money from it. One, you could trade shares using intra-day trading. Two, you can stay invested in the share market for a long duration to generate high returns.
Intraday Trading and Long Term Holding
You get two options to enter the stock market and make money from it. One, you
could trade shares using the intra-day trading. Two, you can stay invested in the
share market for a long duration to generate high returns.
Both forms of investments are associated with certain pros and cons. You could
either hold the shares for years or trade and sell them on the same day you
purchased these shares.
Let’s understand both concepts in detail.
How Intra-day Trading and Long-term Holding Differ?
Investment in the share market can be defined as holding the shares of a
company for a long period. Usually, people keep these shares for a period of 3-5
years (if they opt for long-term investments). Intraday trading, on the other
hand, means you could sell all your shares within the same day. This means you
don’t hold on to the shares for days, let alone keeping them for years.
· Holding Period
As mentioned before, investment and long-term holdings include the shares that
are held for many years. The market fluctuations are common in the long-term
holdings, but that has no impact on your investment. Now, you can hold these
shares for decades. There is no maximum limit. Intraday trading hours are
different. You are supposed to sell all the shares on the same day before the
closing period. You hold these shares for a few hours only.
· Capital Growth
The trader sells the shares as soon as the stock price moves in their desired
direction. Let’s say you purchased 10 shares worth INR 100 from a particular
company. You sell these shares as soon as the price increases to INR 150. That
way you earn a profit of INR 500 from the sale of 10 shares. If the price of the
stock decreases, you could put a stop loss to reduce the amount of loss you bear.
Long-term investments do not involve a quick sale. You don’t sell your shares if its
price increases by a small percentage. You rather hold on to that for several years.
In other words, the