Differences between Investing and Trading

What is Trading ?

Trading is an activity that takes place in the financial markets that aims to conduct buying and selling activities in a short period of time and to achieve maximum profit.

Traders benefit from compensation paid from the seller to the buyer.

Trading itself can be done from the same region or region to foreign or international.

Trading is quite influential because it can be done internationally.

Because trading is in the international trading market, trading offers very fierce competition.

Thus, the price offered on trading is competitive.

Although the prices offered are very competitive, trading still has its fans.

This is because trading has a lucrative advantage.

In addition to having benefits, trading also has drawbacks that can have a fatal impact.

Let’s find out the advantages and disadvantages of trading.

Trading Advantages

Here are the benefits/advantages of trading:

1. Guidance For Beginners

The first time you try to dive into the world of trading, you can try an account that provides demos or guidance.

The demo account can provide information and guidance in the form of trading strategies.

So that for those of you who are still in the category of beginners can get access to this learning.

2. Data Security

Choose a trustworthy online broker when you start trading.

You as a beginner don’t have to worry about the security of your data.

3. Affordable Price

When you know that the prices in the world of trading are very competitive, it does not mean that the price of trading is expensive.

You can find some online brokers that do not provide the requirement to pay in advance at the time of account creation.

In addition, online brokers only charge commission fees and cheap spreads.

4. Practical

The presence of technology that helps in the world of trading, makes you easier to access trading.

Trading access is very practical because trading brokers can be accessed online using the internet.

Then, you can access your trades anywhere, anytime.

5. Easy Features

Price fluctuations and trading price determination can be easily accessed automatically.

This can be done because of the technology that can help you trade automatically. The technology is a feature that facilitates the trading process.

6. Flexible

Because of the trading access made online, then you can use it whenever you want.

Trading doesn’t take up much of your time, so it can be your part-time job.

In addition, trading can also be used in between free time.

After reading about the benefits/benefits you can get, we will talk about several types of trading.

What are the types?

Let’s take a look below.

Multiple Trading Types

Here are some types of trading you need to know:

1. Stock Trading

Stock trading is a stock trading activity with a very fast period of time.

The main activity is that you can sell or buy stocks when there are fluctuations in the stock price.

When the stock price soars, then that’s your chance to make a profit.

So, it all goes back to your decision to look at the market and how the strategy you’re using.

2. Forex Trading

Forex trading is a trading activity that sells and buys foreign exchange rates.

To do so, you can access it online or directly at the money changer.

The profit generated from this trade is also quite large.

However, in addition to seeing the benefits, we must also look at the risks so as not to lose money.

3. Bitcoin Trading

Bitcoin trading is trading crypto currency aka digital currency.

This trade is relatively new in Indonesia today.

Even if you trade as a digital currency, you don’t have to worry because the payment can use rupiah or dollars.

4. Trade Gold

It is a gold trade conducted online or in person.

Trading gold is also not much different from trading stocks, Forex and Bitcoin.

The difference from the trade is only in the object of trade, namely gold.

This gold trade fluctuations depending on the economic condition of the United States and its dollar currency.

5. Binary Trading

When trading Binary, there are often scams so you need to be careful.

Binary trading is usually a trade whose object is a horse racing transaction or a ball game.

This trade is done by setting targets and risking money.

The profit earned will be very large if the target is reached, but you can also accept the loss if the target misses.

Trading Weaknesses

To reduce the risk of trading weaknesses, you need to see the explanation below, namely:

1. Choosing the Wrong Broker

The number of brokers now reaches hundreds and up to thousands.

The selection of this broker is done online so that you can be deceived or less understanding of the broker you choose.

To overcome and also reduce these risks, you need to review and search for information, or even research first so that you really understand the broker you choose.

In addition, you also need to do research to choose a broker that really fits your criteria.

Because after understanding the broker you are reviewing it is also possible that you find another broker that you think is better.

2. Raise a Large Deposit

Although in the world of investment trading can be started from the smallest amount of funds and can be accessed without using a large access fee, there are still brokers that have a high price.

There is a trading broker that requires you to deposit a very large amount.

This can indeed make you earn a high profit.

But this is also what can lead you to high losses as well.

This possibility can not be underestimated, because the risk is great.

Also keep in mind that in this activity there is no institution that can provide you with a backlog.

That’s the downside of trading.

Don’t let you choose the wrong broker, yes.

You can visit the websites for research on the world of trading.

Know in advance the advantages and disadvantages of each broker so that you avoid large losses.

Definition of Investment

Investment is an investment with the aim of gaining profit in the future.

According to OJK (Otoritas Jasa Keuangan), investment is a long-term investment for the procurement of complete assets or with the purchase of shares and securities to obtain profit.

Investments can be made by individuals and through a business entity or a company.

In addition to stocks, investments can also be made in sukuk, deposits, mutual funds, insurance, savings, bonds, even land, and buildings.

Before you start investing, we first review the types of investments.

Types – Types of Investments

Here are the types of investments you need to understand:

1. Short Term Investment

This type of short-term investment is also referred to as a temporary investment.

This short-term investment, as its name suggests, has a period of time that can show its results or profits after three months to twelve months or a year.

Usually this type of investment is used to secure funds or capital while waiting for opportunities from other investments whose profits are relatively more optimal or higher.

This short-term investment has two characteristics that can categorize why it is classified as a short-term investment.

First, the investment must be of high quality.

Second, investment instruments must have strong liquidity and can be sold again.

However, this type of short-term investment has a drawback, namely on a relatively smaller or lower amount of profit or return.

An example of this short-term investment is a mutual fund investment that is quite popular today.

2. Long-Term Investment

This type of long-term investment is in accordance with its name, which takes a long time to generate a return or profit.

Although it takes a long time, this long-term investment is relatively yielding a large return or profit.

This long-term investment takes years to decades.

There are also many investors who only buy investments but do not sell them anymore.

Although with a long period of time and can also bring about a more optimal profit or return, long-term investments also have their own risks, namely you need to have a large amount of capital.

In addition, you also need to do an in-depth analysis before you decide to invest with this type of long-term, because usually in the first years you can lose money.

As for the example of this long-distance investment, one of them is a very popular stock until now.

Popular Investment Instruments

1. Peer to Peer Lending

Peer to peer lending investment is a type of investment instrument that is being hit in Indonesia today.

Although relatively new in Indonesia, peer to peer lending already has legal clarity and has ease in the process.

So the popularity of peer to peer investment continues to soar.

The popularity of peer to peer investment can give rise to fintech lending companies that are currently rampant.

Because of this, the amount of money that revolves around this investment continues to grow.

How technical is it?

The technicality of this investment is that you lend money to the needy and the profit is taken from the previously agreed interest.

This loan can be done individually or through corporate institutions.

You can start investing peer to peer with capital starting from Rp100,000 only, then the profit offered by most institutions is interest up to 18% per year.

2. Mutual Funds

Mutual funds are a collection of several investors who are in the same container or one container.

This group of investors will be used as one to invest in the capital market.

Mutual funds are also included in investments that are popular in Indonesia and most are novice investors.

The capital you need to invest in mutual funds is also small, some are only Rp10,000.

In mutual funds are also further divided into five types, namely money market mutual funds, fixed income mutual funds, stock mutual funds, mixed mutual funds, and indices.

3. Stocks

Shares are a proof of ownership of a company that issued them.

The more shares you have, the more percentage of your ownership of a company you buy shares in.

The return or profit from the shares is derived from the company’s dividend or the profit that has been obtained by the company.

But please also note that not all companies distribute their dividends to investors, but also for the development of their companies.

4. Property

Property investment is the investment with the least risk of fluctuations and risks.

The technicality of property investment is to buy land, build a property on it, as well as resell it with a higher value than its capital.

This investment has little risk but requires maintenance costs to prevent damage.

Property investment is included in long-term investments that will get a high return or profit.

5. Gold and Jewelry

Gold and jewelry investments are investments that have relatively increasing profits.

However, between gold bars and gold jewelry you better choose gold bars if you want to be used for investment.

Nowadays there are many institutions that serve gold bullion investments that can be purchased from 0.5 grams only and easier.

You can buy it through the app or at pawnshop.

6. Deposits

This includes investments similar to savings accounts, but deposits have a higher interest rate than savings in the bank.

Deposits also have a maturity time while ordinary savings do not.

In addition, money already invested in deposits cannot be taken freely such as savings before maturity time.

Those are the types of investment instruments that are popular in Indonesia.

After reviewing it are you already interested in investing?

Or are you more confident with trading?

How to Trade And Invest Successfully

Let’s first learn the techniques that you can use to become a successful person in the world of trading or investing.

There are two types of analysis that are often used, namely technical analysis and fundamental analysis.

Technical Analysis

Is an analysis that focuses on the history of price development.

This analysis pays more attention to the pattern of increase and also the price decrease that has been experienced by a company.

The visualization of this analysis is based on the pattern of price changes, namely with charts or charts.

So the person doing the analysis should understand the movement of the price chart.

This analysis is suitable for analyzing short-term investments.

What are the steps that can be done?

  1. EPS / Earnings Per Share
  2. P/E Ratio (Price / Earnings)
  3. PEG / Projected Earnings Growth
    Dividend Yield
  4. P/S Ratio (Price / Sales)
  5. ROE / Return On Equity

Fundamental Analysis

Fundamental analysis is an analysis that focuses more on a company’s performance.

The things considered in this analysis are everything that can drive the stock price, such as financial performance, industrial potential, level of business competition, market analysis and macroeconomics and microeconomy.

This analysis is suitable for analyzing investments in the long term.

The steps in analyzing these fundamentals are:

  • Relative Strength Index
  • MACD / Moving Average
  • Convergence or Divergence
  • Crossover
  • Divergence
  • Oscillator
  • Bollinger Band

So, Are You Interested in Choosing Trading or Investing?
After knowing about trading and investing, types, benefits or advantages, risks or disadvantages, to the analysis techniques, have you decided to take a trade or investment?

You can take into account the return or profit. and any risk so that you will not get caught in losses.

Hope this article is useful.


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