November 25, 2023

Intraday Stock Trading Vs Stock Investing – Which Is Better?

Intraday stock trading and stock investing are two different ways through which individuals seek profit. Often the words trading and investing are used synonymously. However, these two words represent various aspects of the financial market.

While intraday stock trading aims to generate smaller but more frequent profits, stock investing seeks larger returns over a long time period. In this blog, we will find out which of these two methods is better!

What Is Intraday Trading?

In intraday stock trading, investors square off their positions on the same day. This means that traders carry out more frequent transactions in the form of buying and selling stocks, commodities, currency pairs, and other financial instruments on the same day!

This type of trading is usually done by traders who are well-versed in the stock market. It is also important to note that traders must be more vigilant in intraday markets as they need to continuously monitor the price movements and be good at taking split-second decisions.

Advantages of Intraday Trading

Here are the advantages of intraday trading.

1. No Overnight Risk

In intraday trading, traders close their position before the end of trading hours which means any incident on a local or global scale does not alter or affect the profits that the traders have already booked. This means traders do not have to worry about losing their profits overnight!

2. High Liquidity

One of the most notable advantages of intraday trading is that traders can quickly cash out the trades they make. If you are trading intraday, you can leverage the liquidity angle to place and profit from your trades.

What Is Stock Investing?

Stock investing can either be short-term or long-term. In short-term stock investments, stocks are held for less than a year, while in long-term investments, stocks are held for years together, and wealth is gradually built over this extended duration.

Online investing in stocks is usually the better option for novice investors. Since profits are not accrued in a day, it gives investors more time to analyse their position in the market and then change or modify their strategies.

Before investing in stocks, investors perform extensive research on which stocks would be right for investing in the long run.

To make decisions, investors look at the technical performance of the companies, price and stock performances in the long run. Novice or seasoned, anyone can invest their money.

Advantages of Stock Investing

Here are the advantages of stock investing.

1. Experience Compounding

When you invest in stocks for the long term, the dividend you obtain gets compounded, and you experience the power of compounding, making your investment more lucrative!

2. Lesser Risks

Compared to intraday trading, stock investing poses a lesser risk than intraday trading because, over the long term, any market fluctuations do not have an impact.

Final Words

Both intraday stock trading and stock investing are excellent ways to generate lucrative returns. Both methods entail risks and rewards. If you are a novice investor, experts often recommend you begin with stock investments until you get a hold of the stock market dynamics. If you are looking forward to making quick returns, intraday trading would be the one for you.

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