The Difference between Investment and Stock Trading in Indonesia – Viral35.com
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In general, stock trading can be carried out with two orientations, namely investment and trading. Two people can both buy shares of the same company, but unless the orientation is different, then the method of profit taking and the amount of profit derived from the shares may also be different.
To understand more about this topic, you can pay attention to these three (3) differences between investing and trading:
In terms of financial markets, “investment” refers to investing activities together with the object of profit in the long term, up to more than 1-3 years. forward. Meanwhile, “trading” is an activity to get profits in a short time, in less than one year. or even more so in just one day.
Investors are referred to as “investors”, but general traders are called “traders”. If an investor buys shares today, then he may be able to “hold” for too long a period, moreover it could be up to 10 years. forward.
However, if a trader buys stocks today, then he may only be able to “hold” for more than one day or more than one month. If the desired profit objective has been achieved, the trader can also immediately sell his shares again on the same day.
This is the first and foremost difference between investing and trading. Because the time period can have implications for the object of stock trading, the selection of stocks in the portfolio, and many more.
Theoretically, we understand that profits in stock trading can be obtained from dividends and Capital Gains. Dividends can be distributed periodically by the company based on the agreement of the General Meeting of Shareholders (GMS), together with a proportional nominal depending on the share ownership of each investor. On the other hand, Capital Gain is obtained from the difference between the selling price and the buying price of shares.
So, if someone buys shares with an investment object, then the target is dividends and Capital Gains. Before reaching the expected time period, investors can always collect only certain stocks from time to time (saving stocks).
On the other hand, unless buying shares together with trading objects, the target is only Capital Gain, because dividends are usually distributed once or twice a year. A trader can tend to look for fluctuating stocks and eyeing a variety of stocks that are different and change from time to time.
Basis for Stock Selection
Because it targets profits in the long term, stock investors can choose stocks of issuers that are performing well. Issuers with good performance are actually not always included in Blue Chip stocks or included in LQ45. However, it requires a fairly in-depth fundamental analysis.
Meanwhile, traders may not examine fundamental issues too deeply. Instead of examining the issuer’s fundamentals, traders can analyze stock price movements more technically. The goal is to get entry points and objects to make the most of it.
Apart from the three differences between investment and stock trading above, in fact the trades carried out by investors and traders are based on an equal atmosphere. Equivalent conditions are in terms of capital, selection of brokers (securities companies / brokers), style of securities account, fees for buying and selling shares charged, and so on.
There is a mistaken assumption that investing in stocks can require more capital than trading stocks. The reason is, stocks with good performance are definitely priced at high prices. However, that is not certain to be true. This is because the shares of issuers with good performance can be moderately inexpensive due to external circumstances or their superiority has not yet been disclosed to the public.
Take for example the purchase of Bank BCA shares (ticker code BBCA) by the Hartono brothers when the price fell after the 97/98 crisis. Currently, BBCA’s share price is actually expensive and classified as Blue Chip; but in that era, the price was always much cheaper.
According to this example, those of you who want to buy shares with an investment orientation can try to examine issuers on the second line, not just focusing on the LQ45 list. Who knows, there are “hidden gems” that can be explored and can give you multiple benefits in the future.
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