Investing vs Trading: What’s the Difference?
Written by Mariyam Sara
3 min read | Updated on October 31, 2025, 16:56 IST
What Is Trading in the Stock Market?
Types of Trading
What Is Investing in the Stock Market?
Types of Investing
Difference Between Trading and Investing
Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.
With the rapid evolution of the stock market, more people aim to earn by participating in the Indian stock market. Thanks to Finance Gurus, young adults are learning about trading and investing to earn returns on the growth of the stock market.
Beginners often wonder whether to trade or invest in the stock market. Here’s a full breakdown between trading and investing, so you can make an informed decision.
What Is Trading in the Stock Market?
Trading involves buying and selling securities like stocks, currencies, and commodities to earn short-term profit by taking advantage of the price movements of securities. Traders monitor the price trends on stock charts of the securities to find their entry and exit points for trades.
Traders exclusively use technical analysis and indicators like Moving Average Convergence Divergence (MACD), trend indicators and volume indicators, etc.
Types of Trading
Here are different types of trading.
Day Trading
In Day Trading, traders enter and exit trades within a day. They monitor stock patterns, price charts, and volume to spot profitable trading opportunities.
Swing Trading
Swing Trading involves holding positions for days or weeks. By tracking the short and medium-term market trends, traders earn profits on the trend direction and price difference.
Momentum Trading
In Momentum Trading, traders aim to earn profits by taking advantage of strong price momentum experienced by certain securities.
Scalping
Scalping is a strategy where small and quick profit is earned on minor price movements by executing multiple trades in a day.
What Is Investing in the Stock Market?
Investing involves buying shares of a company to capitalize on its growth and stock appreciation over a long period of time. Investors aim for long-term wealth creation and capital appreciation.
Investors use fundamentals analysis, where they analyze the financials of a company to estimate its growth potential and to make informed investing decisions. Investing isn’t a quick-get-rich scheme, you need to be patient to earn the benefits of your investments.
Types of Investing
Value Investing
Investors identify and invest in undervalued stocks with the potential to appreciate. You can spot such stocks by focusing on their intrinsic value, and analyzing their financial health, profits, and their standing among peer companies.
Dividend Investing
In Dividend Investing, investors invest in companies that offer regular dividend-paying companies like ITC, Vedanta, and TCS Ltd.
Growth Investing
In Growth Investing, investors focus on companies with high potential to outperform the market in the long term.
Income Investing
Investors aim to generate an additional income stream by investing in securities that regularly pay interest or dividends to their investors.
Index Fund Investing
Investors can invest in an index like Nifty 50, which consists of 50 top-performing companies, inclusive of various sectors. This reduces your risk by diversifying your portfolio and is a passive approach to investing.
Difference Between Trading and Investing
| Feature | Investing | Trading |
|---|---|---|
| Timeframe | Long-term, more than a year. | Short-term, less than a year. |
| Objective | Earn long-term wealth creation & capital appreciation. | Earn short-term profits from price movements. |
| Technique | Fundamental analysis. | Technical analysis. |
| Approach | Research, buy and hold. | Monitor price charts, identify trading opportunities, and book profits. |
| Risk | Investing carries low risk as securities have time to recover from market downfalls. | The high volatility of the market makes trading risky. |
| Example | Buying shares of a company and holding them for more than a year to benefit from its growth. | Buying and selling a stock within a few days to earn profit from a small positive price movement. |
Trading and investing both involve buying and selling of securities, it is the approach and the risk appetite that differentiate them from each other. To decide whether to trade or invest, find out your risk appetite and financial goals.
About Author
Mariyam Sara
Sub-Editor
holds an MBA in Finance and is a true Finance Fanatic. She writes extensively on all things finance whether it’s stock trading, personal finance, or insurance, chances are she’s covered it. When she’s not writing, she’s busy pursuing NISM certifications, experimenting with new baking recipes.
Read more from Upstox