What is trading and investing in stock market?

any stock not held for a year long period is not considered as an investment by the Government and is not excepted for tax deduction. Secondly investment mean you have a proper fundamental reason that a stock is going to give you yearly returns(in dividends or in bonus shares) and you also expect the stock to grow on value against inflation. Hence it becomes an asset for you that you can sell or mortgage it when ever at a later stage( a long period). So investment is like buying a shop in a mall. Your primary aim is to get some return and also you want your property to grow on value so that it becomes an asset and is useful for you to derive money at a later stage by selling or mortgaging the shop. tax exception is mere bonus, not the reason for investment. Trading is like buying perishable goods(vegetables, fruits, fish) from wholesale market and trying to resell it for some profit in a short tenure of time. your reason for purchase of any instrument(stock, bond, currency or commodity) is merely to utilize the short term price fluctuation and cash it on your favor. its also called speculation. Hope you understood it. read less

Trading is constant buying and selling of an instrument with an intent to make profit. One can trade Intraday, Overnight trading or short to medium term trading also. it depends how one views the market and the stock trends. In Intraday trading, there is no delivery of stocks takes place as they are squared off before the end of the trading day and the profit/loss is adjusted from margin money when the settlement is done. Some traders do take delivery for short period and deliver when their target is achieved. Investing is committing money into an instrument for a certain period. Investors take delivery of the stock/shares and hold them for a certain period. Investors generally choose a period where they take advantage of the tax breaks available to them. In case of stocks, to gain long term tax benefit the minimum period of holding one year. anything less than this period is deemed to be short term and taxed accordingly. read less