Intraday Trading and Long Term Holding

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Intraday Trading and Long Term Holding
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• You get two options to enter the stock market and
  make money from it. One, you could trade shares
  using the intra-day trading. Two, you can stay
  invested in the share market for a long duration
  to generate high returns.
• Both forms of investments are associated with
  certain pros and cons. You could either hold the
  shares for years or trade and sell them on the
  same day you purchased these shares.
• Lets understand both concepts in detail.
• How Intra-day Trading and Long-term Holding
  Differ?
• Investment in the share market can be defined as
  holding the shares of a company for a long
  period. Usually, people keep these shares for a
  period of 3-5 years (if they opt for long-term
  investments). Intraday trading, on the other
  hand, means you could sell all your shares within
  the same day. This means you dont hold on to
  the shares for days, let alone keeping them for
  years.
• Holding Period
• As mentioned before, investment and long-term
  holdings include the shares that are held for
  many years. The market fluctuations are common in
  the long-term holdings, but that has no impact
  on your investment. Now, you can hold these
  shares for decades. There is no maximum limit.
  Intraday trading hours are different. You are
  supposed to sell all the shares on the same day
  before the closing period. You hold these shares
  for a few hours only.
• Capital Growth
• The trader sells the shares as soon as the stock
  price moves in their desired direction. Lets
  say you purchased 10 shares worth INR 100 from a
  particular company. You sell these shares as
  soon as the price increases to INR 150. That way
  you earn a profit of INR 500 from the sale of 10
  shares. If the price of the stock decreases, you
  could put a stop loss to reduce the amount of
  loss you bear.
• Long-term investments do not involve a quick
  sale. You dont sell your shares if its price
  increases by a small percentage. You rather hold
  on to that for several years. In other words,
  the price fluctuations do not affect your
  long-term investment decisions.

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• Level of Risk
• Intraday trading and long-term investments are
  associated with risk. The risk is higher in
  intra-day trading since the price fluctuates
  quickly. You have only a short amount of time to
  sell the shares. There is high price volatility
  involved in the intra-day trading as compared to
  the long-term holdings. The latter involves risk,
  but thats comparatively lower than intra-day
  trading. Long-term holding gives investors an
  opportunity to grow their money by earning
  dividends and making the best of the price
  appreciation.
• Investors Profile
• Timing is everything in intra-day trading. If you
  fail to track the price of the stock, you will
  lose the deal. Thats because the price of the
  shares of any company fluctuates every minute.
  Basically, you are supposed to keep an eye on the
  stock exchanges 24/7 to ensure that you dont
  miss the right opportunity. Long-term investors
  focus on the credibility of the company. The
  small fluctuations in the price do not make them
  suffer losses. They stay invested for a longer
  duration. They keep the shares for many years.
• Intraday Trading or Long-term Holding - Which is
  better?
• You could earn significant profits from intra-day
  trading, but it involves a high level of risk.
  There is a chance you could end up selling your
  shares at a lower price by the end of the day.
  Long-term investors generate high returns, but
  there is a risk the company might underperform.
  So, both types of investments include risk. The
  best option depends on your risk appetite.