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What is Investing, Trading, and Speculating: Advantages and Disadvantage

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If you're just getting started in the stock market, you should understand the differences between investing, speculating, and trading. All of these strategies entail investing your money in the stock market to make money, but the method and approach are very different. Let's look at each of these in greater detail and see how they differ from the other two.


What is stock market investing?

When we talk about investing in the stock market, we usually mean a long-term process that is done with the goal of building wealth over time rather than producing gains on a daily basis to provide a source of income. When you invest in the stock market, you must commit your cash for a length of time ranging from one year to many decades. The goal is to sell the stocks when they have risen greatly in value and have generated gains well in excess of their purchase price.

Many stock market investors have become well-known, including Warren Buffett, Rakesh Jhunjhunwala, Radhakrishna Damani, Peter Lynch, and others. All of these investors have discovered the proper stocks to add to their portfolio and have held them for numerous years, resulting in significant gains.

The advantages of investing include the ability to take advantage of corporate disbursals such as dividends, rights issues, bonus issues, share splits, and other perks that a trader or speculator would not be able to take advantage of.

However, the downside of investing is that your wealth is likely to decrease during a slowdown or recession, and that investing for the long term does not necessarily guarantee profitability.

For example, supposing the stock markets are down and your portfolio has lost value. Then, until the markets rebound and go back on track, it could not be profitable for you.

What is Stock Trading and How Does It Work?

Trading, as opposed to investing, is a short-term activity in which buying and selling occurs over a period of one to several months. Traders frequently look for asset classes that can produce bigger returns fast and avoid assets such as equities that are underperforming.

The activities of a trader are based on the stock's momentum and sentiment rather than the financials or basic components associated with it. Traders are more concerned with the market dynamics that drive stock prices in a specific direction than investors, who are more concerned with the company's stability and the industry's and economy's future.

Trading, as opposed to investing, takes more time, is more expensive, and demands more attention on a regular basis. In addition, when it comes to trading, profits are earned from a variety of smaller investments, as opposed to long-term investing, where the goal is to earn larger profits from a smaller number of well chosen investments.

Trading has the advantage of allowing a trader to profit from both rising and falling markets by investing in derivative instruments such as futures and options. Trading can also provide a consistent source of income that can be withdrawn on a daily, weekly, or monthly basis. Trading has the disadvantage of excluding traders from long-term gains and corporate actions such as dividend distributions.

What is Stock Speculation and How Does It Work?

Speculating, as opposed to investing, is a wager on the future price movement of stocks. Speculation is often known as 'financial gambling.' A speculator forecasts future events and bets on asset values without intending to purchase these assets, such as stocks. Derivative instruments such as futures and options are used to accomplish this.

For example, if you believe that the year 2020 will be a disaster for a business XYZ and that the release of the company's quarterly reports will further depress stock values, you can bet on selling the firm's shares and then buying them at a lower price at a later date. This is referred to as conjecture.

Also Read:- Best Long-Term Investment Options - Sharetipsinfo

On the other hand, if you believe that a lesser-known firm will deliver great results, resulting in a surge in its stock price, you can buy the stock's futures and sell them at a higher price later.

The drawback of stock speculation is that the risk is generally larger than trading because there is no guarantee or certainty that the anticipated event will occur, and so a speculator could lose the money used to acquire the futures or options.On the other hand, one advantage of speculation is the possibility of large profits, which can aid people in hedging their market positions.

For example, if you bought stock in a company hoping for it to rise in value but are also concerned about a sudden drop in value, you can pay a small premium to buy a put option on the same stock, which will give you the right but not the obligation to sell the stock at a fixed price at a later date. The possible loss in the share trade can be offset by profits in the speculative position in this fashion.



Southwest CEO Gary Kelly tests positive for COVID-19 after Senate hearing: Airline

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Gary Kelly did not wear a mask during the hearing and questioned the health benefit of masks on airplanes.The airline said Gary Kelly, who is fully vaccinated and received a booster,

Southwest Chief Executive Gary Kelly tested positive for COVID-19 after appearing at a U.S. Senate hearing on Wednesday, the airline confirmed on December 17.

Kelly appeared at the Senate Commerce hearing with the CEOs of United Airlines and American Airlines as well as a senior Delta Air Lines executive and the head of a flight attendants union. Kelly drew attention at the hearing for questioning the health benefits of masks on airplanes.

Delta chief of operations John Laughter, United CEO Scott Kirby and American Airlines Doug Parker have all tested negative, the airlines said.

Southwest said that although he tested negative multiple times prior to the hearing, "Kelly tested positive for COVID-19 after returning home, experiencing mild symptoms, and taking a PCR test."

The airline said Kelly, who is fully vaccinated and received a booster, "is doing well and currently resting at home." It added his "symptoms continue to be mild, and each day he is moving closer to a full recovery.

Kelly is set to step down next year as chief executive.

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 the Association of Flight Attendants-CWA, alsotested negative, the union said late Friday. She said in a statement earlier Kelly advised her he tested positive "just as I was returning to work after getting the booster shot. I am following CDC protocols and will test several times within the 5-7 day recommended period, and before traveling with my family for the holidays."

Southwest confirmed Kelly's positive test after Reuters learned of it through other officials. Kelly tested positive on December 16 and told other airlines of the positive test the same day, the officials said.

Kelly did not wear a mask during the hearing and questioned the health benefit of masks on airplanes.

"I think the case is very strong that masks don't add much if anything in the air cabin environment -- it's very safe, very high quality compared to any other indoor setting," Kelly said.

Late on December 17, Southwest released an email Kelly sent to employees that sought to clarify his comments, saying the airline supports the current federal mask mandate at airports and on airplanes: "There is no effort underway to change it before it expires ... 

The majority of our Employees and Customers have felt it has been an important layer of protection, and I certainly agree with that."Earlier this month, the Biden administration extended the federal mandate on masks on airplanes and other transit modes through March 18.

Senate Commerce chair Maria Cantwell said Kelly's COVID-19 diagnosis "underscores the importance of everyone getting vaccinated and following health and safety protocol." Cantwell plans to get a COVID-19 test on Saturday, her office said.

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