What is Stock Trading and How is it Different From Investing? | There is so-called investment in stocks as well as trade. Both of these things can now be done anywhere. But what’s the difference between investing and trading stocks?
Stocks have recently become popular in Indonesia, with many people investing in stocks to gain financial prosperity in the future. However, the exploitation of stocks in Indonesia is now done through investment and trade.
Before you begin to understand stock trading, you need to know what stocks are.
Shares are instruments of the financial market in the form of a sign of the capital participation of a person or business entity in a company or limited liability company.
So what’s the difference between investing in stocks and trading stocks? Is stock trading also safe for beginners? Come see the stock trading explanation below!
What is Stock Trading? Understanding Stock Trading
In general, stock trading is a transaction to buy and sell stocks as a product of the highest capital market in the short term. Here you can see the short term based on the daily stock price.
Stock trading is also usually chosen by people to get fairly large returns in a relatively short time.
People who trade stocks are also called traders, and they are different from investors as traders will be more active in analyzing stock price fluctuations on a daily basis, and hence traders will choose the best stock prices. This is to enable you to get the maximum capital gain during the subsequent sale.
What is the difference between investing in stocks and trading stocks?
Investing in stocks is a way to set aside most of your capital in the financial market to obtain the equity participation of a person or business entity in a company or limited liability company for a specified or sufficiently long period of time.
The purpose of these shares is usually to find income or profit on long-term investments.
Unlike stock trading, which involves buying stocks for a short-term investment.
Typically, stock investments are also passively managed by those who buy them. For example, you buy shares in PT and leave them. In the meantime, stock trading will do a long analysis at certain times to get the stock’s cumulative price for maximum profit.
Stock investors tend to sell their stocks quickly as well, compared to stock investors who choose to invest on a yearly basis.
Finally, investors who trade stocks will not get the benefits of stock investments such as dividends, premiums, and stock splits.
The risk associated with stock exchange trading
Of course, investing in and trading stocks also comes with risks in its application. If the risk of investing in stocks is loss of capital and liquidity risk.
The risks of trading stocks will be greater than investing in stocks because if investors usually choose stocks that have a good foundation, they will choose those that can experience large fluctuations.
The advantages of trading stocks
There is a risk that there is also a benefit. What are the advantages of trading stocks?
1. Risks can be avoided
Traders usually conduct an analysis of the capital or stock market on a regular basis. So when monitoring, it can see the stock price and buy it immediately if it is appropriate and has a high return.
2. Daily profit
Trading stocks can also generate daily profits. How is it possible? Traders will monitor stocks all the time, so obviously traders already have the right strategy to be able to make high profits.
3. Short-term investment with a rapid return on investment
Unlike long-term stock investing, stock trading will try to sell your stocks quickly. If you buy a stock at a low price and there is an increase at any time, the trader will sell it immediately. So it can get capital quickly.
Stock market recommendations suitable for stock trading
You can check which stocks are eligible for exchange trading on the stock exchange. You can choose stocks of large companies that have stable finances or those characterized by high volatility. What is the stock list?
The last stock that you can trade as stocks is telecom stocks such as PT Telkom Indonesia Tbk (TLKM).
- PT Timah Tbk (TINS)
- PT Aneka Tambang Tbk (ANTM)
- PT Indo Tambangraya Megah Tbk (ITMG)
- PT Bukit Asam Tbk (PTBA)
Many banking stocks are selected for investment or stock trading. Banking actions suitable for trading are:
- PT Bank Central Asia Tbk (BBCA)
- PT Bank Negara Indonesia Tbk (BBNI)
- PT Bank Mandiri Tbk (BMRI)
- PT Bank Rakyat Indonesia (BBRI)
An application for trading stocks
To trade stocks, you need to use the stock app, as it will be much more secure and is overseen by OJK. Citing several sources, here are the stock trading apps you can use.
1. The Bibit
This app is quite popular with investors and stock brokers. The Bibit app is suitable for beginners as the registration fee is also quite cheap and you can use an e-wallet for payment.
The Stockbit app is a Sinarmas securities collaboration app that can be used by stock traders to trade stocks online. For those of you still unfamiliar with stocks, Stockbit also has a stock trading simulation feature that you can take advantage of.
Bareksa is a stock trading app that is ideal for beginners who want to learn about stocks; additionally, this app is registered with OJK and sells Sharia market products.
4. MNC securities
PT MNC Kapital Indonesia Tbk has issued a securities company called MNC Sekuritas, which can be selected to trade in shares. This app also has an order tracking feature, which is useful for selling stocks when prices are falling and buying stocks when prices are rising.
5. Indo Premier Securities
Indo Premier Sekuritas is Indonesia’s first securities company since 1996.
There are various types of stock trading to choose from, such as mutual funds, sharia, and an artificial intelligence (AI) -based securities trading app called Indo Premier Online Trading (IPOT). The sale of shares is subject to a fee of 0.29% and a purchase transaction fee of 0.19%.
6. BNI Sekuritas
PT Bank Negara Indonesia has issued a securities company called BNI Sekuritas. The BNI Sekuritas platform is available in 3 systems: web, mobile, and desktop. Then there are three exchange accounts, namely regular, sharia, and margin.
The minimum purchase of BNI Sekuritas shares is IDR 1 million with a purchase transaction fee of 0.17% and a transaction fee of 0.27%.
7. Poems ID
The last app you can try is Poems ID. This stock exchange app was developed by PT Phillip Sekuritas Indonesia which is part of a Singapore business group called Phillip Capital Group.
If you want to use this stock app, you need to register as a Phillip Sekuritas client. The minimum deposit for opening a stock exchange account in these securities for students is IDR 100,000. Meanwhile, the transaction fee is 0.18% for buying and 0.28% for selling.
Stock Trading Tips:
1. Using a trusted trading app
The first step to trading stocks is to use a trusted trading app that is regulated by the Financial Services Authority (OJK). You can use the trading app recommendations above as an example.
2. Use low capital first
Indeed, stock trading is tempting because you can get the maximum profit, but you also need to be careful about managing it, especially if you are still a beginner in the capital market. So the use of low capital can prevent a large enough loss.
3. Perform the right analysis
Trading these stocks will eat into your time analyzing stock prices. So you need to do a quick and thorough analysis to get a fairly profitable purchase price for the stock.
You can start trading right away by knowing what stock trading is. However, be aware that trading these stocks carries a sufficiently high risk. Better study the entire stock first.