Many people are confused with what is. trading and what is investing.Investing and. trading are two very different systems of. trying to profit in the monetary markets. The. biggest difference between them is the length. of time you hold onto the assets.. An investor. is more interested in the long-term. appreciation and a trader is more interested in the short-term.
Investing in stock market is like buying an asset and holding it for a long time. Many Investors buy stocks for long run and then sell them off in giant profit. Some big investors such as Warren Buffet have made more money in Long Term Investing. Trading on the other hand it like buy stocks for 2-4 Days. In these unstable markets it’s very difficult to make good profits in intraday trading, some traders planned to buy stocks for short term and then sell them off in profits.
[sws_blockquote_endquote align=”” cite=”” quotestyle=”style02″] It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price. [/sws_blockquote_endquote]Many investors suffer such losses often, hoping that in five or ten years the market will bounce, and they’ll recover their losses and complete an overall increase. Most investors need to remember that investing is not about enduring tempests with your “beloved” company – it’s about making money. Traders are trying to profit on just those short-term price oscillations. The amount of time an active trader holds onto an benefit is very short. If you can catch just two index points on an average day, you can make a relaxed living as a Trader.
The goal of investing is to slowly build prosperity through the buying and holding of stocks, mutual funds, bonds and other investment instruments.Trading includes the more frequent buying and selling of stocks with the goal of producing returns. Trading profits are produced through buying at a lower price and selling at a higher price within a relatively short period of time. Where traders must make profits (or take losses) within a definite period of time, and often use a protective stop loss order to automatically close out losing positions at a predetermined price level.
FOREIGN DIRECT INVESTMENT(FDI):
.Any non-resident investment in an Indian .company is direct foreign investment. .Foreign direct investment is in contrast to .portfolio investment which is a passive .investment in the securities of another country such as stocks and bonds.
.The Indian system of administration and governance is impregnated with flaws .like shortages of power, bureaucratic hassles, political uncertainty, and .infrastructural deficiencies .In spite of all these political shortcomings, India is perceived to be one of the most lucrative grounds for investing, in the eyes of the wealthy European as well as American investors. This is the true reason why the researches made into the sector establishes more and more foreign investors coming to India and investing liberally into the various sectors of the Indian economy.
Various Indian market sectors have experienced a recent progress and boom, owing to the investment made in them as well as due to the relaxation of rules and regulations that had been levied on the foreign direct investment in India, by the Indian government. The Indian law permitted only the non-resident Indians (NRIs) or persons of Indian origin (PIOs) to make foreign direct investment in India. Even these people had been levied with many restrictions. With these restrictions, a host of foreign investors and companies stormed India with their products, services and business ideas along with their money. This money in turn helped the Indian economy to grow in volume as well as statures.
Many major industrialists and business tycoons expanded their businesses to India with the boom of foreign direct investment in India. Japanese and Korean firms and businesses houses have always trusted for foreign direct investment. Many of the Indian sectors have thus benefited and in turn given lucrative returns to the investors as well. This is the reason why most of the investors keep looking towards India as a venue for investment.
FOREIGN INDIRECT INVESTMENT(FII):
If the Indian investing company has foreign investment in it,an Indian company would have indirect foreign investment. Foreign portfolio investment is the entry of funds into a country where foreigners make purchases in the country’s stock and bond markets.
The foreign investment through the investing Indian company would not be considered for calculation of the indirect foreign investment in case of Indian companies which are owned and controlled by resident Indian citizens and/or Indian Companies which are owned and controlled by resident Indian citizens. The indirect foreign investment in only the 100% owned subsidiaries of investing companies, will be limited to the foreign investment in the investing company. This exception is made since the downstream investment of a 100% owned subsidiary of the holding company is akin to investment made by the holding company. This exception is strictly for those cases where the entire capital of the downstream subsidiary is owned by the holding company.
To calculate the foreign indirect investment, we have company X and company Y. The following would be the method of calculation:
(a) Where Company Y has foreign investment less than 50%- Company X would not be taken as having any indirect foreign investment through Company Y.
(b) Where Company Y has foreign investment of say 75% and:
1)invests 26% in Company X, the entire 26% investment by Company Y would be treated as indirect foreign investment in Company X.
2)Invests 80% in Company X, the indirect foreign investment in Company X would be taken as 80%.
3)Where Company X is a wholly owned subsidiary of Company Y then only 75% would be treated as indirect foreign equity and the balance 25% would be treated as resident held equity. The indirect foreign equity in Company X would be computed in the ratio of 75: 25 in the total investment of Company Y in Company X.