Investment and trading are two very different approaches to earn money from stock markets. Both the methods have need completely different prospective and completely different mind sets. Let us understand the difference between both through following table:

I hope this will clear your understanding about investment and trading.

INVESTMENT vs FUTURES TRADING

Majority loses money in stock market, information flood out of internet makes it a generally known truth. But data-based researches help us to convert information into believe, helps improves our perception and sometimes enable us to understand.

Different researches conducted by Brad M. barber, Graduate School of Management University of California, and his colleagues on the data received from Taiwan stock exchange and other sources. They concluded following observations during various researches:

Research published by Calvet, L. E., Campbell, J., & Sodini P. in 2009 in The quarterly journal of Economics states that :

Mr. Kumar, University of Miami, in 2008 published a research conducted on data collected from large brokerage houses says:

Sankar De , Naveen. R. Gondhi and Bhimasankaram Pochiraju in 2010 found that:

Through these researches we can point out some important facts. 

These facts show that majority loses and loses huge amount because of their wrong focus on earning huge money in short time span as they consider trading as lottery, wrong method of cutting profits in place of loses and because of wrong psychological process of remaining influenced from losses and profits of latest trades. We will go in details of these set-backs and will discuss upon removal of these errors and transition to stress free trading in Trading Psychology section.

WHO WINS IN STOCK MARKETS

First let us try to understand what do we see in stock market. For example, you perceive an opportunity in market based on your experience or strategy but you failed to execute it, then what stopped you from entering into a market. In my point of view, it is only possible if either you do not want to earn money or you are unable to act because of fear of failure or fear of loosing money. Through this we can understand that stock market will make you face what is inside of you at that moment. What is inside of you could be a fear of loosing money, greed for opportunity, if you are dying to hit a jackpot you will see an opportunity for it.

In sum total you see what you want to see, stock markets reflect nothing but yourself only. A gambler is always thirsty for jackpot, this thirst is not only for money but it also for a chemical release he got in his mind when he hit the jackpot sometime in his life, now he is just searching the similar experience. And market moves only in two direction either up or down so a gambler mindset also gets a feeling ‘ ohh.. I was very close to win’ which acts as a catalyst for his addiction and brings him again and again in stock markets and eventually he ends up busted. Even if he hits a jackpot sometime but his addiction will keep bringing him again and again in search for same experience and eventually he will end up in loosing money.

On the other hand, a trader mindset is a mindset of a businessman. He is searching for a consistent return. He is not in a search of a single big win, but he is searching for a method through which he can regularly earn money from market. This approach brings him to right method, right focus and right psychological process. Trader approach is well disciplined, he acts with certain rules and regulations and he is not in a market for any enjoyment or addiction. He is here for business so he see and get business in stock markets. 

TRADING vs GAMBLING/LOTTERY

Key to understand future lies in the past. To understand this concept let us draw an analogy between Universe and Mathematics. With time universe is expanding and it began from nothing when energy and mass was single entity, as per big bang theory. Let us consider the beginning of universe as point zero and one side of expansion as positive leading to +infinity and other side of expansion as negative leading to -infinity. Now let us assume mathematical numbers also expanding with time, starting from zero towards +infinity and -infinity.

Universe and numbers both expanding with time.

Now consider every event in universe is unique and represented by each number. As we all know that each number is unique and not repeatable but there are some properties which are repeatable like we can categorize them in odd, even and prime numbers. For even numbers we know that every even no is divisible by 2, for prime nos we know that it is not divisible by any no. Like this we have every no as unique but some properties are rhyming. Similarly, we can understand that every event in this universe is unique and not repeatable but rhyming. So, we can understand that history does not repeat itself but it rhymes itself. Similarly, stock market is always new but we still can find some repeatable properties pertaining to some patterns and can use them to take well informed and mathematically calculated decisions.