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Stock Trading: Understand the Definition and Risks

JENTIKA.IDStock Trading has become a familiar term lately. Not only is it becoming a word that is increasingly popular, more and more people are inviting their friends and relatives to join in stock trading.

Even so, not many people understand what stock trading actually means and what risks can arise from this activity. Shares are a financial market instrument, while trading is a short-term transaction process on the financial market.

In this way, stock trading is a short-term stock buying and selling activity with the aim of getting maximum profits. Not only experienced investors, even beginners can trade shares.

For those of you who are just starting to invest, now investing is easier with OCTO Mobile from CIMB Niaga. The product choices are complete, ranging from mutual funds, bonds, to foreign exchange. Come on, #GetWealthSoon !

Things to Consider in Stock Trading

However, before starting stock trading, what is important to learn when trading stocks is technical analysis. For beginners who want to trade shares, there are also various applications that can be used.

Technical analysis is one of the analysis techniques used to observe patterns such as market data, stock prices and stock transaction volumes. This technique is used to analyze prices based on past data, where the data will be used by analysts to see a trend or price pattern that occurs. This technical analysis is usually used for short-term stock investment or trading.

Before you start trading stocks, there are a few things you need to pay attention to. First, you need to know what your risk profile is. This is to find out how much tolerance you have for possible risks.

Apart from that, you also have to look at the stock trading period. This is a consideration in determining which shares to buy. Next, determine securities, considering that for every action of buying and selling shares, you will be charged broker fees.

Even though it can provide maximum profits, this stock trading activity is not free from risks. Remember, with the high profits obtained, the risks involved in trading these shares are also high.

This high risk is caused by traders who usually choose class three shares or shares that have just been listed on the stock exchange. These shares are chosen because their prices tend to be cheaper than blue chip shares, but have the potential to experience high fluctuations. However, this high price will also depend on market sentiment. So, what is the difference between investing and stock trading? 

Differences Between Investing and Stock Trading

Although they look the same, stock trading and stock investment are different investment instruments. If stock trading is the activity of buying and selling shares in the short term with the aim of getting maximum profit, stock investment is the activity of investing capital in companies listed on the Indonesia Stock Exchange and the shares are traded. 

If in stock trading you are more active because you analyze the market and decide the best time and price for stock transactions. In stock investment, you are more passive because you only invest where you do not run the business directly but invest funds, and the company concerned manages it.

Not only that, there are various other things that differentiate stock trading and stock investment. Starting from the principle, where stock investors tend to have the principle of buy and hold. This is because the purpose of investing in stocks is for the long term. Meanwhile, stock traders have the principle of buy and sell, because the stocks are bought at a certain time and sold in the short term.

Stock traders tend to use technical analysis, because it is based on historical prices on the stock market. This is different from stock investors who tend to use fundamental analysis. Fundamental analysis II is based on company conditions, the economy and related industries. With this analysis, investors know which company shares to buy. This fundamental analysis is used for long-term investment or trading.

The risk level of stock trading and investment is quite different. The risk of stock trading is higher than stock investment considering that stock investors are more selective in investing their capital in a company. Usually, they also choose to invest in companies that are already blue chips, where these companies have good fundamentals.

Considering Mutual Funds As An Investment Option

Stock trading and stock investment may often confuse many people, because they do not understand the terms used in it. Even so, there are still various investment instruments that can be chosen, one of which is mutual funds.

The Indonesian Stock Exchange explains that mutual funds are an investment alternative for the investing community, especially small investors and investors who do not have much time and expertise to calculate the risks of their investments.

This mutual fund is a forum for collecting funds from people who have capital and have the desire to invest, but have limited time and knowledge. With this investment alternative, it is hoped that the role of local players in investing in the Indonesian capital market will increase.

Because it targets small investors, one of the advantages of investing in mutual funds is that the funds invested can be started with a nominal amount that is not too large. This can also reduce the risks involved when investing in mutual funds.

With mutual funds, this investment allocation can be diversified, where it can be directed to various instruments in the capital market or money market, such as deposits, stocks to bonds . Other advantages make it easier for investors to invest and provide time efficiency. 

The reason is, investments in mutual funds are managed by professional investment managers. That way, investors don't have to always monitor the performance of their investments. This will make it very easy for investors who don't know portfolio techniques.

To start investing in mutual funds at CIMB Niaga, you can start via OCTO Mobile and OCTO Clicks. You don't need a lot of funds, you can buy mutual funds starting from IDR 100,000.

Meanwhile, the way to buy mutual funds through OCTO Mobile is very easy, namely:

  1. Log in to OCTO Mobile then in the register and investment section, select buy mutual funds.
  2. Select the investment category to be purchased.
  3. Select the investment product you want to buy.
  4. Enter the nominal amount to be invested, then agree to the terms and conditions.

To date, PT Bank CIMB Niaga, as a mutual fund sales agent, has distributed 69 mutual fund products. The types of mutual funds distributed range from money market mutual funds, fixed income mutual funds, protected mutual funds, mixed mutual funds, index mutual funds (RDI) to stock mutual funds.

CIMB Niaga ensures that all mutual funds marketed by CIMB Niaga are managed by Investment Managers who have obtained Investment Manager Representative (WMI) permits from the Financial Services Authority. Your investment will be allocated properly by a Professional Investment Manager in accordance with the prospectus and your investment objectives in order to achieve the targeted return (investment results).

Information related to your mutual funds is also transparent, considering that the prospectus regarding investment policies and general information regarding products, financial reports and portfolio reports via the Fun Fact Sheet are provided periodically. Not only that, liquidity is also high and access to investment is easy.

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