Trading in Stock Market

Question:
I've been working on the technical analysis of stock market, on a very personal level for some time now. Alhamdulillah, it’s been going fairly good. There's the ‘investor mindset’ which lets one buy and hold a stock, through thick and thin, because one believes in the growth potential of a company. Then, there is the ‘trader mindset’ (punters included). You buy a stock today, because you believe it will shoot up (for a given reason) by afternoon or in a day or two, at which point, you book profits and run away. I've been mostly involved in the latter kind, knowing well that at the end of the day, it is the investor who gains the most. However, trading allows for constant activity and thus, a feeling of fulfillment and hard work and, not to mention, it drives away boredom and monotony.

My concern, off late, has been the level of its acceptability. I wouldn't want to call it wrong (you may please, if you believe/think so). But it seems like one is put into a wheel of gambling. You buy a stock as soon as it dips, hoping it'll be at strength later in the day, at which point, you sell it immediately. And this process is repeated a million times in a day, by experienced traders. Buying a share of a company makes you a partial owner of the company. On the one hand, if I own something, it is my decision whether or not I want to hold it any further; on the other hand, frequent and frantic buying and selling clearly indicate that I am only around to make quick bucks out of speculation.

Please allow me to reiterate that I do not operate on the basis of insider information and/or simple speculation. I study charts and analyze. At times, the signals tell me to make a few trades within a day. Should I be comfortable with that? What are your thoughts?

Response:
Stock trading in the secondary market is similar, although not identical, to trading of commodities. While trading, you do have the profitability of the business venture foremost in your mind. In an effort to achieve that end, you might move around your products from one place to another, wait for the opportune moment to sell etc. None of these activities would be categorized as immoral, provided nothing done in the process is exploitative etc. There is one exception though: If you keep essential commodities from selling at a time when they are needed desperately by the people, especially the poor, you will be guilty of moral breach.

Trading in stock should be seen in the same light. However, I must say, I too would have the same feelings of slight discomfort as you have expressed, when it comes to the question of frequent buying and selling just to make more money on the speculative understanding of market trends. I would fall short of calling it haram or immoral. However, I think good people should have second thoughts about making it their sole bread earner.

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