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New crypto investors often get confused about whether they should hold or sell their coins once their price increases. It is clear that there are multiple ways to approach the bitcoin or crypto market. Investors can either choose to trade their bitcoins or buy and hold their crypto coins for the long term. If you want to become a top bitcoin trader, there is no better platform than Official App for you.
Both trading and investing in cryptocurrencies are a great way to increase your wealth, but both types have different goals that are accomplished in different ways. However, both increase the investment value, but which method or strategy is right for you? The key is to know the difference between buying, holding, and trading cryptocurrencies.
What do Buying and HODLing means?
Buying and HODLing means investing in crypto coins and holding on for dear life. In early forums of bitcoin, an investor misspelled the word “hold” as “hodl,” and the readers defined it as “‘hold on for dear life.” Holding means holding a crypto investment for the long term, and in this, the investor doesn’t get affected by price volatility that occurs in daily life.
What is the difference between traders and investors?
The main goal of both traders and investors is to make money but in different ways. In general, traders are the ones who take advantage of small fluctuations or price movement in the market to earn money. Traders need to have the proper skill set of analyzing the crypto market to profit from it. They need to study the market, learn technical analysis, know the news, and follow the market. Traders have to enter and exit the positions in the market over a short period to make smaller yet frequent profits.
Moving on to investors, investors can also be called HOLDers who invest in crypto coins for the long term. HODLers invest their money for the long term and seek huge profits by holding them. Price volatility and liquidity don’t matter much to investors because they see and expect the profit in the long term and don’t get affected by short-term ups and downs in the crypto market.
So what do you think is investing better or trading?
The bitter truth is that around 92% of the traders lose their money. Though there are multiple trading strategies, and if implemented properly, you can make a profit. However, still, it is a fact that traders lose money because even after gaining proper knowledge of the market, you can lose your money. The crypto market is extremely volatile, and this creates an issue. Many newbies enter into trading thinking that it is as simple as buying crypto coins at low and selling them at high. But it is much more than that. It is also said that automated trading entities, robots, and bots control the crypto market.
A survey depicts that around 8-% of transaction volumes on trading platforms or exchanges consist of bots. This means that bots will get either the lowest or highest bid with prices in the crypto market. On the other hand, long-term investors are those who operate on a long-term horizon. Though buying and holding cryptocurrencies is underpriced and is not preferred by most traders, holding cryptocurrencies will indeed be extremely profitable. This is because cryptocurrencies are the future.
Trading Bitcoin is a zero-sum game.
If you are investing in cryptocurrencies with the expectation that you will earn good profits in the short term, you are speculating. Speculative trading is a game, and to win, others have to lose. The most important thing is that trading is only effective and profitable in the short term, and it doesn’t add any value to society. If you want to add on to your wealth, hold cryptocurrencies, and succeed in the game.
The difference between trading and investing can be understood as getting rich quickly and getting rich slowly. Trading will make you rich quickly, but it is not possible every time, whereas investing will make you rich slowly but can help you become a millionaire. However, if you choose to trade bitcoin or other cryptocurrencies, never rely on the hype or advice of others, and make sure to keep your eyeballs focused on financial services, newsletters, and other updates about the crypto world.
Reviewed and edited by Albert Fang.
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Article Title: Is Investing or Trading the Best Investment Strategy?
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