Crypto trading or investing – the pros and cons

Crypto has gradually found its way onto more and more people’s agendas in the trading and investment worlds. Bitcoin’s volatility makes it a tempting punt for those who enjoy day trading on the Forex markets, while we’ve all seen the tales of the Bitcoin billionaires who bought at the right moment and adopted a HODLing strategy.

Those who are new to crypto generally throw in their lot with either the trading or the HODLing camp. There’s no right or wrong strategy here, and both approaches can yield impressive returns. However, at the same time, there are also risks associated with each.

Trading

Crypto is most famous for one thing – volatility. A two percent gain in Forex or share dealing is something that is typically going to be headline news. In crypto, it is part of everyday life. On the face of it, trading is the obvious way to go, and if you buy and sell at the right time, you’ll make more money trading than you will HODLing.

Of course, there was a word in that last sentence that is much bigger than its two letters suggest: If. The crypto market is incredibly nuanced, and is influenced by even more factors that Forex. To put it bluntly, the majority of people who install a trading app on their phone are simply not good enough traders to realize the profit potential of crypto trading.

A couple of years ago, then, the advice would have been to study like mad, take some courses and learn everything about every indicator before you start. But now in 2020, there are platforms like cryptosengine that can do all that for you. These platforms offer automated trading, meaning a bot does all the analysis and even does the buying and selling for you. If you are dipping a toe into the waters of crypto trading for the first time, using a platform with this kind of functionality is vital.

HODLing

We’ve all read the stories of people like the Winklevoss twins, who made their billions by buying at the right time and HODLing. But has that bird now flown for the rest of us? Bitcoin’s overall trajectory is a positive one, and if you hang on through tough times, you’ll come out on top. However, there’s that terrible word if again.

HODLers have a tendency to buy when prices are high, as this is when Bitcoin hits the headlines. If things go south, it takes resolve to hang on – this is where the acronym hold on for dear life really takes effect. The other danger is that having ridden the dip and successfully HODLed to the top, investors find it hard to let go, and just keep HODLing into another dip rather than taking the profits.

A blended approach

When you start to truly understand what makes the crypto market tick, it becomes evident that “buy or HODL” is the wrong question to be asking. To get the most out of crypto, what it comes down to is refining a blended strategy that incorporates both long term HODL and short term trading.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.