Are you thinking about getting your feet wet in the cryptocurrency market? If so, your first order of business is to define your goals. You may have heard several stories about people becoming cryptocurrency million years without much effort. Sure, some of these stories are true but do not assume that making money in cryptocurrencies is easy. Before investing your money, you must 1st decide whether you want to trade regularly or hold your investment for the long term.
Long-Term Strategy
If you want to buy coins and then forget about them for at least a few months, then the hodling strategy is your perfect option. It’s like buying stocks and not selling them right away. This is an excellent strategy for beginners mostly because of how simple it is. Imagine those who have invested in Bitcoin when its price was still below $100 and then cashed in when the price hit $19,000. That’s what hodling brings to the table.
This is also ideal if you don’t have enough time to actively trade cryptocurrencies. It doesn’t require you to keep up with the news or learn how to perform a technical analysis. However, you should note that this strategy should only be used if you feel confident that the price of the coin will increase in the future.
Short-Term Strategy
Because of the price fluctuations in the cryptocurrency market, many investors decide to trade more actively. It can be hard to resist buying a particular coin and then selling it to the next day when its price increases by 50% or more. Don’t forget, however, that the price can also go down as much in a short period.
Cryptocurrency trading requires more time and effort on your end. You need to be aware of the latest in the cryptocurrency market and all the regulations implemented by different governments. A single news article can have a huge impact on the price of cryptocurrencies. Thankfully, you can have an easier time trading crypto by using Bitcoin Trader, a trading robot that lets you execute trades automatically.
Before deciding whether this is the right strategy for you, keep in mind that you have quite a bit of studying to do. It is a must to develop your technical analysis skills to make informed trading decisions. You should also make sure that you have the time to trade cryptocurrency regularly. You must be prepared to incur losses as well, as it is virtually impossible to make the right trade each time.
Which One to Choose?
One investment strategy isn’t necessarily better than the other. There are pros and cons to day trading and hodling. It’s all a matter of weighing your preferences and identifying your goals. For a more passive strategy, you should stick to hodling. For a bit more action, then trading proves to be irresistible. Of course, you may also decide to use both at the same time. As a beginner, it’s a good idea to allocate most of your funds to your long-term positions and then uses a small portion for trading daily.
