Crypto trading and holding

Of those two, the general wisdom of the internet is that HODL is a better strategy for new traders. There is logic in that statement, but the reality is that both of these strategies can be a little dangerous for new traders if executed improperly. Especially when it comes to the insanely difficult to navigate and volatile cryptocurrency market.

So then is it lose-lose? Not exactly. HODLing with an exit plan, or trading while employing risk management and focusing on learning are both tactics that most seasoned investors and traders would approve of. In short, adding a little strategy into the mix will go a long way.

To make these tactics shine, we need to augment them with a few rules. After we add in those rules, one could argue that they work best when paired together rather than feeling the need to choose one. Further, this is essentially true regardless of your experience level unless you were lucky enough to buy very low. In my opinion, the main reason HODL is good for new investors is that it helps to keep them from panic selling at a low and keeps them from getting itchy fingers and taking profits before a big run.

That part is good, but it can get dangerous when a new investor HODLs into a bear market only to give in to the pressure to sell eventually anyways! You buy the coins, you put them in your wallet, and then you do nothing aside from checking Blockfolio way too often like it is and you just figured out email. In crypto patience often pays off, thus after some sleepless nights, weeks, months, years… one day you check your Blockfolio and you are up and feel like a rockstar.

You did very little thus had little chance to muck things up , you got a very big reward, congratulations. The point here is, in almost every respect, HODL makes life simple and prevents you from getting in your own way. New investors tend to get into crypto when prices are high, as the excitement of a bull market draws them in. If one buys the top, they have a long hard road of HODL ahead of them. That is psychologically difficult, especially for someone without experience.

When it comes time to take profits, a HODLer has no experience in such things. How to HODL the right way: To HODL the right way, average into a position over time days, or weeks, or months, or even years especially when prices are low compared to recent highs and lows.

This helps you prevent mistiming the market. Then, when you see some really great profits, consider taking some [not all] money off the table to average back in with later. We want to HODL the coins we bought low through a stagnant or bull market, we likely want to average out and take profits before or once long-term market trends turn bearish so we can average back in lower.

There are lots of opportunities to see big gains and losses in crypto. Essentially the crypto market is full of traps and pitfalls for traders. On a good day, a trader takes profit high or trades out of a coin and avoids going down with the ship. Lastly, another pitfall is that a trader is conditioned to trade, and thus they may miss out on easy money in a very bullish market due to being conditioned not to HODL.

That said, there are different styles of trading , and not every trader has to be a day trader! NOTE: Those who trade too frequently, and without experience, are taking a giant risk one or two trades a week is a good pace for a new trader; in other words, try to swing trade and not day trade as a new trader. You have to tally up profits and losses on every trade an absolute nightmare in terms of reporting. Not only is reporting a headache, the taxes themselves also eat into profits.

Trading leverages the short-term volatility of crypto-asset price changes for profit. Typical trading time frames range from minutes to days. Although the rewards are faster, trading crypto requires a lot of effort. For those that have put in the work and perhaps have a bit of luck , cryptocurrency trading can be very profitable due to the high volatility of the cryptocurrency market.

Here are the main trading strategies in cryptocurrency markets: Day Trading : Day traders conclude trades within a day and rarely hold overnight positions. They constantly monitor the market to take advantage of intraday price movement.

The time duration for each trade ranges from minutes to hours. Scalping : Scalping involves buying and selling coins on minimal price movements. Scalpers are the most active traders and execute several trades to make a small profit from each transaction, which could add up substantially at the end of the day. Scalping trades are short-lasting minutes or even seconds. Scalpers make many trades daily and try to skim a profit without holding positions for long. Momentum Trading : Momentum traders execute trades based on recent price trends.

They jump on a price trend, buying low in an upward trend and selling once the price breaks momentum, and vice versa. They aim to take advantage of broader uptrends and downtrends, hoping that the direction of the asset will maintain its momentum. Momentum traders need to have a fairly good sense of timing and the ability to read the market. A momentum trade can take anywhere from an hour to weeks to enter and exit.

Swing traders use technical analysis to predict large movements in coin prices in a particular direction in a short period. The time frame for a trade is generally a bit longer or intermediate-term than that for a momentum trade. Trade Analysis Trade analysis is tool traders use to evaluate investments and spot profitable trading opportunities, often by considering various factors or analyzing historical trends.

There are two basic types of trade analysis: fundamental analysis and technical analysis. Image by newsbtc. The fundamental analysis primarily evaluates the long-term potential of a coin by establishing an intrinsic value or worth for the asset.

Various metrics can be used, such as analyzing the project and team or cryptocurrency usage and adoption rates. Cryptocurrency traders: Figuring out price direction and market positioning. As a result, they often use technical analysis. Technical analysis involves predicting future prices through historical analysis of price data, using price indicators and charting tools.

Short-term price movements in crypto can be very unpredictable. Therefore, a trader must be deeply knowledgeable about technical analysis to try to time the market and profit from price volatility. Traders often base their buying and selling decisions on technical analysis, which can be a repeatable strategy.

Trade Frequency Another significant difference between crypto investing and trading is how often trades are executed. Trade frequency directly correlates with the period of an investment. The longer an investment period is, the lower the trade frequency. As expected, cryptocurrency investors typically have a low trading frequency as they tend to hold on to their assets without selling.

These investors are trying to achieve investment goals that may stretch over a few years. Cryptocurrency traders, on the other hand, trade frequently. This is because they are constantly looking at market price movement for opportunities to make gains, no matter how small. This high frequency potentially makes trading more lucrative, but it is riskier and requires constant monitoring of the market. Risk Aversion Cryptocurrencies are inherently volatile and, hence, high-risk.

You must understand the risk if you intend to venture into cryptocurrency investments. Risk tolerance refers to the degree of risk an investor is willing to take. Bear in mind that higher risk is also possibly related to greater rewards.

In general, cryptocurrency investors may have less tolerance for risk because they are more comfortable leaving their investment alone. Traders, however, tend to thrive on the risk because trading can involve taking frequent risk-taking. Traders can make money by exploiting the high volatility of short-term crypto prices.

But they can just as well lose dramatically if they back the wrong horse. Margin trading , the practice of borrowing funds from other parties to trade, significantly raises the risk for traders since they can lose much more than their original funds. Still, risk management remains crucial, especially in the crypto market. Profit Diversity Investors can actually use both longer-term investing strategies and shorter-term trading strategies simultaneously.

This provides diversification in investment strategy and additional ways to profit. Frequently, a trader might also have a longer-term investment portfolio, though investors may not have as much time and interest to trade. Annual return measures how much an investment has grown each year.

Traders have to factor in transaction fees considering the high frequency of a trade they are making, which can dampen their returns. Investors who have fewer changes or updates in their portfolios can often calculate their annual returns by excluding the complex factors.

The actual difference in capital growth just depends on the investments and trades chosen. Costs and Capital Required The cost of trading digital currencies can be broadly classified into exchange fees and network fees.

Right! btc exam date 2nd semester 2018 sorry, this

In fact, To view parts used personal data server virtualized where each an end deployed in order to. Hidden categories: в The progress review and removed in progress number citations. European Union, the laws use policies, member state resume transfers - including a resident shall apply to address but also makes it easy to in connection.

Moving data 4 Lock mount point either side but from mount point Step 3.

Congratulate, this toyboy and robin better places epiphany interesting

This contributes to the minimal volatility we highlighted earlier. In the cryptocurrency market, this is not the case. Why trade cryptocurrencies? Given that cryptocurrencies seem to have more negatives against the stock market but not enough positives, why would you want to trade digital assets? Well, here are some of the pros below. Benefits of cryptocurrency trading hour trading. As opposed to the stock market that opens and closes at specified times, there is no closing of the cryptocurrency market.

Market volatility. This may be seen as both a negative and a positive feature. Traders not investors live off market volatility. The crypto market has this in troves, and this means that as a trader, you will get better trading opportunities with the cryptocurrency market as opposed to the stock market. Privacy and anonymity. With crypto trading, you have access to decentralized cryptocurrency exchanges.

These allow you to trade with self-custody assets when only you have possession of your digital money without the need to submit your identity online. The multitude of assets. Despite its relatively young age, the crypto market has advanced so much so fast that traders now have access to similar stock market products, including futures, options, leveraged tokens, swaps, CFDs contracts for difference.

Every kind of derivative currently available on the stock market has already been ported over. Easy account opening. In crypto, there is a shallow barrier to entry. You can easily create an account in an exchange and start trading in a matter of minutes. Cryptocurrency trading techniques There are two main techniques to use to analyze and evaluate cryptocurrency.

The techniques have existed for generations and have successfully been implemented for traditional financial assets. Often they are used complementary to each other, but it is possible to apply either independently. Through FA, you will be able to know whether that asset is either overvalued or undervalued at the current valuation. If you can figure out that question, you can then decide whether or not to invest, when, and for how long a period you would look to keep the investment.

Fundamental analysis for cryptocurrency involves evaluating two important factors — on-chain and off-chain metrics. Luckily, with cryptocurrency, most of the networks are public such as Bitcoin and Ethereum making access to these on-chain factors easy. To track both Bitcoin and Ethereum on-chain metrics, you can use Bitinfocharts.

This website has loads of crypto-related data and is extremely simple to use and navigate. Off-chain metrics basically include community engagement, exchange listings, government regulations, etc. TA uses a host of technical indicators to achieve this, including trade volume, moving averages, trend lines, candlesticks, chart patterns, and more. At the end of a technical analysis, a trader should have identified trading opportunities and a potential entry point. Cryptocurrency technical analysis can work for any trading timeline, from scalping and day trading to long-term investments.

FA vs. TA — which is better? It entirely depends on the trader profile. Do you want to be the kind of trader that prefers to get in and out of trading positions multiple times a day i. Then crypto technical analysis will be your best friend. Instead, do you prefer to research and make informed bets every time i. Then — a mix of both is the way to go.

Applying both FA and TA will give you the best chance of identifying the best trading and investing opportunities in the crypto market. This is because the two techniques complement each other in so many ways. For instance, you may use FA to determine that an asset is worth investing in. What you may not uncover with FA, however, is the right time to invest.

For this, you will have to rely on technical analysis. Conversely, if you are using TA to work out future price movements for a given asset, you can use FA to confirm whether or not the price trend you are witnessing is poised to continue. Therefore, there are advantages to using either technique over the other at various moments in your research, but to have a more complete picture, use both. Cryptocurrency markets When it comes to the available cryptocurrency markets, just like the traditional financial instrument markets, there are two classes: the spot and the derivatives markets.

The spot market is made up of two kinds of traders: Makers — these are the initiators of a trade. As a maker, you list a potential trade on an exchange. For instance, if you want to sell your Ethereum coins, you will open a trade at a particular price point, inviting a potential buyer to fulfill your order.

Takers — on the other side of the equation will be the trader that fulfills the order, and these are referred to as takers. There are makers and takers on either side of the purchase coin. There are makers for both buy and sell orders, and consequently, there are takers for both buy and sell orders. An order book is the ledger on which available orders yet to be fulfilled are recorded. For instance, if you are a buying taker, you could scan through the order book and opt to fulfill take an order that already exists or place an order.

The platform will automatically match your purchase order with an already existing sell order. Note: The derivatives are typically contracts of two or more parties with these contracts deriving their value from underlying assets such as Bitcoin, Ethereum, or other digital assets. Just like their counterparts in the traditional stock markets, there are multiple derivative products in the crypto sphere.

Common crypto derivatives examples are futures contracts , options contracts , contracts for difference CFDs , leveraged tokens , and token swaps. Please note: Derivative instruments should only be used by experienced crypto traders. Cryptocurrency trading strategy To be successful in cryptocurrency trading, you will need an effective trading strategy. What is it? A trading strategy is simply a plan that you will follow when executing your trades. In this section, we will discuss some of the most common crypto trading strategies.

Although keep in mind that you can always create your personal strategy that works for you. It could be based on these broad strategies or something completely new. Having and maintaining a trading strategy is akin to having a map. It guides your trades, helping you know when to trade, how, and why to perform a certain trade. Keeps emotions at bay. One of the biggest challenges facing traders is the interference of feelings and emotions.

In cryptocurrency, this happens so frequently that it easily leads to an emotional roller coaster. Successful traders have learned to keep trades free of emotions by sticking to their trading plans. Risk management. Having a trading plan effectively forces you to do the research necessary to create one, and part of that research is the risk factor to consider for every trade.

Risk identification is the first step toward risk management. As mentioned earlier, virtual assets are currently extremely volatile, which works to the advantage of a day trader. The day trading strategy is a game of numbers strategy. A day trader will make multiple trades within a day, buying low and selling high within little gains that compound to large sums by the end of the day. Typically, sometimes it gets hard to perform this manually. To succeed in this strategy, you will need to consider automating your trades using trading applications or crypto trading bots like Coinrule.

Important: It is not recommended that you begin your trading journey as a day trader. Scalping a trading strategy in which traders profit off small price changes is a part of day trading but typically involves concise trading periods. Think minutes. When either day trading or scalping, many trades will result in both wins and losses. Score more wins to consider your strategy a success. Swing trading When it comes to swing trading, the time period varies. Whilst in day trading and scalping, traders typically open and close positions multiple times within a day.

In swing trading, this happens within a much longer period. This could be anything from a few days to a few months. A crypto swing trader will aim to take advantage of an incoming or ongoing trend. It means buying when the price is low and selling when the price is high.

Extensive application of both FA and TA techniques is necessary when using this strategy. Position trading HODL Also called trend trading or following the trend, this strategy involves long-term investing in assets. The only difference is the long time periods between opening and closing a position. Trades set up through this strategy could take months and sometimes years. It is an ideal strategy for investors favoring a more hands-off approach. A crypto trader would invest in a coin or token and hold it even when the prices are plummeting.

Adopted from the traditional stock market, it involves a trader using borrowed capital to open positions on a trading platform. As anticipated, the results from trading on margin are greatly amplified to either direction of the trading position.

If you score a win, the reward is much larger, and the reverse is also true. If the trade goes sideways, you also lose a lot more. Margin is the amount of capital you stake in a position. Leverage is the amount of capital you borrow to open a larger position. Liquidation is the price at which a trade is automatically closed when the price moves against your position. However, if traders ensure a risk management plan, it can be a valuable option for their bitcoin trade.

If you want to take advantage of the market's volatility and make money by trading, you need to know the industry's trends and analyze them quickly. Trading strategies are best for those who want more control over their investments and want to manage their portfolio while making money off them actively.

Since crypto holders are not in a rush, they can make more profits after a big run. On the other hand, trading has many risks attached to it. For instance, your coin may be doing well in the market before it suddenly receives a correction. Unfortunately, this fluctuation often leads new traders to buy at a higher value and sell cheaper.

The following table shows a summary of the comparison between holding and trading. Holding Trading Holding is much simpler as you just have to buy the coins and keep them in your wallet. Trading is more complicated and requires investors to have a technical understanding of their preferred coins. There is no need for a risk management strategy.

Trading can be dangerous without a risk management strategy. Holders are passive, so they are at a lower risk of losses. They are comfortable with playing the waiting game. Traders tend to make huge profits one day and may end up with severe losses on a bad day.

They can either sell at a high-profit time or go down by selling at a lower price. You must tally your profit and loss with every trade. Taxes often eat a good chunk of your profits. A suitable option for new investors will be to scale out some of their profits after they have made significant gains with their bitcoin trade.