HODL Vs Trader: Which Crypto Strategy Is Best For Me?

Hodling is a slang term that means “holding.” It likely originated due to a spelling error.

Hodlers hold onto their coins for an extended period and only sell them after they have substantially risen in value.

Traders behave like day-traders on the stock market, as they typically try to capitalize on short-term gains in the crypto market to make a profit.

When considering which strategy is better, most people will tell you that it depends on what you want to accomplish. However, I can assuredly tell you that hodling is the better and more prudent strategy of the two.

Trading: A Risky Gamble Every Time

Day-trading, whether with stocks or cryptocurrencies, is a lot like gambling. The chances of coming out on top are slim, and even though you may have an impressive string of luck, it will almost certainly end with a loss.

Of course, some people make day trading profitable, but it is tough to do and incredibly risky. I prefer to think of those people as exceptions, and I also think they engage in this practice for thrills. If you like being an active crypto trader, go ahead and do it, by all means. But there are far cheaper ways to get a thrill.

Hodling: Long-Term Rewards

On the other hand, hodlers hold their crypto and sell only at the right time. They can hold their coins for months or years. This is the best strategy if you believe cryptocurrencies will accumulate in value over time–and they likely will as more countries and institutions come to accept them as currency.

This strategy may not be as exciting as day-trading, but it is far easier to manage, less time-consuming, and more likely to produce desirable results in the end.

The best reason to hodl is that you can implement dollar-cost averaging, which means you make periodic purchases of cryptocurrency throughout the month or year. This reduces your overall risk while allowing you to accumulate larger amounts of cryptocurrency over time, especially compared to buying a large amount all at once and watching the market go belly-up the next day.

The biggest mistake hodlers make is selling when the market goes down. That is the worst time to sell, as the number one rule of investing is: sell high and buy low.

The reason hodlers do this is that they panic and want to pull as much money out as possible before losing it. However, it is important to remember that investors don’t lose anything until they cash out. So whenever prices fall, stay in the market and start buying. Eventually, the market will get bullish, and you will finish better off than when you started.

The key thing everyone should take away from this article is that day-trading is a high-risk strategy that mostly yields short-term thrills. Alternatively, hodling (and adopting a dollar-cost averaging strategy) allows investors to reduce their overall risk and come out far richer in the long run.

Cryptocurrency is high-risk enough without throwing day-trading into the mix. Invest wisely.

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