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Trading VS Hodling: What should you do?

January 3, 2022 | Trading| By Uni Finance

There are many ways to earn from cryptocurrencies and the decision whether to trade or hodl is all up to you. Keep in mind that the market is highly volatile and whether you trade or hodl, the movement of the financial market will affect your investment. Let's make a comparison to help you decide whether to buy and hold (HODL) cryptocurrency or trade and try to grow the investment.

What is hodling?

It’s a purposeful misspelling of “hold” which means holding on for dear life through crypto’s ups and downs. Hodling refers to the buy-and-hold strategy. Buy-and-hold investors tend to hold their assets for an extended period of time to profit from the long-term value appreciation rather than making frequent trades. Hodling can provide more safety to investors, as they are not exposed to short-term volatility and can avoid the risk of buying high but selling low.

With hodling, you simply buy the coins, put them in your wallet, and do nothing aside from checking the market value of the cryptocurrency that you bought. It requires a great amount of patience, without any assurance that the cryptocurrency of your choice could have a huge value, just like Bitcoin. So if you are one who wants instant gratification, then hodling is not for you. But if you can wait patiently, the rewards can be satisfying.

What is trading?

The concept of cryptocurrency trading is to buy a digital coin when it's low and sell it high. It relies heavily on price fluctuations so you really have to know the fundamentals and technicals of a coin for you to profit. While it sounds easy to just buy and sell a coin, it actually isn't. It takes time to know the different factors that affect price movement. But once you learn to analyze the market, it would be easier to have profitable trades.

If you want to be a cryptocurrency trader, you need to have a plan and should be able to execute it as planned. Aside from having knowledge in the crypto world, your emotions also play a vital role. Never let your emotions rule your trade or else you will be on the losing end. Learn to set aside greed and never trade to get even with the market because instead of winning, you will just lose more money.

Whether you end up being a trader or hodler, keep in mind to invest only what you can afford to lose.

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