Crypto Investing vs Trading: Which Suits You Better?
Cryptocurrency, a multi-billion block chain industry has grown popular over the years. Two major ways of using cryptocurrency are either through investment or Trading. These might sound similar but are entirely different.
People in different countries have tools that can help them trade or invest in crypto. For instance, a trading app in India can offer useful resources that will guarantee the safety of the trader’s assets.
Like the ancient humans who practiced the barter system, humans today also exchange valuable goods. In our case, we trade cryptocurrency to get more value and profit from whatever was invested. In this article, Crypto Investing and Trading will be properly analyzed and you would be able to determine which suits you better.
Crypto Investment
Crypto investment is a strategy. Generally, investment is not a get-rich-quick scheme where one accumulates wealth overnight but it is a profitable venture if done in the right way. Crypto investment is when one buys crypto assets with the hope that the value would increase over time. This implies that when an investment is made in crypto, one does not expect an overnight profit. The value of one’s investment increase over time.
Crypto investors seek to build profit through buying crypto assets and holding such assets over a long period of time. The idea of holding for a long period of time is that the price of most of these assets tends to rise over time. In a nutshell, cryptocurrency investment is a long-time project.
There are two reasons why crypto investors hold assets over a period of time. One of the reasons is that investing has a bigger reward for the early birds. This means that you buy at a lower price before the masses rush into it and sell at a much higher price thereby making a lot of profit.
The second reason for investing is that there is a belief that the value of cryptocurrency assets such as Bitcoin, Ethereum, Dogecoin, and other assets rises as they are recognized and adopted by the mainstream financial institution. These assets rise more when they are eventually adopted as a mode of payment by bigger companies.
The more the assets gain popularity, the more people invest in these assets. This will eventually boost and increase the value of these assets. For these reasons, people tend to invest in cryptocurrency and wait until they get value and return on their investment.
As mentioned earlier, there are two modes of using cryptocurrency; investing and trading. Having seen what, it means to Invest in cryptocurrency, what does it mean to Trade Crypto?
Crypto Trading
Unlike crypto investors, the goal of a crypto trader is to accumulate wealth in a short period of time. While investment is slow and requires patience to build your portfolio, trading is much faster and offers a high-octane way to make money.
Trading is often carried out on a short or medium-term basis. Crypto traders often follow trends, news, and market events and activity to look for a change in price. Because of the volatile nature of the crypto market, traders are faced with high risks than crypto investors.
The traders analyze candles and other trading tools to make an informed decision on when to buy a particular trade. They follow up on the assets to observe a change in price and sell when they are in profit. Sometimes, they also use resources like the trading apps in India already mentioned to improve their chances of making better decisions.
The major aim of trading these assets such as Bitcoin is to buy when the price is low and sell when the price shoots up. Buying at a low price implies that one would pay a low amount of fiat currency such as USD, for a high amount of such asset. Selling at a higher price implies that one would receive a high amount of fiat currency such as USD for a low amount of such asset. There are different types of traders and they include:
- The Scalper: which might be seen as the most active form of trading buys and sells coins many times a day with the sole objective of making small profits in each open trade. These Scalpers accumulate wealth by making small gains in the trade.
- The Day Traders: These types of traders execute trades in a day and close any positions at the end of the day.
- The Momentum traders: The traders execute trade according to the strength of a current price with the belief that the price will gain momentum over time. These traders open small trades and monitor the price. As soon as the price rises, they sell and make profits.
Cryptocurrency trading has however been made easier by experienced traders who seek to guide people on how to trade. Having thoroughly examined crypto trading and investment in detail, you can choose which aspect would suit you better.
