HODL(Hold On For Dear Life)

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HODL is a special term that is used by crypto currency traders to describe the action where crypto-traders buy and hold crypto assets until a target point is reached.

The term was initially abbreviated and it means "Hold On For Dear Life". This term is no complex term as it is there to tell traders that even at a tokens' worst time a trader should still hold on to his tokens as it will surely rice again. The term HODL is a misspelling of the original term "hold" and since making that mistake by a user on an online forum known as Bitcointalk.com.

The HODL this day is used as a trading strategy for traders. This type of trading strategy is simple but before describing what it means let me talk about a scenario of 2 brothers.

2 brothers bought an amount of 5 Ethereum when it was in the amount of 200 dollars and one of the brothers decided that he was looking for profit when the token price rises. What it means is that brothers bought the assets for 1000 each. do After a while the price of the token shot to an amount of 250 dollars.

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The first brother who decided that he wanted to make profits decided to sell his assets and he was able to make gains.
So when the first brother sold his assets, he had an amount of 1250 dollars, making a profit of 50 dollars on each eth token.

The second brother decided that he would hold his assets for 2 years. When you decide on this, it means that no matter the amount the token goes to you won't take profit not until the 2-year target has been achieved.

So he held on for 2 years and as at the time he wanted to take profit the token had reached an amount of 2000 dollars. What this means is that for each eth token the trader bought, he made an amount of 1800 as profit on each token and by the end of the day, the trader make a total amount of 10,000 dollars on the 5 eth tokens he had initially purchased using an amount of 1000 dollars.

The second brother made the decision and decided on the strategy to use. He only wanted to make a long term profit. The first brother had decided on making short profits hence he didn't make much.

The thing is, as the first brother has decided to make short profits he could have also decided to buy more as he takes the profits. We all know that when a token breaks an all-time high price, it rises for a little while and then falls back down again. So what the brother could have done was to take short profits and then look to accumulate more eth tokens.

The HODL can be used as a trading strategy as I have explained quite well with the example of the 2 brothers.

We all get a feeling of anxiety when we suddenly see our assets shooting up. Sometimes we wanna hold on till it reaches an unbelievable amount and sometimes we just wanna leave the marker as soon as possible.

But the problem with most traders is that before buying an asset they do not have a plan on how long they wanna keep the token or they will take profits when they begin to make profits on that token.

The HODL word was a misspelt word by a user online but the strategy has proven to work perfectly for patient traders.

Thanks for reading.