From your own experience with cryptocurrencies what's the most profitable way: to trade them or to HODL for a while and then sell?

in #cryptocurrence6 years ago (edited)

View the original post on Musing.io

Most prifitable?

Short answer, trading them if you know to do it well (and lucky).

Cryptocurrencies are extremely volatile. This is due to a lot of factors such as low market cap compared to other asset classes, low supply (like BTC and ETH), not having central regulatory bodies, etc. Double or even triple digits price movements on cryptocurrencies are not the most surprising thing in this wild market.

Assuming someone consistently executes perfect trades, the potential for profit from trading cryptocurrencies surpasses every other asset classes.  If BTC price decreases by 5% today and a trader buys it then sell it the next day when the price is back that's 5% profit in 2 days only by trading. This kind of price movement happens almost every single day on crypto market with magnitude sometimes multiple times higher than the scenario I described before. This isn't a thing on any other asset classes.

The profit on cryptocurrecy trading also comes with the risk. You may gain 40% in a day by trading cryptos but you may lose that amount in a day either. HODLing is the "safer" method investing in cryptocurrecies. People that do this believes (at least should) on the long term gain of the coins they are investing in as the profit from HODLing comes from long term value increase of the coin. Also, HODLing don't need constant work from you monitoring crypto news and prices. HODLers are not safe from cryptos being cryptos though. Value of a coin can drop to 0 before they can realize.

I personally watched crypto prices and news daily back then and has experienced both big gains and losses from trading them. Nowadays I don't do that anymore because it took too much of my time to ensure I don't lose too much when crypto prices drop.

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