Steemit Crypto Academy Season 2 Week 3 || Trading and Holding - Two Sides of a Coin by @alphafx
"The first rule of investment is: Don’t Lose. And the second rule of investment is: Don’t forget the first rule."
Warren Buffet
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Steemit Crypto Academy Season 2 Week 3 || Trading and Holding - Two Sides of a Coin by @alphafx
"To hold, or to trade, that is the question". Probably, if William Shakespeare were alive these days, he would be asking himself this question constantly, seeking either higher returns on his investments or, like our friend John, a retirement plan that would guarantee him a smooth old age happily surrounded by his grandchildren.
Holding and trading are two very different ways of trying to make a profit in the cryptoasset markets.
Generally speaking, people who go for holding are investors who seek higher returns over an extended period of time by buying, exchanging or minning coins and holding them.
Traders, on the other hand, take advantage of the constant fluctuations in currency prices to enter and exit their assets in a shorter period of time, with the objective of obtaining smaller but more frequent profits.
The level of risk tolerance of a person will determine, among other factors, which of these modalities he will choose to generate income with the cryptos he has in his possession: a long-term investment must be accompanied by a large dose of "patience" that will be repaid in the future with large profits, on the contrary, the trader must be endowed with great intuition and boldness to take advantage of the ups and downs of the market to obtain profits in the short term.
Do I hold any coins?
Yes. I am currently holding some coins, mainly Steem, SBD and TRX that I have obtained as a reward for creating content on Steemit, since I joined this platform in early 2018; and to a lesser extent, some USDT and fractions of Bitcoin that I own on Binance, the exchange wallet that I use.
I can't really qualify myself as a holder because the earnings I have earned during my tenure on Steemit, I have used largely to satisfy my immediate basic needs, such as food, medicine, maintenance of my home and vehicle, condo and utility payments, and to a lesser extent, to acquire goods such as, a new smartphone with more storage capacity to continue creating content on Steemit that allows me to generate income from my home, particularly, in these times of confinement due to the Covid-19 pandemic, which has hurt the job market in many economic areas.
On the other hand, I am far from being considered a trader, firstly because I have a moderate to high level of risk aversion, in addition, I require more knowledge of the strategies necessary for trading, and the operations I have performed so far are to acquire goods or cancel services, and not with the purpose of generating profits with the fluctuations in the cryptoasset market, however, I do not rule out doing so in the future when I have a higher level of knowledge.
What type of Wallet do I prefer?
After seeing the description of the different types of Wallets available in the market, I am leaning towards Hot Wallets, particularly Binance, which is the one I have at the moment, since I am familiar with its use and I find its interface quite friendly, even though I am aware that the main key is in their possession and not mine, however, all Wallets have, to a greater or lesser extent, their risks and it is up to the user to minimize them.
On the other hand, in a Steemit Crypto Academy assignment last week, the professor exposed the different modalities offered by this platform for its users to generate passive income through the products it offers, which obviously caught my interest.
Finally, I believe that storing data on a piece of paper or USB device has a high level of risk associated with the destruction, loss or theft of this storage medium, and surely our friend John knows this.
Performig a Spot Trading
Before proceeding to do the trading to fulfill this assignment, I make sure I have enough funds in Binance, for which I previously transferred some Steem from my Steemit Wallet.
Then I access the Binance application that I have downloaded on my smartphone to verify that the coins are there.
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Once I verified my balance, I go to the trades option that is located in the center of the lower toolbar, and once I press it, the last pair of cryptos that I exchanged appears on the screen.
If the pair that appears in the upper left part of the screen, under "convert" and "spot", is not the one I require, I can change it by pressing on the pair, after which a side menu is displayed where I can locate the pair corresponding to the cryptos that I require, in this case, STEEM/BTC.
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At this point in the operation, I choose the "sell" option because I am going to sell Steem to acquire Bitcoin. The platform sets by default the price at which I can exchange, however, I have the option to change it according to my preferences. Immediately, I put in the amount of coins that I am going to sell and the equivalent amount is automatically displayed.
Screenshot edited with PicsArt
After finishing the operation, I return to my wallet to check the balance. The time it takes for the exchange to take place varies depending on the selected price and market fluctuations.
Once I confirm the success, I decide to make a new operation, this time I exchange my recently acquired Bitcoin for USDT, for which I proceed to carry out a process similar to the previous one, changing the pair STEEM/BTC for the pair BTC/USDT.
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Holding or trading, which do I prefer?
Holding or trading, is really a good question, and I think the answer is associated with multiple variables, among which I would highlight the family and cultural values, previous experiences and the personality traits of the investor. A conservative person is likely to favor holding, while an extroverted person chooses trading to generate high returns in a short period of time, even running the risks associated with price fluctuations in the crypto market, and that can mean the loss of a lifetime's savings.
In my particular case, I prefer the holding of my meager repertoire of crypto assets, possibly due to fear of losing a part of my personal assets, although I do not rule out trading in small volumes, which I have only done up to the time to purchase goods or cancel services; in order to familiarize myself with the appropriate strategies to enter this fascinating universe, and not perish in the attempt.
Conclusions
Holding and trading are two modalities that allow us to generate profits with the coins that we have in our possession.
The main difference between these two investment options lies in the period of time during which we are willing to maintain our assets before taking profits.
There are marked differences between Cold Wallets and Hot Wallets. In the former, data and crypto storage is done on physical media such as a sheet of paper or an external USB device, or by a hybrid mode that combines online and offline operations. On the contrary, in Hot Wallets, storage and transactions are practically carried out through online applications or websites that we access through a mobile or portable device, such as a smartphone or a laptop.
This is mi Homework Post for "Steemit Crypto Academy Season 2 Week 3 || Trading and Holding - Two Sides of a Coin by @alphafx
Scoring
Thank you very much Professor @alphafx
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