Investing versus Trading in STEEM- how does buying at low or high fare?

Steem can be considered as dividend stock and more than that. Due to DPoS design, Steem Power also earns 1.95% APR in every block cycle. Automated or manual curation can provide more dividend on top of staking earning (i.e. DPoS). If an investor can create good contents, he can further earn rewards form voting by fellow Steemians. Therefore, for active investors, Steem can provide multiple layers of incomes.

The issue is the timing to buy STEEM. This year STEEM saw its all time high (ATH) of $8.5 and it touched a low of $1.45. At current price of $3.2, someone who bought STEEM at $8.5 may not even break even being very active in Steemit unless he/she is a prolific blogger and marketer. However, those who bought at $1.5, they are very good position in terms of ROI and daily dividends.

It looks like at this price of $3.2, lots of losers versus winners. However, it is assumed that if they tried to sell their at current price. If we remember correctly STEEM was 10-20 cents during early months of 2017. Now it is in the range of ten times of previous years value. If STEEM achieve similar feet in 2019, we are talking of STEEM at $20-30.

Here comes investor's faith versus rationality. Several cryptocurrencies at the top has been 10X gain per year. STEEM has already done it for at least one year (unless somebody bought at the earliest when it was just start trading at $4). It can do it again, but nobody knows. Fear and greed both can run supreme. However, in bigger scale of time say, 3-10 years it looks highly possible.

Therefore, those investors who are very concerned about short-term gain should practice buying at low (i.e. best educated guess) in couple of phases (e.g. $1.5, $2, $2.5 or $3) and should have patience. For others who don't care short term may think of buying STEEM on every paycheck. Still they can get a good average price for STEEM on year basis.

Now the big question is who bought at $8.5 and who at $1.5. Most probably they are day traders who look for every strong up or down signals. They may have bought at $8.5 and sold at $8 or $7.5 at some loss, because they may assume that they made a wrong decision and got out with some loss. If they are good traders, their 70-80% decisions are supposed to be correct.

But there will be always some new traders who are bad at timing and sold at half price (after buying at $8.5). Therefore, trading is whole different strategy which does not consider long term growth (e.g. 10x in a year) rather short term signals (20-50% in a day or hours).

However, active and passive investors should analyze the overall trend and can buy in phases to get a deal on a good average price. Due to STEEM's dividend potential, if it is bought at reasonable price, it will have very positive results.

Moreover, one should remember if an investor earns 10-15% a year for 5 years, he/she will be considered a very successful investors in regular stock market. Now consider those who bought STEEM at 10 cents, 50 cents, $1, $2 even $3, how much their portfolio increased in base of fiat. They should be put into together with very successful investors in level with top hedge fund managers!

But here is the problem when someone look in to CoinMarketCap and see a particular coin gained 175% a day and may whine that STEEM is down 20%. You have to consider that STEEM has risen 200% (from $1.5 to $4.5) and then dropped 30%. These events happen to most coins on big updates. If you are a good trader and may think you can time it, then you are welcome to do that. But if you are an investor, your game would be a strategy to buy up periodically for a big long term gain (e.g. 10-20x).

Disclaimer: This opinion is not a financial advice, it my personal perspective and opinion. Please seek professionals for financial decisions.

Image sources: Most images are open sourced (e.g. Pixabay, Wikimedia etc.) with Creative common license. Some images are used with due courtesy to respected owners.

Thanks for reading.
@riseofth
Cryptominer since 2013, occasional trader and tech blogger