Long term trading advantages and disadvantages
Have you ever heard the word “HODL”? Well, if not, we will assume that you are completely new in the crypto space! No, it is not a word you will find in the dictionary, but you will certainly find it in crypto forums and community chat groups!
Definition of “HODL” is that it is a jargon term which means holding a crypto currency for long-term instead of selling it after some time. Its real meaning is “Wait for dear life.” In general, long-term crypto trading means holding a currency for a year or more.
The idea is that, although there will always be volatility, the price should increase greatly in the long term.
A great example of this would be the lucky investors who bought Bitcoin in 2011 when it only cost $ 0.35. If they kept it until the end of 2017, they could have sold their coins for almost $ 20,000 each! That is more than 57,000X of your initial investment!
One of the main advantages of long-term cryptocurrency trading is that it is easy and requires a little time. You do not need to understand complex commercial charts or graphs, as you simply seek to keep your currency in the long term.
Unlike short-term trade, where you must constantly spend time checking cryptocurrency prices, you can do so in your spare time. It’s simple, once you’ve bought your currency, you don’t need to do anything more than wait!
Another good advantage of long-term cryptocurrency trading is that you don’t need much money to get started. You can buy small amounts as long as you have some extra money and let it grow for a long period of time.
This also allows you to avoid the stresses of market volatility, as you don’t need to worry about short-term movements in price.
A disadvantage of the long-term cryptocurrency trade is that it can lose a good opportunity for quick short-term gains.
Sometimes the coins increase in value very quickly, only to fall directly down. Short-term traders will realize this and can make a quick profit.
Another disadvantage is that because you aren’t spending time analyzing the market (as much as a short-term trader), you could miss some bad news. If there is bad news released that could affect the price of your cryptocurrency (such as regulations), the price could fall and never rise again.
So, just make sure you are keeping on top of cryptocurrency news to avoid this from happening.
Now that you know some of the advantages and disadvantages of both short and long term cryptocurrency trading, let’s have a look at some of the thing you need to be careful of before you start.
The most important thing to remember before you start trading is that there is a chance you could lose your entire investment.
The cryptocurrency markets are very volatile, and although some people have made lots of money, lots of people have lost money too. You should never trade with any amount that you can’t afford to lose.
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