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Trading Cryptos vs. Owning Cryptos

Trading Cryptos vs. Owning Cryptos

June 26, 2020 | 

733 Views | 

JOHN K MWANIKI | 

Get Into Cryptocurrency Trading Today

Cryptocurrency has become a massive phenomenon in the financial industry, and as someone interested in cryptocurrency, you may be interested in trying your luck with the cryptos.

There is a decent number of different cryptocurrencies in the market, and before you involve yourself with this market, you may need to learn a few things about it.

One of the critical things that you may need to know about cryptocurrency is that you can either choose to trade in the currency or own it. Owning, in other words, is investing in cryptos.

Deciding whether to trade in this currency or to invest in it needs to be a well-informed decision; because an ill-informed choice may cost you dearly. Here are some of the things that you should know about owning and trading in cryptos.

Owning cryptocurrency

Investing in cryptos entails creating a long-term position in this kind of digital assets; based upon long term trends. The main idea is to create a situation whereas the price is lower than those which you intend to sell your cryptos.

Eventually, that is if you even intend to sell this asset at all. When you invest in crypto, you have a lot of room to mistime any buys.

Unlike trading, owning involves significantly little selling. However, you can hedge this to assist in managing your position. For example, you could trade some of your cryptos, sell some high cryptos, then rebuy, as well as choosing to hold a short position. 

The goal of investing in the digital currency is to be in it for the long haul. This is good as it helps you sit out temporary fluctuations in price, even when they are great.

You may also choose to invest in cryptos if you feel that that particular crypto is oversold because it may add to your position with time, regardless of the prices.

Ultimately the goal of investing in cryptos is to get more coins as time progresses.

Trading cryptocurrency

On the other spectrum, trading in cryptos is a more profit-based approach that optimizes short term and technical trends. When you trade-in cryptocurrency, you are supposed to buy them when they are selling at a low price; and resell them at high prices within a short period.

If you choose to trade, you should be willing to face set stops as well as losses; when you end up buying these cryptos for high prices and selling them for much lower when trends change against your favour.

For crypto trading, the current prices are not of much importance, as the potential for some percentage gains. Trading requires you to deliberate upon opportunities for the costs of these currencies to rise and drop in a short period.

With crypto trading, you can always put your money on the table, because your main goal should be profit-making, capital growth, and capital preservation. Although you may be very interested in cryptocurrency, price trends should be your priority in the short term.  

If you become too sentimental about crypto as a trader, it may prove to be detrimental. This is because, with trading, you will need to drop your coins often. Ultimately the primary goal of trading crypto is to make more money.

In summary, owning crypto is a long term commitment that is concerned with long-term trends and fundamentals. Moreover, it is not about price trends over short timespans. On the other hand, trading and crypto are all about short-term price trends and technicalities.

Both options require you to be patient and to have control over your emotions. Both may prove challenging, but at the same time, they can be good and rewarding.

Risks 

Both owning and investing in crypto come with some risk. However, trading in cryptos carries more risks than owning because of the vulnerability of cryptocurrency. 

As an owner, you can wait through any crash and get the resources to prolong any bad strike. As a trader, though, you may have to act fast and know when it is time to stop trading. Before you choose whether to invest or trade in cryptos, it is diligent to first give it a try with fiat money.

It would help if you refrained from putting all your capital in all at once, and instead build your experience slowly as you understand the crypto market better. As a beginner, you may be tempted by the idea of significant trading in digital currency.

However, you should remember that these fluctuate more than traditional stocks, thus raising the risks. This market is also more dynamic.

Bottom Line

With all this information regarding owning crypto versus trading crypto, you may wonder which way is better. You could choose to go with either, but your choice should be guided by your knowledge of cryptocurrency as well as available assets.

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Total Market Cap The Total Market Capitalization (Market Cap) is an indicator that measures the size of all the cryptocurrencies.It’s the total market value of all the cryptocurrencies' circulating supply: so it’s the total value of all the coins that have been mined.

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