Trading and long-term investing are two different things. But one may wonder if certain features of trading can be used in a cryptocurrency investment. This is what we will see in this article.
Difference Between Trading and Investment
Trading consists of placing buy and sell orders on stock assets to play a raise (long) or a diminish (short) of an asset.
the trader goes multiplier les trades (purchase/sale of a quantity of an asset) to carry out the execution. In general, a trade is made short or very short or even intraday.
On the other hand, the investment is mainly long or very long term, that is, purchases to hold the assets for several months or even several years.
When you invest you don’t have you don’t need the same skills only if you are negotiating.
The qualities of the merchant.
Trading requires essential skills to be successful over time. These skills are learned over time and are not innate.
To be a merchant you must:
- Availabilities
- Patience
- Organization
- Don’t be too playful
- A trading technique (or several)
- Mind (all the time)
- manage psychology
- …
the CRYPTOCURRENCIES are generally very volatile. Therefore, it is necessary to apply these skills more rigor that you were in calmer assets.
If you have already traded, you will have no skills in this area. Although long-term investing is different from trading, some aspects trading you can serve What :
- Patience : wait for a drop to avoid buying to the maximum, accumulating at high levels, making the dollar cost average (DCA), spreading purchases over time, etc.
- Technical analysis : buy the big supports in the medium and long term, see if there is a long-term uptrend,…
- portfolio management : In trading, managing potential losses is important; position size management limits risks. This management can be used for long-term portfolio management
Now, if you don’t have business skills or even business knowledge, you can still invest long term. You will learn how to do it. During the learning phase At the beginning of your portfolio construction period, I advise you to start as follows:
- Don’t invest too much capital from the start
- Buy small lines (low % equity per line)
- Accumulate in the lines that you like the most but in a reasonable way and spacing purchases over time.
I hope I have helped you in the management. try to have a reasonable management of your assets cryptos. Good trades and investments for all. Do not hesitate to comment, I will answer your questions with pleasure.