Have you ever heard the word “HODL”? Well, if not, then we’ll assume you’re completely new to the crypto space! No, it’s not a word you’ll find in the dictionary, but you’ll certainly find it in crypto forums and community chat groups!
“HODL” is a slang word meaning to hold a cryptocurrency long term rather than selling it. Its actual meaning is “Hold On for Dear Life”. Usually, long-term crypto trading means to hold a coin for one year or more.
The idea is that, although there will always be volatility, the price should increase in a large amount over the long term.
A great example of this would be the lucky investors who bought Bitcoin in 2011 when it was just $0.35. If they held on to it until late 2017, they could have sold their coins for almost $20,000 each! That’s over 57,000X your initial investment!
One of the main advantages of long-term cryptocurrency trading is that it’s easy and requires a little amount of time. You don’t need to understand complex trading charts or graphs as you’re simply looking to hold your coin for the long term.
Unlike short-term trading, where you need to constantly spend time checking the prices of cryptocurrencies, you can do it in your spare time. It’s simple, once you have bought your coin, you don’t need to do anything other than wait!
Another good advantage of long-term cryptocurrency trading is that you don’t need lots of money to get started. You can buy small amounts whenever you have some spare money, and let it grow over 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.
One disadvantage of long-term cryptocurrency trading is that you might miss a good opportunity to make quick short-term gains.
Sometimes coins rise in value really quickly, only to fall straight back down. Short term traders will notice 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 things you need to be careful of before you start.