Day-Trading vs Long-term Holding: which is best for you?


There are commonly two types of traders in the crypto industry, those who day-trade, and those who hold onto their funds for long periods of time. Both are valid forms of investing, however, they are on the opposite ends of the spectrum when it comes to financial activity. Here are the main differences between these two mindsets.


Day-trading is about quick returns


Day-traders are people who engage in crypto with the aim of getting quick and immediate returns on their investments. They often buy coins or tokens and hold onto them for a brief period of time; sometimes multiple days, sometimes a handful of months. It is a risky method, but savvy traders who know how to read the market can make a good return by doing this, although some level of luck is necessary. Day-traders usually do not care so much about what they invest in, and rather care more about the current media reception that their assets are getting, as the media is one of the biggest tools for moving and swinging the crypto market.


Day-trading might be common in finance, but it is usually frowned upon in crypto communities, specifically because of the risks involved. Day-trading is not easy, and due to crypto’s youth, technical analysis tools are not as accurate as with other, older, assets. This makes day-trading an extremely high-risk, high-reward endeavor, the likes of which most people avoid for this reason.


Long-term holding is about the future


Long-term holding (or HODLing) is a popular alternative in crypto communities. This is where you buy coins or tokens and then simply leave them alone for a prolonged period of time. People usually hold these assets for over a year, and some people have been holding for over a decade. Long-term holders usually believe in the technology behind the assets and believe in the overall positive effect that cryptocurrency will have on the world. Some are active members in the community, helping to inform newcomers of both the market and the technology, whereas others are silent and fully disengaged with crypto at the moment as they have the confidence that their assets will eventually shoot upwards in value regardless of what they do as an individual. However, make no mistake that long-term holding comes with its risks, too. Not every crypto will survive for the next few years, and many coins and tokens fade into obscurity, when this happens long-term holders of those failing assets are usually punished for their activity, as holding means they lose their money.


Long-term holding and loans


Long-term holders are also the type to look into getting crypto loans, as for many, a significant amount of their funds are locked up in assets. While holding can pay off big in the future, for the time that somebody holds, it can heavily dampen their fiat cash flow. This is where crypto loans come in handy, as they allow long-term holders to borrow fiat, whilst still keeping their position in the crypto market.