Should You Invest Or Trade In Bitcoin?
A lot of people assume that trading and investing are the same, but they are actually very different. Trading is a short-term method of trying to make a profit from the buying and selling of Bitcoin. Investing is a long-term strategy where you will hold into the Bitcoin for a prolonged period of time and ride out the dips in the market.
Bitcoin traders will thrive on the volatility of the market. They will try to time the market and buy their Bitcoin when the price has dropped and then wait until the price rises again before they sell them off. It is important to note that trading is a very high-risk game as you are betting that the price will change direction.
Trading is not the right option for everyone. The most successful traders will have nerves of steel and will be able to detach themselves from the emotions of their trades.
Traders will not be scared of dips in the price of Bitcoin as they will be optimistic that it will rise again at some point. They are also looking to maximize their profits. This means that they are likely to invest lump sums and buy at the lowest price they can possibly get. They will then wait for the price to rise so they can make a significant profit.
Trading Bitcoin will take a lot of guts along with analysis and thought. If you are an emotional person who starts to panic with every dip in the price, you will be better off with investment instead of trading.
Bitcoin investors are very different to traders. They will be in the game for the long haul. They are not going to be looking for the advantage of short-term movements. Of course, if there is a serious drop in the value of Bitcoin, they will become worried, but are unlikely to pull their trade. This is due to the fact that they have already decided to hold onto the trade for years.
A wise investor will use a dollar cost averaging method to manage their risk. This means that when the price of Bitcoin goes up or down, they will buy and hold onto the coins. This strategy is ideal for long-term investments were you are spreading the risk. The profits from this will not be as high as with trading, but as an investor, you will generally be able to sleep better without worrying about movements.