In the world of finance, traders and investors speak the fluid language of risks and returns. Similarly, cryptocurrency traders and investors aspire to maximize the risks of their investments to gain a higher return. Although trading and investing in cryptocurrency are closely related, leveraging risk as a trader and as an investor is distinctly different. One of the main differences relates to returns on investment, where traders seek to benefit from short-term gains, while investors prefer long-term profit.
Cryptocurrency trading
Trading a cryptocurrency is a temporary commitment since traders aren’t expected to own units of crypto. Instead, they simply trade on the value of it. In comparison to investing in cryptocurrency, trading is easier to some extent, since it’s focused on short-term gains and doesn’t require to analyze the long-term picture of the whole investment portfolio. However, trading is often considered to be more expensive than investing, since fees are charged from every cryptocurrency transaction.
Cryptocurrency investing
On the other hand, crypto investing is little more complex as it requires investors to take ownership of cryptocurrency and work out a strategy that covers the long-term profit goals. To achieve it, crypto investors have to diversify their portfolio and stay on top of all the updates in the industry to have a plan for a long-term strategy.
Piece of mind
The decision on whether to go with investing or trading should be based on your goals. No matter which one you choose, always analyze the market carefully. Do your research before getting into the game — check out our tips on how to become a crypto trading guru.