There are two types of people involved in the cryptocurrency markets, day traders and investors. Traders are more interested in flipping cryptocurrencies to make profit within days or weeks. Investors, on the other hand, are focused on fundamentals, and seek to improve their financial standing over a period of years to decades.
As opposed to fundamentals-based investing, the majority of people who choose to participate in short-term trading will fail, and lose money. Conversely, anyone who bought Bitcoin over the past fifteen years and simply held has profited well, barring the most recent correction in this bull market.
Day trading requires a unique set of skills including technical analysis, where you analyze charts to figure out if a particular crypto's price is likely to head up or down in the short-run. It also requires a keen sense of market sentiment, to determine whether there is too much greed or fear at the moment a trade is made.
There are plenty of YouTube and Telegram channels with communities that are dedicated to the practice of day trading, where you can learn about different chart patterns, moving day averages, or how to "short" and "long" digital assets.
The lure of quick profits draws many people into day trading, but the risk of losing your money is much greater than if you were to simply invest it instead. If you really want to try day trading, I recommend setting aside a small percentage of your portfolio to a trading account, while keeping the majority of your savings locked into solid blockchain projects.
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Investing doesn't require as much technical knowledge as day trading, and is far less stressful over the long-run, as your emotions won't be triggered by volatile market swings. The key to success here lies in understanding the long-term value proposition of cryptocurrencies (international, limited in supply, permissionless), investing in them when nobody is paying attention, and patiently waiting out the bull/bear cycles of the market.
Compared to day trading, investing requires a separate set of skills. It involves doing lots of research and analysis over a longer time frame. The reality is that most people don't have the time to do this, so they are better off taking advice from someone trustworthy who has put in the time and effort to identify which crypto projects are legit and have long-term potential.
Investing may seem kind of boring compared to day trading, but it is the safest way to improve your financial position. You will learn some fundamental trading skills along the way, such as the basic concept of it's better to buy when there is fear, and better to sell when there is greed. Determining which emotion is dominant is usually as simple as glancing at the price charts.
We can already see that those who invested in Bitcoin or Ethereum anytime over the past two decades have done well if they simply waited. Other solid blockchain projects will also perform well over the following years and decades. To succeed at this requires that you take the counter-intuitive action of purchasing an asset when almost nobody else is buying it, because you have determined it has potential future value.
Investing Is The Safest Bet
Although the possibility of making large short-term profits is tempting, you will be far better off in the long-term keeping the majority of your wealth locked up in fundamentally solid crypto projects. Of course, you are free to change your mind, and re-allocate your funds between projects, but this should only be done after plenty of careful analysis.
If you learned something from this post, be sure to check out my other articles on finance and crypto here on the HIVE blockchain. You can also follow me on InLeo for more frequent updates.