The web is an endless source of knowledge, giving users access to all the answers they need in a matter of minutes. Often, the internet is where we resort to for the most trusted results, with questions being one of the most googled items. For those looking for answers on trading vs investing and which is best, look no further because we have what you need! Although trading and investing is a time-old activity to help improve people’s financial standing, cryptocurrency only recently came into the picture, offering improved results. Besides crypto betting, trading and investing have become popular ways to make money online. In this guide on trading vs investing, we will focus on cryptocurrency and the advantages of choosing the digital avenue.
Trading Vs Investing
To put it clearly, investing and trading are two very different activities. Although both aim for profit, the steps taken to reach the results are stark opposites. To profit from crypto markets, traders and investors participate in the action. Investors can be seen as a way of long-term gain, with the target of landing significant returns through buying and holding. In contrast, traders utilise the volatility of the markets, taking advantage of the rise and fall of stock value. The goal is for the trader to enter the market at a low point and exit at a high return rate. The trading duration is a more short-term fix, with smaller but more frequent profits.
Key Takeaways
- Investing: a long-term approach for financial gain, usually providing larger profits.
- Trading: short-term strategies for strong financial standing, offering returns daily, monthly, or quarterly.
- Investors thrive in more stable and long-term markets, while traders benefit from quick profits from fluctuating markets.
Investing
Investing has always been seen as the more dignified approach to financial standing. Investing aims to slowly but surely grow and expand financial wealth through long-term goals. To achieve investment goals, one would need to buy and hold stocks, currencies, bonds, or, most recently, crypto. The investment period can vary, with the average period being years or even decades. In the case of crypto, the investment period is just as lengthy, with the average return over five years being 27% annually for BTC. Investors are in it for the long haul, and with that being said, the market inevitably fluctuates. Often, if not always, investors will ride out the dips with the expectation of recovery. The most critical aspects for an investor to pay attention to are price-to-earnings ratios and management forecasts.
Trading
Trading is for those that enjoy quicker results, involving frequent transactions of buying and selling of stocks, commodities, currency pairs, or in this case, crypto. The main aim is for traders to outshine the buy-and-hold method used by investors, resulting in faster-generated returns. For example, while investors may be happy with an annual return rate of 10%, traders could aim and achieve a monthly return rate of 10%. This is managed by buying into the crypto market at a lower price and selling when the price spikes. There is also the method of short selling, which allows the trader to sell at a higher price and buy to cover the lower price; this is beneficial in dropping markets. There are different kinds of trading, which are listed below:
- Position Trader: Positions are held from months to years.
- Swing Trader: Positions are held from days to weeks.
- Day Trader: Positions are held throughout the day only.
- Scalp Trader: Positions are held for seconds to minutes.
How Many Trading Days In a Year
Learning and implementing good trading practices is essential to profit from them. One thing about crypto trading is that it doesn’t always go to play, but luckily for you, there are 253 trading days a year, giving traders plenty of time to pump up the profits.
What Apps Can Crypto Traders And Investors Use?
Nowadays, the options are endless, with thousands of apps. From crypto to fiat, the investment and trading industry is bigger than ever, offering that interesting access to both traditional and digital wealth.
- Gemini Exchange.
- Coinbase.
- eToro.
- Robinhood.
- SoFi Active Investing
Conclusion
Regarding trading vs investing, both can be beneficial depending on timing and finances. With plenty of crypto coins, now is the perfect time to get started. Weigh up the pros and cons of each action before starting to ensure success. All profits can be re-invested or traded, or better yet, used for crypto betting!
