Investing and trading are two very different approaches to earning money, although both can be profitable in the cryptocurrency markets. In general, investing takes more patience holding an asset over an extended period of time but can be more rewarding with a larger amount of return. Traders take smaller and more frequent profits, entering and exiting positions over a shorter period of time which can be more beneficial in the present vs the future.
Investments are typically held for years even if the markets fluctuate because the expectation is that prices will eventually recover any losses. Investors usually are more concerned with market fundamentals, such as price-to-earnings ratios and management forecasts, instead of price action and technical indicators. The goal of investing is to gradually build wealth with a long-term approach, hoping one day it will eventually pay off in time for retirement.
Trading requires more skill in understanding price action and technical indicators, and it involves buying and selling a lot more to generate wealth on a daily, monthly or quarterly basis instead of years. Traders seek to gain profits and minimize risk frequently by using technical analysis to find high-probability trading setups.
Investing and trading simultaneously can be beneficial in the cryptocurrency space because you can benefit from the best of both worlds. As you trade, you ebb and flow in and out of the very volatile cryptocurrency markets which can be a trader’s paradise, even though you can be wrong sometimes--Being wrong is part of the game and how you minimize those losses when you’re wrong is the key to successful trading. Long-term investments can help mitigate these losses as having a long-term investing mindset will create positivity, and long-term accounts will eventually outweigh losses if you research market fundamentals accurately.
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