Page 13 - September 2021 Issue
P. 13

 BITCOIN InvestmentS
Trading and investing may sound the same, but they are as different as day and night in reality. Trading refers to a short-term way of trying to profit from buying and selling bitcoins, while investing refers to a long-term plan where a buyer will hold on to their bitcoins for a long time and ride out any dips in the market value.
The Bitcoin Trader
The Bitcoin trader thrives on the exciting buoyancy of bitcoins. They’ll try to time the market and buy bitcoins when the price drops, and then they’ll wait for the price to go up before they trade their bitcoins. Trading is a high-risk game because you’re gambling for the price to go up or down. Not everyone can sell, however. The most successful traders have nerves of steel and can separate their emotions from their trades.
Traders don’t get scared of dips in the price because they are confident it will go up again sooner or later. They are looking to maximize their profits, too, so they’ll mainly spend a lump sum and buy at the lowest price they can go for, and then they’ll remain until the price is high enough for them to make a significant profit.
Trading takes a lot of guts. It takes a lot of thought and study. If you’re an impulsive type of person who gets physically sick with every dip in bitcoin price, you’re better off buying and not trading in bitcoins.
The Bitcoin Investor
itcoin investors are different from traders. They’re in it for the long haul. They’re not looking to take advantage of short-term variations in the exchange rate. If the price goes under by hundreds or thousands of dollars, they’re probably going to get bothered, but they’re not going to pull out their investment because they’ve already determined they’re going to hold it for the next 10, 20, or 30 years.
A wise investor will follow the dollar-cost averaging method to manage risk. This means whether the price goes up or down, they’re going to buy bitcoins and keep them. This strategy is perfect for long-term investments as you’re spreading the risk. Though values may not be as significant as short-term trading, the bitcoin investor probably sleeps more open at night as they’re not concerned about how the charts will look tomorrow or the day after.

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