Investing is a long-term thing; you start to create wealth by creating a portfolio (consisting of cryptocurrencies i.e. Bitcoin and Altcoins) and keep it for a long time, while trading is a buy and sell for more profits. As an investor, you are not restricted to just job or work. You can venture into another profession as well. But its not allowed for a trader as the name implies. Face your trades!!! smiles.
The key term to consider when investing is compounding or reinvesting profits and dividends to buy more coins. When you think about investing, be sure that you are going long term, where do you want to be in the future, adding up more investments along the line are welcome. In theory, an investor should not think about regular market fluctuations because it does so in the long term. It only beats downward trends because the market is finally recovering. Investors invest after considering fundamental factors such as the price, earnings ratio, effective management, competitive advantage and CEO experience, etc.
A trader tries to buy and sell coins to beat the investor who buys and holds them. An investor can be satisfied with a 10% return, but this can only be his monthly profit. As a trader, you buy an asset at a lower price and sell it in a relatively short time at a higher price. You must have heard about the term “shorting the market”, which benefits when you sell at a higher price and buy at a lower price to take advantage of a falling market.
Trading is more aggressive than investing. Traders need to generate profitable returns in a given time. Therefore, they use tactics such as the stop-loss order to close the positions by setting the price limits before time. Tools such as technical analysis and moving averages are more popular among traders than among investors.
Depending on the tenure period, there are different negotiation styles.
- Position traders maintain assets from month to year,
- Swing traders keep from a few days to several weeks,
- Day traders spend all day and there are no positions over the night.
- Scalp traders hold positions for seconds or minutes and, of course, there is nothing like overnight positions.
The style depends on several factors, such as: the size of the trader’s account, the time it can spend, etc.
Which is the best / the most difficult?
“Better” depends on the person. In general, trading requires more attention, time, experience and care than investing. To me I think trading is more difficult than Investing because it will take most of your time regarding the level of profits you want and also some level of both technical and fundamental analysis
Investors are usually long-term and do not care about short-term price movements. In other words, an investor trusts the long-term potential of a currency if he invests with the intention of selling it (and making a profit) in a few years. The reason is that the blockchain technology is extremely new. It could take a few years (or even years) for the technology to disrupt traditional systems and become the norm. It should be noted that the market cycles in the cryptocurrency market are much shorter than those of the stock market. This means that the cryptocurrency market will have a bull market (bullish trend) and a bear market (bearish trend) more intensively for a shorter period. For example, a bull market or bear market may take years to perform in the stock market, while it is much shorter for the cryptocurrency markets (usually within a year).
Traders, on the other hand, have a short-term horizon focused on price movements. Traders examine daily and hourly prices movements in the cryptocurrency market by buying and selling currencies for short-term gains. The fundamental objective of the traders is to buy a currency at a good price and sell it at a higher price in the next minute, hour, day or week. Volatility is an essential element that traders must take into account when trading in the short term, since it must be profitable. The extreme volatility of the cryptocurrency market makes it an extremely profitable proposition for traders
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