Differences Between Trading or Owning Digital Assets

Short-term trading of digital assets involves taking a position that could last from seconds to several days. This is to take advantage of the short-term fluctuations within a macro trend. On the other hand, the word “hodl” is a widely-used slang in the digital asset markets which means to buy-and-hold indefinitely (also known as “hold on dear life”) regardless of market conditions.

Is one way really better than the other？ The answer is no. It all comes down to personal preferences instead of a solid answer. This is also a misconception that confuses many people when it comes to trading and/or investing.

Let us take a look at some of the distinctive differences between trading and owning digital assets:

• The intrinsic value or future prospects of a digital asset do not matter.

• The main focus is taking advantage of short-term volatility and price fluctuation.

• It could be taking long or short positions.

• Trading style and strategy: scalping, day trading, or short-term swing trading.

• Utilizing margin and leverage to maximize the use of funds for profit.

• It involves entry prices, stop losses, and target prices.

• Having calculated risk management is essential.

• It is about believing and investing in the bright future prospect of a digital asset for its intrinsic value.

• It involves buying and holding onto a digital asset indefinitely, even when the market condition is bad.

• No trading strategy is needed.

• Only one entry price is necessary with manual closing of the position.