It is appealing to follow technical analysis reports that claim to bring in fortune. Technical analysis does have its merits but long-term and day trading style needs you to get involved. Just following some analysis reports blindly can lead to poor decisions. Both trading style has their pros and cons. You can experiment with one or both but ensure to invest a little money you are fine with losing. Never invest in the cryptocurrency market with borrowed money.
Long-term holding style
When an investor feels that the value of a specific cryptocurrency will escalate soon they plan to choose a long-term holding style. For example, by the end of 2022, you feel that the value of DOGE will escalate. Therefore as an investor, you will buy Dogecoin and hold it for at least 6 to10 months. It is a great approach for investors who are busy and cannot keep up with market fluctuations.
Even some cannot watch the ups and downs in the market. For a few long-term holding is not exciting like day trades. A short-term strategy can keep you grounded as it can damage your portfolio. Even before you choose to go long term completely evaluate future use cases. It is time-consuming but worth the effort.
Pros
- Low tax rates
- Allows cost averaging
- Less paperwork involved
- Encourages a comprehensive project research
Cons
- Miss on large gains
- Hard to generate income or gain daily
- Not exciting as day trading
Day trading style
In day trading, you are taking advantage of crypto trade market fluctuations, which occur within a day. You can even consider short-term swing trades that occur across a couple of weeks or a few days. These are small gains, but quickly add up if coins are more.
Several people get trapped in the hype when they see traders making massive gains. The allure of earning fast is exciting and intoxicating. This style is complex and beginners must approach it cautiously.
Anxious people must never choose a short-term trading style. To protect your cryptos never choose to buy unreliable cryptocurrencies or dead assets with a market cap easy to exploit because the moment it is dumped you will be trapped with some worthless coin.
Even if you buy coins that are escalating, you can end up catching a downtrend and dumping money. In day trading, review the charts to ensure you are aware of the entire picture before investing. Diversify your portfolio to lower the risks.
Pros
- Offers a new income source
- Potential to earn big
- More exciting than long-term style
Cons
- High tax rates
- Carries high risk than long term
- You can wind up holding a useless token when it dumps
- Lot of paperwork
Which trading style is better?
Both styles are best. If you desire to learn about cryptocurrency trading styles visit ZenGo X. It is a platform that offers an MPC wallet based on multi-party computation technology. It is a keyless wallet. Whatever style you choose it is crucial to do due diligence!
