Is it better to sell or trade crypto

There are a couple of ways to earn more money with cryptocurrencies. The most obvious one is buying and HODLing it for a considerably long period of time with the hope that you have got your hands on some really solid crypto. Yet another alternative is that you master trading them through the peaks and lows of the market. While none of the two is a sure-shot way of earning more, it is safe to say that trading demands more skill and time consistently.

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Unlike stocks where the golden rule is to buy and hold for a minimum of five years, crypto trading works differently and traditional rules don’t apply. Read on to learn more about crypto trading: 

Buying and HODLing

Buying and HODLing have been the go-to strategy for crypto investors for a long time now. Often it doesn’t turn out to be as fruitful as expected since they buy at a very high price and hold on to it until the price tumbles and they don’t want to admit that their speculation has turned out to be incorrect. 

However, HODLing also has many success stories. If you had bought Litecoin at its initial bull run, you may have been disappointed by the loss that came your way. However, if you would have managed to hold onto it until the 2017 bull run and sold it later, you would have made a solid profit. 

Thus, evidently, there are some solid advantages and disadvantages of purchasing and then HODLing but the challenge which comes before is choosing the right crypto. Today, there are thousands of cryptocurrencies and there is a good chance that not all of them are going to make it to the end and will end up collapsing soon. 

Yes, there are several benefits but one cannot turn blind to the risks involved. Buying cryptocurrency is risky and in a market that is so volatile, one cannot expect any sure-shot guarantees. 

When should you sell crypto?

In the following situations, it is best to sell your cryptocurrencies: 

  • The crypto token’s value has doubled or tripled since the time you bought it.

If you feel that your investment has grown considerably, you should look at taking profit and selling at least parts of it. A smart way is to sell what you had invested so you have your capital back and you continue trading with the profit you made. Given the volatile nature of cryptocurrencies, profits can go away before you realise it. 

  • You don’t think it could be a long-term success anymore

Part of investing in crypto is knowing when to cut your losses. This can be difficult since people are often very passionate about the cryptocurrencies they buy. That’s why it’s important not to get overly attached to any project. Here are a few signs that a cryptocurrency may be on the way down:

An important part of investing in crypto is understanding when you can slash your losses. It can be a tricky thing as people tend to get really passionate about the cryptos they invest in. Remember to not get too attached to a project. How can you find out if the crypto is about to hit a low? Look for these signs: 

  • You cannot see any significant development.
  • There seems to be something off about the management team
  • The community which backs it keeps shrinking
  • There are better investment opportunities out there.

Cryptocurrencies as well as blockchain technology is developing at a great pace. If you see that there are many other cryotocurrencies that are surpassing your crypto holdings, you should be selling them off. Make sure you come out of the trade before it is no longer profitable or before the loss seems to cut deeper. 

When you shouldn’t sell crypto

When it comes to deciding when is not the right time to sell your crypto, there’s no rulebook. But try not to panic and sell your assets just because the prices are low. The crypto market is a volatile one and prices tend to fluctuate. Panic-selling is one of those moments that most crypto investors end up regretting. 

When should you trade crypto?

Purchase at a low price and sell when the prices are back up, crypto trading seems like a cakewalk on paper but it is far from it. But one can understand why people may feel it is easy since there are a number of influencers today who like to showcase their crypto wealth on social media

Trading cryptocurrencies can be difficult as they are very volatile. Since the market is also largely unregulated, it is not easy to keep a tab on the pump and dump schemes that may manipulate the market. To be able to trade profitably, you need to have a good command over the market’s functions and factors that affect the prices. 

Crypto trading is also risky because you could end up losing your money. Especially if you are trading consistently, your exposure to the market increases and so do your chances of losing the investment. You could rely on technical analysis to understand the mood of the market but nothing can guarantee that all predictions will come true. 

In the bull market, anyone can look like a master trader in the crypto world. The real challenge comes in the bear market which will indeed be a test of your skills and patience. 

Stopping Losses

Investors should always take the losses into account and know that there is an equal chance of making more money and losing it all. Crypto exchanges typically have a tool that closes your trades on their own if they hit a certain low point. It is odd but true that often people have a better understanding of how much they want to lose than specify how much they want to win.  A golden piece of advice to put 1% of your total funds into crypto investment. This would keep your losses in check and also ensure your profits are also reasonable.