Each day the cryptocurrency gets discovered by new people. Especially for people without any experience in the financial markets the volatility of the crypto markets can be unsettling and exhausting for new market participants. In this article we will give you insights on what is better - buy and hold or actively manage your positions.
HODLing - Holding on for dear Life
The word HODL was brought to life by light-hearted communities within the financial space and is a purposeful misspelling of the word Hold. HODL just means to hold on for dear life - often harder to execute than the HODL memes imply. Especially in crypto where massive moves down are common it takes a level of grit most people do not have.
Problems when it comes to HODLing
- HODLers tend to buy low but then end up not selling the top. After that the price often comes down massively.
- Most market participants are not good with trading. Especially in the volatile crypto market it takes a lot of knowledge and experience to execute trades correctly.
HODL vs. Trading - What is better?
It is not possible to say that either HODLing or trading is the way to go. The most important thing is to find out which of these two options fit you better. If you are a rather nervous person you should tend to buy and hold your positions. But if you are not that hard to impress and also got theoretical and practical knowledge of financial markets, you might be better off with actively managing your positions.
If you choose HODLing as your way to go you should always think of an exit plan or price targets where you take profit. On the other hand, if you stick to trading actively you should educate yourself on risk management to minimize your risk of losses. The most important thing is to always keep focusing on learning more about the crypto space.
How do you buy Cryptocurrencies?
If you do not want to use a centralized exchange you can use a decentralized exchange.