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Should I Invest or Trade Crypto?

The short answer is both.

When starting out in the crypto market, we have two options: to invest or to trade. Sometimes these two concepts can create a bit of confusion, they are thought to be the same, but they are not.

What’s the difference between investing and trading?
Trading is about buying and selling asset classes for short-term profit, with a focus on prices. Investing is about buying asset classes for long-term gains

In simple terms, investing refers to buying a crypto asset and holding it for a long time also known as HODLing. Believing that it will increase in value over time. This strategy does not require much of your time (in executing) and holds less risk. For beginners, investing is by far the easiest and safest option.

Trading, in contrast, refers to market entries where traders can generate returns via speculating on an asset. Buying or selling, creates the opportunity to generate profit when the crypto asset increases or loses value. These trades may last from minutes to several days or weeks. 

Trading requires knowing how to read price action, risk management, and a strategy that will allow you to get the best out of the market. Let us bear in mind that trading in cryptos is practically the same as in any other market. Cryptocurrencies, however, can present high volatility compared to other markets such as Forex, Stocks, CFDs, etc. 

Related: How to Trade Crypto with Tradeview

Volatility: what to consider between choosing to trade or invest in crypto

While volatility is desirable and necessary to generate returns, high volatility can still present increased risk.

Although they seem the same, we can see then that investing and trading are two completely different terms. Now the good thing that crypto assets allow us is the possibility of implementing both modalities without any inconvenience.

For beginners, the best option is to start investing. When you gain experience little by little, you can begin to trade, and thus, you can capitalize on both opportunities.

Crypto: How and where?

invest or trade crypto

To invest in cryptos, you need to procure (buy) the coins in an OTC (Over-the-Counter) or P2P (Person-to-Person) market, or look at a product linked to crypto offered by a broker or an exchange. It is always prudent to use recognized platforms for this purpose. 

To trade cryptos, you can use P2P platforms, but trading them with CFDs through a regulated broker makes the operation go faster, meaning you make more profits.

Allow me to short-list my favorites.

# 1 BINANCE (Crypto Exchange)

# 2 COINBASE (Crypto Exchange)

# 3 LOCALBITCOINS (P2P Marketplace)

# 4 TRADEVIEW MARKETS  (CFD Broker)

With a broker, we have the easy implementation of our risk management approach and the use of leverage that an Exchange may not offer you. Remember that with a broker, you may not own the cryptocurrency. It could be traded through derivatives, practically the same concept as with Forex. 

One is not buying and selling trucks full of currencies, but we use derivatives as a tool; super cool, right?

Not all brokers offer you cryptocurrencies, and many that do offer them have a very high spread. That is why I recommend Tradeview Markets, which is regulated by several entities, offers five different platforms, with the best spreads and commissions in the market. 

You can open your real or demo account here, without any obligation, register, try them and see what I mean.

Which Crypto to buy or trade?

We always have to lean towards the crypto assets with the highest market cap and trading volume for investment or trading options.

For novices in crypto, Bitcoin is the first choice when it comes to investing. Bitcoin is the oldest cryptocurrency project and the largest crypto by market capitalization. 

But there are thousands of different cryptocurrencies, also known as altcoins. Some of these altcoins have their own blockchain, while others run on pre-existing ones.

Diversifying assets: Bitcoin, Ether or Alt-coins?

If investing, its always good to diversify, be careful and always do your due diligence when selecting a project (coin). As I mentioned before, besides Bitcoin, many different altcoins are available, but be aware that there are also many poor choices which are sometimes called “shitcoins”.

Once again, allow me to list my top 10 crypto coins:

• Bitcoin

• Ethereum

• Litecoin

• Ripple

• Tron

• Binance coin

• Cardano

• Stellar

• Monero

• Iota

In contrast for trading, let me list my favorite options:

• Bitcoin (BTCUSD)

• Litecoin (LTCUSD)

• Ethereum (ETHUSD)

• Ripple (XRPUSD)

As you can see, when trading, it is no longer the coin alone, but a pair, and this pair is created with the US dollar as the quote or reference.

Always bear in mind that risk in the financial market is amplified by inexperience, your first mission is to educate yourself and thus take advantage of the most excellent tool to create wealth, the financial market. Again, the decision is yours, and please remember you should never invest or trade money that you cannot afford to lose.

Now that you know if you should invest in Cryptos, open a demo account with Tradeview and try it out! 


Oliver Garcia

Senior Market Analyst

 

Tradeview Ltd. is not a portfolio manager or an investment advisor. This Market Report is for informational purposes only. Any statements made or opinions voiced in this Market Report do not constitute investment advice. The Tradeview Ltd. Market Report does not constitute a solicitation to buy or sell in the financial markets. Although the information contained in the Market Report comes from trusted sources, Tradeview Ltd. is not responsible for guaranteeing the accuracy, timeliness, completeness, or fitness of such sources. Tradeview Ltd. shall not be responsible for and disclaims all liability for any losses which may be suffered from access and use of the contents of the Tradeview Ltd. Market Report. Trading any financial instrument on margin, using leverage or otherwise involves considerable risk. Therefore, before deciding to participate in any style of trading, you should carefully consider your investment objectives, level of experience and risk appetite. Most importantly, do not invest money you cannot afford to lose. Consulting with your investment counselor, attorney, accountant or other professional upon whom you rely for guidance as to the appropriateness of an investment in any style of trading is recommended.

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