Every web3 enthusiast who has stepped into crypto trading would have reached a dilemma regarding whether to do day trading or HODL the coins. Clearly, holding is less risky than short-term trading, but sometimes day trading can generate huge revenue.
This article will compare the two and provide you with a solution to the dilemma. We will check the advantages and disadvantages of both strategies and delve into genuine conclusions. Let’s get started.
What is Day Trading?
Day Trading, aka intraday trading, is a short-term strategy where the traders purchase and sell a token within a day. Usually, it happens in daylight hours when a trader buys and sells multiple times within hours according to the market fluctuation.
Advantages of Day Trading
Day Trading is the easiest option if you are looking for quick profits. You can buy a share for $10 and sell it for $11, and combine these small daily profits to earn a decent income excluding the trading fees. Day trading gives space for experiments such as increasing the leverage and trying multiple assets.
Day trading helps the trader to train the self regularly, aiding the evolution into a successful day trader over months. However, it is one of the hardest trading methods where there are several hidden risks involved.
Disadvantages of Day Trading
Day trading demands fast decisions and extensive daily research which can be exhaustive for certain people. Also, the extreme volatility will result in losses or a steady movement will result in very little profit, even less than the trading fee.
In extremely volatile situations where the candles switch between green and red within minutes, you will be in a rush where the charts force you to do multiple things such as research, ordering, setting a stop loss, and enhancing the awareness of senses at the same time.
What is HODLling?
Holdings, in the economy, basically means the financial assets in one’s possession. In 2013, a user in Bitcoin Forum misspelled it into hodling, and the typo was spread throughout the crypto spaces as a joke. HODL gradually became a standard word for “holding long-term” or “holding cryptocurrencies for life long”.
Advantages of HODLing
You might have come across an old tweet where a user regrets selling his 1700 BTC he bought at $0.06 for $0.30 because they are now trading at $8. This situation happened in 2011, and BTC is now trading at around $100K (21/01/2025). This is why hodling is important.
Hodling helps us to escape from the short-term price fluctuations of this highly volatile market. Also, it saves a lot of time that surrounds trading. It doesn’t require advanced knowledge of chart analysis and technicalities. However, you should HODL the coins with potential long-term value otherwise you’ll get rekt.
Disadvantages of HODLing
Certain coins that once were driving forces of the market remain drained for years. This is mainly because of the lack of real use cases and the loss of community support. When people collectively no longer believe in a project, it will collapse gradually and cannot be revived easily. As a relatively new market compared to the traditional economies, nobody is sure whether the tokens we HODL will have value 100 years from now.
HODL or Day Trade? Which is Better?
The choice of hodling or day trading depends upon each individual. Day trading is better if you are looking for short-term gains from the market. Hodling is possible only if you have spare money to lock up. Anyhow, there are specific ways such as crypto staking where you can earn rewards by hodling currencies.
If you plan to HODL, take your time to do research before choosing the coins to fill your portfolio. Frontrunners like BTC and ETH should be considered, but they should try to invest in dips. Also, moderately accumulate them through multiple purchases.
If you plan to do intraday trading, start with small amounts and gradually increase them according to your profit. Beyond the chart analysis, you should research daily, accessing every new data regarding the coin. Your eyes should reach the daily news, the community discussions, and the insider data surrounding the coin.
Conclusion
It seems like the crypto market will take another decade to settle down its incredible volatility. As an unstable market, day trading is riskier than hodling. However, if you have funds that you can afford to lose, it is better to do experiments in day trading. In either case, try to do maximum research. DYOR!
