Many are being exposed to financial matters for the first time. Being involved in cryptocurrency means we are instantly immersed into the financial arena. Having some basic skills is important.
In this video I discuss some of the basic differences between trading and investing.
▶️ 3Speak
At one point(2019 or something like that) I had something like 90% of my crypto portfolio as long-term and 10% of it was dedicated to trading and gradually I turned my whole portfolio into a sort of a trading one and that's how I screwed potential juicy gains for the years to come. I once had 566,000 DOGE which could have made me a few hundred grand, but I tarded these for I don't know what and so on and so forth until I ended up with a pile of garbage that I bought too late, held for too long(mid 2022) and this way it took me two cycles to learn my lesson. The way I see it for someone that's less than a cycle in crypto investing and opting for noncustodial storing is the best choice. I bet less than 10% of the traders in crypto make life-changing money by doing that. There was even a study a few years ago that proved traders in crypto make less money than investors do. Many of the traders are actually gamblers the way I see it. I was one of them. I've done that with AVA, RUNE, ADA, etc...
It is easy to do. The lure of quick money is powerful. We all can fall victim to that.
We have to resist it. There is nothing wrong with trading for those who focus upon that but not with our entire accounts.
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When I was in the stock market, I am 100% a trader. Transitioning to Hive, I describe myself now as a micro-investor 99% and 1% an HE token trader.
Trading is a lot tougher than investing and time is definitely a factor. If you are trading, you should generally follow your plan because emotions hurt you. You need to be quick to decide when to take profits or cut your losses.
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Trading is very difficult, that is for sure.
Those who can do it well can mint money.
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Hello @taskmaster4450le
Thank you for your video on the basic differences between trading and investing.
Barb
#thriveonhive
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Summary:
In this video, Task emphasizes the importance of distinguishing between investing and trading, particularly in the realms of finance, cryptocurrency, and DeFi. He explains that the key difference between the two is the timeframe – short term for trading and long term for investing. Task elaborates on how traders focus on price movements and momentum, while investors prioritize underlying fundamentals and long-term growth potential. He highlights the significance of enduring short-term fluctuations in value for long-term gains in investing. Task concludes by emphasizing that traders aim to profit quickly, while investors aim for sustained growth over time.
Detailed Article:
Task starts the video by underlining the significance of understanding the disparities between investing and trading, asserting that fundamental financial skills are crucial in today’s landscape, particularly with emerging sectors like cryptocurrency and DeFi gaining momentum. He points out that participating in platforms like Hive inherently involves financial decision-making and prompts individuals to consider what to do with the tokens or coins they receive as rewards.
The crux of Task's discussion revolves around the critical factor of timeframe when differentiating between investing and trading. He elucidates that a short-term outlook characterizes trading, where individuals seek quick gains by anticipating price movements in the near to medium term. In contrast, investing entails a long-term perspective, focusing less on current prices and more on underlying factors like company performance in the case of stocks, overall potential in cryptocurrencies, or the impact of technology projects.
Both strategies entail unique priorities – traders prioritize price movements and taking advantage of short-term opportunities, while investors are more concerned with the long-term growth and development of the asset or project in question. Task delineates how successful investors like Warren Buffett view market downturns as opportunities to acquire assets at a discount, emphasizing the importance of looking beyond short-term price fluctuations.
Moreover, Task stresses the inevitability of experiencing some losses or periods of stagnation in investing, emphasizing that the key question for long-term investors is how different things will be in the future. He highlights the importance of projecting future growth based on historical performance and company projections, indicating that a sustained track record of growth can serve as a reasonable basis for future performance estimates.
In conclusion, Task reiterates the contrasting mindsets of traders and investors, with traders focusing on quick profits and capitalizing on short-term market movements, while investors emphasize a more patient and strategic approach to long-term wealth accumulation. He emphasizes that each approach has its merits and suits different individuals based on their risk tolerance, financial goals, and time horizons.