Post
Topic
Board Trading Discussion
risk in hodling and trading strategy
by
Tytanowy Janusz
on 11/06/2018, 13:38:02 UTC
I've seen many times on this forum statements like:
"trading is risky, holding is safer"
"when you are hodling you are not making that many mistakes"
"in trading there are much more possibilities to lose money"
"if you would buy ether for 1$ look where you could be now"
"Hodler is not affected by whales making pump and dump"

Let's discuss then how does investing time goes with risk taken (lets discuss only about risk).

Hodler strategy risk:

Hodler is buying coins by fundamental (whitepaper, team, code, hype, being unique in specific segment) analysis for very long period. Hodling is a strategy very often suggested for newbies in cryptos (when you are newbie than buy good coins and sell on profit after years - I heard it thousands time). What can go wrong?

1- whitepaper is just a document with words. It can be copied and change a little. Faked. I can create my own whitepaper in which ill write that tomorrow ill be on mt everest.
2-team can be faked with fake twitter account with bought followers
3- code - who of us can check if code is OK? How many of currencies have working code now? Most of them are just concept without working product jet.
4- hype can be bought.
5- being unique didn't give you certainty of being unique forever. 1 month after your investment there can be new ICO with better team, bought hype and with working product delivered faster.
6- you are newbie and you did fundamental analyst wrong or didn't do at all just jump after hype or because someone said that its great investment
7- there are 1600 coins. More than 1400 won't survive next few years because they are not necessary. Your decision must be precised and full of luck

What if any of above will happened? Your investment will continuously goes to 0. And if you are hodler you will never sell until there will be nothing to sell. When you are buying with hodler strategy you are risking 100% of your investment. I don't think there is more risky way.

Trader

Good trader have loved coins that he checked fundamental and trade on them. He is trying to buy low and sell high. When trade is not going how he planned it he sells. He don't w8 for coin to hit bottom to panic sell, he tries to sell on the rise. His risk is set by him by stoploss which is set in his trading strategy. And it depends on time period he is investing in and expected profits. He don't fallow pump and dump.

Time period:

When trader see good buy opportunity on 1d candles he has to set stoploss lower, he takes bigger risk then but possible profit is bigger.
When he sees opportunity on 5 min candles he can set stoploss even 0,5% under buy point risking only 0,5% of his investment.

Trader is taking known risk each time he enters trade and this risk i related to expected profits. When trades are not going well he can stop trading, lock money into bitcoin or usd and change strategy. Hodler takes unknows risk - up to 100% - for unknown profit. With hope that his analysis was good and data wasn't faked. He also don't have chance to learn to invest because after first buy decision there is only hodl