Trader

Trader vs. Holder

When you are in the world of crypto for long enough, you will often hear the terms “trader” and “holder” (some may say HODL instead of HOLD). What do they mean?

Disclaimer: The entire article reflected on my understanding with my own experience. It is subject to be different based on different point of view.

Similarity

When it comes to crypto trading, no matter if you are a trader or a holder, your long-term goal is to make money. Nobody has ever said that “I trade crypto for fun and entertainment.” Let’s face it; we are here for the same goal: To earn money that provides capital gains for daily profit. We are not here for fun or excitement.

Major difference

The significant difference between Holder and Trader is the perspective towards trading.

Trader: We are here for the short-term profit, and we don’t care about coins

For a trader, the opportunity to earn a profit, no matter short-term or long-term, is the ultimate goal. If some coins reach the technical reversal point, they will place their order and wait for a profit-taking spot. It has proved that even though Technical Analysis hasn’t shown full potential on Crypto, but there are still some opportunities that you can make money with charts.
Furthermore, the trader will ride the news efficiently. If a coin is going to list on significant exchanges, current prices may pump up heavily. That’s the opportunity for a quick 10-200% gain on a single investment.

Sample cases:

  • I know that coin ABC will be on Binance next week, so I buy a lot of ABC coins right now. Next week, right after the announcement of Binance, I sold all ABC coins and packed 20% profit.
  • Based on both technical and fundamental analysis, I see that coin XYZ will have a major breakout above the resistance to reach 10% higher than the current price, so I bought XYZ coin and waited for the breakout, sell it for %10 profit.

Hope that those two cases give you an insight into the trader’s point of view.

Pros

  • Fast, easy to react and earn a profit on the market
  • Applied both analysis and news to make sure the direction is correct
  • Many options, many coins to select and trade, versatile.

Cons

  • Not significant profit (10% is not a big deal in the crypto world, trust me)
  • Relied a lot on trades and depended a lot of both Buy-side and Sell-side (if you have sold your coins and it flies again, cannot sell anymore)

Trader

Holder: We believe in the future of a project, and we are not selling till we reach x5 profit

Holder is like Investor, aims to buy a good project at a reasonable price, and then keep it there till it reaches the sky. The Holder often stays off the trading platform, try their best to improve the reputation of the project they are following and try to get more and more people involved in the project. The holder aims for long-term profit.

Sample cases:

  • I have experienced many cases that holder can earn a lot of money. Take an example of Cardano (ADA), after the ICO; it listed on Bittrex at a price was around 200 Satoshi. It has reached the highest of over 6000 satoshi and has many tours around that peak. So, let’s say you had repurchased your bag of ADA when it was Satoshi, getting 30x from your investment is n-sweat.

Pros

  • Peace of mind, stay away from most of the painful day-trader things
  • Enjoy a huge profit if the project achieves a major milestone

Cons

  • Rely on one or little number of project
  • Cannot flexibility invest in other projects since capital is locked
  • Cannot diversify risk, if the project is not successful or involved in a scam, can lose the whole investment.

Which is better?

For me, it pretty much depends on your goal and capital allowance. I will share more about capital allocation in another post, in this post, I want to give you some ideas:

No matter if you oriented yourself as a trader or a holder, a combination of both is the best. If you can put some capital aside for a big project that you believe to bring significant impact to the market, the rest should be for trading.

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