The crypto market recently crashed and the Fear & Greed Index is at 19—extreme fear (at the time of writing this). For those who are looking to get rich through trading crypto, is this still possible? Or is it just a bubble?
Today we are going to discuss a divisive topic! Indeed, we have all already heard or read an anecdote about a trader who lets his losing position run, because it’s now for the “long run”!
Yes, being a trader and being successful at it, is not something you learn overnight, and it’s very different from investing. This is exactly what we will explore in today’s article, let’s go!
Trading vs Investing
What is trading? I’m sure most of you already know it, but for the others, it’s about speculating on the rise or fall of an asset in the more or less short term. In the collective imagination, a trader is very often someone who speculates in the short term. We saw this in the movies or in the press during the 2008 crisis.
Although the difference between trading and investment concerns the time horizon, which is generally longer for investment, it would be far too simplistic to equate short-term trading with short-term investment.
The different types of trader
There are indeed several types of traders according to their preferred time horizon. First of all, we have the swing trader, which uses rather long time horizons such as 4 hours or daily. The use of longer time horizons is easier to start trading because the signals generated on them will generally be more relevant.
Indeed, on small time horizons such as 5 min or 1 min, we will be confronted with a colossal amount of false signals, also known as “noise”, sometimes intended to mislead the novice trader. Traders who use such short time horizons are called scalpers, and this is a discipline reserved for the most seasoned amongst us, traders. In short, scalping is a trading style that profits off small price changes. The accumulation of these small profits along the way could become substantial over time. Similarly, one large loss could eliminate the small gains that the trader worked hard to accumulate.
In between these two extremes we find the Day-Trader, which as the name suggests, will open a trade and close it in the same day using time horizons like 5 min, 15min or 1 hour.
Different types of trading
There are as many types of trading as there are traders. Okay, it’s a bit of an exaggeration but there are a lot of methods or strategies that allow us to open a trade.
Some traders will prefer fundamental analysis, which can be balance sheet analysis as well as the evaluation of the fair value of a company in the case of equity trading. Fundamental analysis can also be used for investment as we will see later.
Others will prefer a more graphical approach. Indeed, most traders are familiar with technical analysis, or at least they know what it is. This includes a whole bunch of “graphical” methods such as supports and resistances as well as countless indicators that help the trader make a buy or sell decision.
There are still other ways of trading such as quantitative trading or arbitrage, which are often reserved for institutional trading, but not only.
Try our packs 7 - days free
As mentioned above, the main difference between trading and investing will be the time horizon. Indeed, it is not uncommon for a long-term investment, such as BTC or real estate, to have a time horizon of 10 years or even longer!
Some investment funds specialize in Venture Capital, i.e. they invest in the capital of the company directly, generally with a rather long time horizon.
Besides the fundamentals such as technical analysis, the investor would have a lot more research to do in order to ascertain the value of an investment asset. These include the macro economic factors, risk and reward profile, time horizon of the investment and many more!
To hedge against risk, it is important to diversify and not throw all your eggs into one basket. An example of this is to add the SMART Bots to your portfolio. If you are a holder in crypto, the SMART Bots can trade on your behalf on full automation to help you accumulate profits. That way, you’ll benefit from holding as well as trading.
The big question – can you get rich from trading crypto manually?
It is certainly possible but there are a lot of complex factors that contribute to the success. One thing is for sure – it requires a good amount of time, complete dedication, practice and trial by fire to be consistently successful at trading. In short and utter honesty, it is possible but not everyone is cut out for it.
Is there an easier way to trade the crypto market?
The 4C-Trading SMART Bots are developed for this very reason – to help traders and investors trade the crypto market easily, without stress and hassle! Yes, you can trade crypto using the automated SMART Bots even if you have no time or experience at trading. They are designed with automated trading algorithms to help you trade round the clock automatically.
Savvy investors never rely on just one form of investment. It is always important to build a diversified portfolio to help you cushion any unforeseen bumps along the investing adventure.
Don’t forget that there is the SMART Bots 7 Days Free Trial that you can always try out before making a decision. Having said that, neither the SMART Bots nor any investment assets in the crypto or legacy market, will give you overnight big gains. It is important to allocate a longer time horizon.
Can you make good gains with the SMART Bots?
This is a question that we will answer by providing you with the data of the SMART Bots performance record. Below is a graph of the ROI of the SMART Bots based on a projection of $100K trading capital (excluding trading fees) that dates back from January 2019 to December 2021.
Although past performance doesn’t indicate future success, it does certainly provide us with a good insight of what the SMART Bots are capable of! As clearly shown in the graph, there are two important factors that contribute to the handsome return – a good portfolio diversification across the different SMART Bots and a longer term time horizon allocation.
Regardless if you’ve chosen the position of trading or investing, one thing remains true – stay rational and non emotional, have patience and never be afraid to do a course correction should the situation calls for it.
Stay tuned for our next article on the topic of “drawdown”. It will help you immensely as a trader or investor. Understanding drawdown allows you to remain calm and focus on your goals, and not get swayed by emotions or irrational fear. In the meantime, stay safe and happy trading!