After you’ve bought some bitcoin and you start putting together your strategy, you will need to decide if you are going long term or short term on your trades. Each person has their own personality and this can have some control over your trading style. Here are some pros and cons in short and long-term trading.
Short Term Trading
If you like the rush of watching the markets close and getting quicker returns. Short term trades usually only last from a few days to a few weeks but it takes time to watch for good entry or exit.
Pros of Short Term Trading
Faster trades means faster money. One style is called “Day Trading”. Day trading is a very short term style in which all positions opened at the beginning of the day are closed the same day. If you see one of your trades going bad you back out quickly and avoid higher losses. Another form of short-term trading is referred to as “Scalping” and focuses on intra-day price movements. A pure scalper will make numerous trades each day — perhaps hundreds of them. Profits are small, but risk is reduced. Scalpers usually follow short period charts, such as 1-minute charts, 5-minute charts, or transaction-based tick charts and the ability to rapidly execute trades with low commissions is essential for success.
Cons of Short Term Trading
Relatively more stressful because you spend a good amount of your time closely watching prices. Lots of screen time – especially for scalping. Short term charts can be more volatile and unpredictable. If you are not careful the rug can be pulled out from under you.
Long Term Trading
Positions that are held open for months or even years are considered to be long term trades.
Pros of Long Term Trading
Less stressful than short term trading. No need to babysit your positions. You can relax and look forward to future market conditions. You can take advantage of compounding by taking the gains and investing them back into the market for larger returns. Long term trading can also give you breaks on taxes.
Cons of Long Term Trading
Missing out on taking advantage of moments of volatility in the markets. You will need to do a lot of research before making your long term trade and this can be very time-consuming.
In the search for information, we found it a little difficult to find the cons of long term trading. It seems overall that long term trading is the safest and most profitable, particularly if one follows the news and takes profit when the price rises dramatically.