IN the world of crypto asset investment, investors have two main approaches that can be chosen according to their investment style and goals, namely active trading and passive investment.
These two strategies offer different ways of managing a crypto asset portfolio, with each having its own advantages and risks. The following is the difference between active trading and passive investment according to Pintu Academy.
Active trading: chasing short-term profits
Active trading in the crypto market is regarding taking advantage of price fluctuations over short time frames. As a result, this strategy demands a significant commitment of time and attention from traders, as it involves technical and fundamental analysis to identify profit opportunities.
Some popular methods of active trading include:
Daily trading
This strategy focuses on buying and selling crypto assets within a day, with the aim of taking advantage of daily volatility to make a profit.
Also read: These are tips before diving into the world of crypto trading
Swing trading
This approach takes advantage of price fluctuations over weeks or months, based on technical and fundamental analysis.
Trend trading
Also read: These are tips for managing FOMO in crypto investment
This strategy aims to follow larger price trends, be they up or down, and requires patience and long-term analysis.
Scalping
This method aims to gain profits from small price differences that often occur, and is generally carried out by experienced traders.
Also read: Strategies to Maximize Crypto Investments for Investors
Passive investment approach
On the other hand, passive investing places more emphasis on selecting assets to hold for the long term, without being too affected by short-term market volatility.
This strategy is more relaxed and does not require constant market monitoring.
Some passive investment tactics include:
Buy and Hold
A classic strategy where investors buy and hold crypto assets for a long period of time, in the belief that the value of the asset will increase significantly.
Regular Savings (Dollar-Cost Averaging)
This approach involves purchasing crypto assets periodically for the same amount of money, allowing investors to reduce the impact of price volatility. For example, investors can take advantage of the Auto DCA feature of the PINTU application.
The choice between active trading and passive investing depends on several factors, including investment goals, risk tolerance, and time availability.
Active trading offers the potential for higher profits in a short time, but comes with greater risk and requires dedication and a deep understanding of the markets.
In contrast, passive investing is an option for investors seeking long-term growth and less risk, although it may take longer to see significant returns.
Understanding these two approaches can help investors make better decisions tailored to personal preferences. (RO/Z-1)
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