The crypto space has been digging its way into the bustling finance arena where crypto assets like XRP are traded actively. XRP – is the native currency that operates on XRP Ledger, well-known for its high speed, low-cost, and efficient transactions across the globe. Ripple’s On-Demand Liquidity ODL is an added perk to XRP network. It attracts a diverse community of traders and investors towards XRP. But many investors and traders don’t know which strategy will be better. When it comes to XRP investment strategies, many market participants are typically approaching two main strategies, Day Trading and HODLing.
These two methods aim to profit the XRP users with high returns. But when it comes to the execution process and risk tolerance they both differed. Hence, it is essential to understand the key differences between Day Trading and HODLing. This may help you to determine which strategy suits your XRP investment. Let’s dive in.
What exactly is Day Trading?
Day Trading – is the process of buying and selling or trading XRP within a single trading day. The main goal of day traders is to capitalize on short-term price fluctuations. Usually, shorts-term price rise occurs when the XRP headlines on the news, market sentiments, and technical indicators. Investors who choose day trading strategies, usually rely on the daily charts which encompasses chart patterns, Moving Averages, and RSI. This may help traders to predict the XRP price and volatility on the crypto market to make an informed investment decision.
Advantages of XRP Day Trading
- Instant Profit: A skilled or professional trader can profit from XRP investment by capitalizing on XRPs volatility.
- Leverage Opportunities: Many top crypto exchanges in the crypto market offer leverage opportunities. It allows traders and investors to take over large positions with less capital.
- Market Agility: As mentioned earlier, in day trading, the price fluctuations of XRP reacts to the breaking news and dynamic market shifts.
Drawbacks of XRP Day Trading
- Time-Intensive: For a successful XRP day trading, traders should constantly monitor the daily chart and news feeds.
- Market Volatility: The cryptocurrency market is notoriously volatile, if you trade at market volatility, your investment could end up with losses.
- Emotional Toll: Sometimes, the fast-paced crypto market could trigger emotional toll like stress among the traders.
What exactly is HODLing XRP?
HODLing is the long-term trading strategy where traders can buy and hold their XRP for long-term.
Advantages of XRP HODLing
- Lowers Stress: HODLing strategy eliminates the need for constant monitoring and emotional toll.
- Potential Gains: XRP has significantly seen Bull runs in the past. Long-term holders usually benefit when XRP encounters parabolic price fluctuations.
- Taxation: Taxation on XRP will be lower in the long-term trading when compared to the short-term trading.
Drawbacks of XRP HODLing
- Market Uncertainty: Since the crypto market is volatile, predicting XRPs price movement depends on the XRP regulatory challenges.
- Lead to lower cost: If traders hold XRP during bearish sentiment, investors or traders might lead to sell their XRP at lower cost.
- No Active capitalization: Like Day Trading, HODLers don’t earn or cash out XRP to the real-world price on a daily basis.
Investors who are ready to accept high risk tolerance can go with HODLing trading.
A Hybrid Approach
Besides Day trading and HODLing, some XRP investors opt for hybrid strategy. What exactly is Hybrid strategy? Some market participants hold a large amount of XRP for long-term trading and allocate a small portion of XRP for day trading to capitalize good returns.
Conclusion
Wondering which trading strategy suits your XRP investment? Ultimately, both Day trading and HODLing XRP have their risks and rewards. Understand your investment horizon, risk tolerance, and potential benefits. This may help you to choose wisely.
