5 Ways to Trade Cryptocurrencies in 2021

It seems like only yesterday that cryptocurrencies became a legitimate subject that became acceptable for friendly conversations at the poker table, family outings, or even at the gym. Since the emergence of the first Bitcoin just over a decade ago, cryptocurrencies have gained more recognition, worldwide acceptance, and intrinsic value. To help you tread through the crypto wave, this guide shares some straightforward and relatively simple methods for getting started in the crypto market. So with this in mind, let’s dive in. 

Top Ways to Trade Cryptos

• HODL - “Hold For A Dear Life.” Buy and hold for (hopefully) massive returns.
• Invest - Invest in cryptos that you believe can generate a good return in a reasonable time.
• Trading - Buy and sell cryptocurrencies at any moment with a trusted platform or with contracts-for-difference (CFDs) from supported forex brokerages.
• ICO - Participate in ICOs (Initial coin offerings). 
• Mining - While not technically a form of trading but rather accumulation, crypto hardware machines can mine cryptocurrencies for you. 

Quickly, before we dive into crypto mining and trading, let’s discuss HODL. 

What does HODL Stand for? 

HODL is not an abbreviation but an accidental typo that became an acronym for Hold On for Dear Life. Consider HODL a long-term buy-and-hold trading strategy. An example of HODL is action would be Bitcoin investors, who have long navigated the volatile highs and lows on BTC. 

How/where did the term derive?

True (yet funny) story. The acronym HODL originated in a bitcoin forum back in 2013.  A highly frustrated intraday/speculative trader decided that enough is enough, and this way of trading is not working for him.

In a really heart-opening post, he goes on and on about his experiences but rather than telling you the story, why don’t you read it yourself.

HODL Strategy (In Action)

You get excited about some new project you heard about, and you immediately fall in love with the idea. No research is needed. You go ahead and buy this thing, hoping that it will eventually “take you to the moon” and 100x (to make 100 times your investment) your initial investment. There is no clear plan of action, no exit plan, just HODL. If you have a knack for identifying these strong opportunities early on, this strategy may be optimal for you. 

Investing Strategy

This strategy is relatively straightforward. Conduct your research, spot the next ‘million dollar’ opportunity, and then initiate a reasonably pre-define return. Generally, holding periods vary between months to years. When buying cryptocurrencies, sometimes a coin value will explode in value within days or weeks (although this is rare). The best part about this trading style is that it requires little speculation, no intraday trading, and no charting approaches - just simple good ole investing. 

Trading Strategy

When it comes to short-term trading, we are getting into the deep. Trading or speculating is the form of short to medium term, buying and selling coins on different platforms that offer such products. But, again, that could be happening with or without leverage and margin. 

The idea here is to make money from the short-term price swings and the very high volatility that the crypto market offers. Moves of 5 to 10% a day is a nor, and that’s what short-term traders try to catch.

In this game, you will need a unique set of skills and deal with losses. 

Participate in an ICO 

Another way to get involved in the crypto market is by participating in an ICO (Initial Coin Offering). This is pretty much the same as IPO (Initial Public Offering) if you are familiar with the stock market. In a word, the purpose of the ICO is crowdfunding. The company will offer tokens to early investors and supporters of their project. It is hard to distinguish which project or company will succeed in the long run, but applying common sense and logic should guide you pretty well.

The process of acquiring tokens from ICO might be considered both hard and easy, depending on whether you are tech-savvy or not. Once you send your money and receive your tokens, the waiting begins. If the ICO is successful, the company will be listed on exchanges, and it will start trading. 

Mining Cryptocurrencies

Another way to get yourself some cryptos is by mining them. Without getting too technical, let’s see what “mining” actually is in the crypto world.

Definition of Crypto Mining 

The process of validating existing transactions and the process of introducing new coins to the current market supply.

Those are, in general, the two functions crypto miners facilitate. So how does it work? As you know, there is no free lunch. The people doing the mining are rewarded for their work. With...guess what? Correct, tokens. 

Essentially by mining specific cryptos, you will be rewarded with tokens of the same crypto. 

There are many pros and cons on this subject, and we can merely cover a few in this short article, but here are some things to consider:

• Cost of electricity for your machines (the computers doing the mining eat a lot of electricity and produce plenty of heat which must be controlled somehow - fans/cooling systems).
• The reward/cost ratio. In other words, how much are you going to spend for a potential reward?
• Which cryptocurrencies to mine?

As you can see, the crypto world provides enough opportunities in all shapes and sizes. Which one works best for you? That is for you to decide. 

However, whichever way you choose to go, keep in mind that the crypto market is relatively new, extremely volatile, and carries risk (and reward). Good luck!