So your deciding to buy some cryptocurrency but not sure what to do with it. You can either buy a small piece and leave it or you can trade with it. So what is the difference?
Say you have £1000 to invest, so you buy some Bitcoin. At the current price, your £1000 will purchase just under 8% of a Bitcoin. You can then just leave this 8% to fluctuate with the price, but you will only ever have 8% if you do not invest anymore. This is where trading is different. You can take your 8% and trade up to 100x that amount, so £100,000, through margin trading. You can see our guide to margin trading here. As the price stands now, that is just under 8 full Bitcoin.
By trading rather than just buying and holding Crypto, you can actually make money be deciding on whether the price is going up or down. But how do you make money when an investment you have goes down in value? We have given you a very simple explanation in our buy or sell article.
There are pro’s and con’s to both ways of investing. If you invest in a coin and just hold it as an investment, your investment will always be there and just fluctuate with the price, although the size of your investment will stay the same. If you trade with your investment, you can change your 8% in to 80% or even 800% with the correct strategy. However, trading can lead to losing all your investment if you are not careful.
Be careful, as volatility trading can both be lucurative and costly. Make sure you understand the risks before beginning.
If you would like to know how to begin trading, read our trading tutorials fully before starting.
Ready to trade? Click here to begin.