HODLING on for dear life: A simple trading strategy
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HODLING on for dear life: A simple trading strategy
Investing Basics
May 28, 2021

HODLING on for dear life: A simple trading strategy

In the BOTS app, you will find a variety of trading bots. They all follow a particular trading strategy, and for a beginner, this all may be pretty confusing. In this article, we will introduce to you one of these strategies called the HODL strategy.

You spelled hold wrong

First, let’s begin with the word “hodl,” which stands for hold, but many in the crypto community refer to it as hodl. The origin of this misspelled word is the Bitcointalk forum, where a seemingly drunk trader commented on a significant crash of the bitcoin (BTC) price. In 2013, bitcoin’s price rose from $15 at the beginning of the year to over $1,000. But panic caused by a Chinese crypto ban made the bitcoin price fall by almost 40%.

Many traders sold, but not this trader: “I AM HODLING,” he said. “I type d that tyitle twice because I knew it was wrong the first time. Still wrong. Whatever.” This misspelling of “hold” soon became a meme of its own and spread like wildfire. That is why crypto traders still refer to this strategy as “hodling.” But what exactly is this strategy?

A way to deal with volatility and FUD

The crypto market is known for its volatility. Price drops and rises of 40% or more are common, and often there doesn’t seem to be any logic to these wild moves—a true rollercoaster ride for those who aren’t familiar with crypto and even expert traders. If you want to trade with crypto or even in traditional markets, timing is a big issue. When do you buy, and when do you sell?

You likely find yourself buying high and selling low, while it should be the other way around. This can be frustrating and, of course, causes you to lose money. Furthermore, it makes you doubt crypto as a viable investment opportunity or even yourself! Luckily, hodling is a simple strategy that you can follow to take away much of this stress. It simply means that you buy a coin and hold on to it for the longer term. Thus, you don’t let short-term price volatility influence your decision and just ride out big corrections. In short, you buy crypto, forget about them, and see what it has become in a couple of years!

Let a trading bot hodl for you

That sounds simple, right? Well, it may not be that simple because you’re still dealing with your emotions. Let’s say you bought some bitcoin, and you see the price drop by 50%. Do you still feel confident about having bitcoin? You may tempt yourself into selling, thinking, “I will buy back lower.” But that would go against the strategy and philosophy of hodling. And what if the price jumps back up? Then you’ve missed the train, and it likely won’t stop any time soon!

Trading bots can help you make this a lot easier. Their algorithm picks out the best moments to buy and then hodls the position. For example, Boosting Alpha has several HODL-trading bots that target the top 3, 5 or more. As they are long-term trading bots, don’t expect a lot of action. It is essential, though, to let the bots do the trading. They will help you stick to the long-term strategy of hodling!

Check out the BOTS app to find out how well these HODL-trading bots perform.

There is no such thing as risk-free trading. It is possible to lose (part of) your stake.

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