Key Focus on Learning Cryptocurrency Basics

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Cryptocurrency Basics—
Various Ways and Differences in Cryptocurrency Transactions
Both trading and investing are methods in the cryptocurrency financial market to gain profits, but they significantly differ in methods and objectives.

What is Trading?
Trading is a fundamental economic concept involving the buying and selling of assets. The objects of trade can be goods or services, and the buyer needs to pay a fee to the seller. In some cases, trading may also involve the exchange of goods and services.

In the financial markets, the assets traded are referred to as financial instruments. There is a diverse range of financial instruments, including stocks, bonds, currency pairs in the forex market, options, futures, margin products, digital currencies, and more. Even if these terms are unfamiliar, there's no need to worry; we will provide detailed explanations in this article.

Typically, the term 'trading' refers to short-term transactions, where traders actively enter and exit the market within relatively brief periods. However, this definition can be misleading. In fact, trading can have various strategies, such as day trading, swing trading, trend trading, and more.

What is Investing?
Investing involves allocating resources (such as capital) with the expectation of gaining profits. Forms of investment can include using funds for business financing, purchasing land for resale at a higher price after appreciation, and, in the financial markets, investing in financial instruments with the anticipation of selling them at a higher price in the future.

Expected return on investment (ROI) is a core concept in investing (also known as ROI). In contrast to trading, investing usually adopts a long-term approach for wealth accumulation. Investors aim to build wealth over a considerable period, spanning years or even decades. There are many methods to achieve this, but investors typically seek potential investment opportunities based on fundamental factors.

Long-term investing means investors generally do not worry about short-term price fluctuations. They maintain a relatively passive mindset and are less concerned about short-term losses.

What are the Differences Between Trading and Investing?
Both traders and investors aim to gain profits in the financial markets, but their methods differ significantly.

In general, investors expect returns over a longer period, ranging from several years to decades. Due to the extended time horizon, investors also have higher return goals.

On the contrary, traders actively capitalize on market volatility to earn profits. They enter and exit the market more frequently, often engaging in multiple trades with relatively smaller returns.

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