Securities trading comes in more forms. Some people choose to try their hand at day trading while others feel crypto investing better meets their needs. What are the differences between these options? 

Crypto Investing

Cryptocurrencies differ from fiat currencies in that they aren’t issued by a government or central authority. This means there is no entity controlling the value of the currency, interest rates, or supply. Individuals who don’t like government involvement in the free market because they believe it interferes with wealth building for the average person often turn to cryptocurrencies as an alternative.

If a person invests in cryptocurrency, they do so intending to hold on to the currency and allow it to gain in value. When it does increase after a period of at least one year, they sell it and make a profit. People find they can invest in cryptocurrency with nothing more than a few hundreds of dollars, but they are subject to management fees as well as capital gains taxes. Men and women who wish to know more about crypto investing can visit Coinbrary for more information. 

Crypto investing is like investing in the stock market over the long term. The main difference between investing in stocks and investing in cryptocurrencies lies in the risk involved. As cryptocurrency remains relatively new, the investor assumes more risk. However, price appreciation may not be the only way they generate income. They may earn money from dividends, forks, and airdrops. 

Investors must understand the fees they will pay when purchasing or selling cryptocurrencies. However, those who choose this option find they don’t pay as much in fees as day traders do because they don’t trade as often. This means they get to keep more of the money earned on their investment. 

Day Trading

Day traders buy a stock hoping to sell it at a pre-determined price. They also sell stocks and buy them back when they hit a certain price. Day traders aren’t in the market for the long run. They don’t hold on to these stocks for more than a day. However, a person must have a minimum of $25,000 in capital to trade in this manner, unless they are trading in Forex and futures. The fees they pay are determined by the number and size of the transactions they complete. 

Day traders often only hold on to their stocks for seconds or minutes. They never carry a stock over to the next day. However, they must use a broker to complete the transactions in the United States. These brokers require clients to maintain a minimum daily account balance, which they refer to as a margin. If they trade four or more times in five days, their margin account must have at least $25,000 under current trading regulations provided by the United States Securities and Exchange Commission. There is an exception for individuals day trading in currency markets. They need at least $1,000 for these trades and $5,000 to trade futures. 

Fees can quickly eat into a day trader’s profits. For this reason, a person must know the fees they pay, the number of trades they complete, and how much they are trading in terms of value to ensure they are making a profit. 

People often assume they must choose either investing or day trading. This isn’t the case. A person may choose to put some of their funds in investments while reserving the rest for day trading. Each individual must do what feels comfortable for them, as they know the level of risk they are willing to take on and what they feel comfortable investing in.