5 Things You Must Know About HODL

Cryptocurrencies have become the hot new method of trading, one capable of making investors huge amounts of money in a very short period of time. That being said, the crypto market is extremely volatile – much more so than regular stocks or bonds – and this volatility is not for everyone. It has also led to an array of new strategies and trading philosophies – HODL being one of them.

What is HODL?

According to the financial experts at SoFi Invest, the term “HODL” actually came from a misspelling in a Bitcoin forum: “The term HODL originated as a misspelling of the word ‘hold.’ Ultimately the acronym Hold On for Dear Life was attached to the term.”

HODL is the idea that you can’t time markets correctly. As such, you just make a purchase and hold on for as long as possible. It is part investing strategy, part crypto philosophy: Screw the trades. Just hold on.

Five things to know about HODL

First, it is not for the faint of heart. The idea behind HODL is that you don’t try to time markets, that you just make a buy and hold on. This fits well with the crypto ethos, which can often be confused with a philosophy against traditional markets and standard analysis. It involves not listening to your emotions, but simply buying and holding. This can be difficult, and if you are a trader that does not do well with volatility, this strategy may not be for you. 

Second, HODL shouldn’t be confused with “just buy blindly.” If you are going to implement a HODL strategy with your own investments, you still need to do your homework and invest in a crypto that has strong fundamentals and fits your portfolio needs well.

Third, understand what HODL is: A buying and holding strategy. This may sound obvious, but remember, the purpose of HODL is to keep you from overanalyzing, from suffering from a fear of missing out, or from selling prematurely. Some people view it as a philosophy more than an investing strategy, and that may work, but if you are looking to make more money, get rid of emotions and view HODL for the investment strategy that it is. 

Fourth, even within your crypto portfolio, you have to diversify. This means that you may HODL certain coins or currencies, but actively trade others.

Fifth, consider an exit point. Yes, HODL is great, but there are modified versions of this philosophy that may work. If you are investing for the purposes of making purchases, HODL until your crypto hits a certain point – then sell. Just make sure you know what that point is. 

As you can see, HODL isn’t for everyone – but, then again, neither is cryptos. As always, do your homework, and make sure you are implementing a buying, selling, and holding strategy that can fit your financial needs. Furthermore, remember, cryptos are all about volatility, so if you are going to implement HODL, be prepared!

Ethon More
Hello , I am college Student and part time blogger . I think blogging and social media is good away to take Knowledge