Trading, a business very different from investment

Trading, a business very different from investment

If the activity of day-trading can seem attractive, making the prospect of winning fortunes while staying in front of his computer, the reality is quite different. According to a company, 90% of day-traders end their year in the red. Most of the remaining 10% traded their profession with a constant watch on the markets and the fundamentals of values. It is a complex, stressful and risky job that requires real skills and always keep calm. Contrary to what sellers of “formations”, YouTubers or other “influencers” often want to make-believe, trading can be very difficult to be a subsidiary activity bitcoin to another occupation

The best weapon against volatility: the investment at constant cost

The constant cost investment, or dollar cost average in English, is to smooth its investment over time, regardless of the valuation of the asset. This makes it possible not to have to ask the question of whether it is the right time to buy and to accumulate capital as and when over time.

We get more units of the asset when its price drops and less when its price increases, but the investment charge remains the same in each period. Smoothing your investment also smooths your “average cost of purchase” and reduces the impact of volatility on your portfolio.

What results for the dollar cost average over the last two years of Bitcoin?

An investor who would have started in September 2017 to buy bitcoins at € 100 a week, regardless of the price of Bitcoin, would have crossed both the bubble of the end of 2017 and the bear market of the year 2018.

While these periods made the fortune or the ruin of the day-traders, our investor would have remained imperturbable and would have methodically invested the total sum of 10500 € in 104 weekly purchases of 100 €.

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