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Mining vs trading - What is more lucrative?

As you already know, trading can be very lucrative. You've probably already gained some experience regarding the stock market, but what about trading with cryptocurrencies? Could it be more profitable than trading stocks? And what about mining?

First of all, the answer differs from person to person. That means that mining might be a perfect fit for a unique person while trading is the only thing that creates positive results for another one.

Mining Cryptocurrencies

Mining cryptocurrencies yourself

In the early days, you could mine Bitcoins with your own PC or Notebook, gathering hundreds or even thousands in a single day. However, today more and more people want to take part in the Bitcoin gold rush, as its price has risen tremendously.

Many people have built big mining farms with thousands of graphics cards and coolers. You might wonder, whether you could start such a mining farm too. But nowadays, it's nearly impossible for an average person to engage in Bitcoin mining and to make a profit. When thinking about starting your own, you should bear this in mind: It requires a significant sum of money to buy all the necessary equipment, and you need to select a location with low electricity costs.

If you can afford a so-called ASIC miner and have suitable electricity costs, you might earn more than simply investing in the same amount of Bitcoin long-term. Otherwise, you will only have a slight chance to compete with all the big mining farms in China and Iceland.

The risks of mining bitcoin yourself

But keep in mind that mining could be even riskier than trading cryptocurrencies.

Why is this like that? During the mining process, your mining equipment could potentially be damaged, as the gear is running continuously at maximum performance. Therefore, if you want to mine for yourself, you should consider buying at least four of these expensive machines, each costing as much as a new high-end gaming computer. Moreover, nobody can predict the future and how mining will progress. But as the majority of people who have invested in cryptocurrencies trust the cryptocurrency market and don't believe in a ‘bubble,' you can be quite sure that it will get a lot more difficult to mine in the near future.

The risks of mining altcoins yourself

So, what about mining altcoins? This is even riskier.

If you fall for a pump-and-dump coin with no real value, you need to be aware of the right market timing and when to sell. You need to know the company and the team behind the coin, to evaluate the fair price of the altcoin so that you can sell it when the price is exaggerated.

Cryptocurrency cloud mining

Another way to participate in mining is called ‘cloud mining.' Cloud mining can be a good alternative if you are looking for a safe crypto market investment.

With this way of mining you only have to pay for a small percentage of a mining company to get a linear reward. This means that you won’t have to acquire the whole equipment, search for a location with low electricity cost or worry about failing equipment. Reputable mining companies will have high-quality coolers and continuously invest in top gear. However, as it is commonly known: more safety means less profit. In addition to that, you have to watch out for scams in the cloud mining space. It’s just like investing in less-known altcoins; you have to do your own research, check reputable sites like Tradimo and learn more about the mining companies advertising there.

Trading cryptocurrencies

Although most of the traders already have experience regarding the stock or Forex market, you need to bear in mind that cryptocurrencies are new. Therefore, you should consider changing your trading strategies.

If you only want to trade cryptocurrencies you can simply store them at an online exchange. But do not forget, what had happened during the Mt Gox scandal and that in most countries cryptocurrencies have not been regulated yet. Mt Gox was once known as the biggest and most secure online exchange until all client funds went missing. With a rise in regulations, governments could prevent people from having full control over their coins. Any government regulation could have an immediate and radical impact on the price. As an active cryptocurrency trader, you have to be constantly up-to-date.

But there are also other reasons that make trading with cryptocurrencies very risky. Some exchanges offer leverages to open long or short positions. Although it might make sense to go long on a cryptocurrency like bitcoin because you believe in the future of the technology, it could turn out to be the wrong decision during particular timeframes, as other traders and speculators will influence the price; especially when trading small or new cryptocurrencies.

Being greedy and getting affected by new and interesting ICO's could end up as a nightmare since there has been a high scam rate among ICOs historically. This may change as the market establishes. But be careful! Bitcoin has a very high volatility, although it has a multi-billion dollar market capitalization. This means that you'll need steady nerves and a good strategy with clear risk and money management rules. It is recommended to only trade an amount of money that you can afford to lose. Simultaneously it could be very lucrative to trade right now and to take advantage of the digital currency boom, even if you are only trading with small amounts!

Conclusion

As you see mining is getting less profitable as more and more people join the mining effort. So the final share of mining for each individual is much smaller than it used to be in the past.Trading cryptocurrencies, on the other hand, is becoming more and more similar to Forex and stocks trading, so traditional trading rules are applied up to a certain extent.

Every trader needs a trading journal. As a Tradimo user, you qualify for the $30 discount on the Edgewonk trading journal. Simply use the code “ tradimo” during the checkout process to get $30 off. Use this link to get the discount.

Opening a trading account

The details behind opening an account and trading will be covered in the next lessons. If meanwhile, you want to open an account with a broker feel free to do so. you can get yourself familiar with the terms and conditions, the interface and the overall services of the broker/s you choose. Remember you can start trading and practicing with a demo account.

At Tradimo we have partnered with the three most reputable brokers when it comes to cryptocurrencies. When you open an account from this page and deposit you will get offers exclusively for Tradimo learners.

Go ahead and explore!