A popular mantra in investing circles — especially in crypto and stocks — is “just HODL.” This leads to the widespread belief that holding is always better than trading. While long-term holding can yield strong returns in bull cycles, the idea that it’s always the superior strategy is a myth. In reality, holding and trading each have strengths, weaknesses, and appropriate use cases. The right choice depends on your goals, skill level, time commitment, and market conditions.

This article unpacks the myth, compares both approaches, and shows how to use each strategically.

Why the myth exists

1. Historical bias toward bull markets
Long-term holding strategies like “buy and hold” have worked well during multi-year bull runs — in both equities and crypto. This fuels the belief that simply holding always wins.

2. Survivorship bias
We hear stories of Bitcoin holders who turned £1,000 into millions — but not about those who held altcoins into oblivion or sat through 80% drawdowns with no recovery.

3. Anti-trading sentiment
Trading is often seen as gambling, stressful, or “too hard for most people.” This drives passive investors to label holding as safer and smarter — even if it’s not always more profitable.

4. Simplicity appeals emotionally
Holding feels easy, low-effort, and emotionally detached — a psychological escape from the pressure of decisions, entries, and exits.

When holding works best

• During long-term uptrends
  E.g. S&P 500 post-2009, Bitcoin from 2016–2021. Trends driven by macro expansion or adoption tend to reward patient holders.
• For fundamentally strong assets
  Holding works better on assets with proven use, steady demand, and structural tailwinds (e.g. top-tier stocks, BTC, ETH).
• When you lack time or expertise to trade
  Passive investing suits people who want exposure to markets without active management.
• In tax-advantaged accounts
  Holding can be more tax-efficient, especially in retirement accounts or long-term portfolios.

When trading works better

• In volatile or sideways markets
  During periods like 2018–2020 in crypto or 2022 in equities, trading often outperforms holding, which may yield flat or negative returns.
• For high-momentum opportunities
  Short-term catalysts (e.g. news, earnings, macro events) create price spikes that can be captured actively.
• To reduce exposure during uncertainty
  Traders can move to cash, hedge positions, or scale in/out — while holders may ride deep drawdowns.
• For diversifying strategies
  Trading lets you profit in both directions, access leverage (safely), and apply structured risk management.

Pros and cons of holding vs trading

Aspect	Holding	Trading
Time commitment	Low	High
Stress level	Lower (usually)	Higher, especially intraday
Skill requirement	Minimal	Moderate to advanced
Tax efficiency	Better in most cases	Can be worse (short-term gains)
Profit potential	Depends on cycle duration	Higher in volatile or range-bound markets
Risk control	Limited (ride full drawdowns)	Strong (can use stops, hedging, cash outs)

Best of both worlds: hybrid approach

Smart traders and investors often combine the two:

• Core holding portfolio for long-term wealth creation
• Active trading account to generate income, hedge, or exploit volatility
• Periodic rebalancing to lock in profits or cut underperformers
• Staged entries/exits to blend technical timing with long-term conviction

Conclusion

No — holding is not always better than trading. It’s simply one strategy, suited to certain goals, market phases, and personality types. Trading, when done with structure and discipline, can outperform holding in choppy markets or help smooth out returns. The best traders and investors understand when to hold, when to trade, and when to sit out entirely.

To master both long-term holding frameworks and short-term trading strategies — and know when to use each — enrol in our Trading Courses at Traders MBA, where timing meets conviction, and strategy beats guesswork.