Navigating the world of cryptocurrency trading reveals its own jargon, one of the most iconic terms being ‘HODL’. If you’re new to digital currencies or even a seasoned trader, understanding the meaning of HODL in crypto trading can help shape your trading strategy. In this guide, we’ll unpack where ‘HODL’ comes from, what it truly means for traders, and how you can apply a HODL strategy using the cryptocurrencies available on.

The origin of HODL

The story of HODL is both humorous and telling of the crypto community’s culture. The term began in December 2013 on a Bitcoin forum, where a user misspelt ‘hold’ in a post entitled ‘I AM HODLING’. The typo quickly caught on, going viral and becoming a meme and an investment philosophy.

Since that fateful post, the history of HODL has been woven into the fabric of crypto conversations around long-term holding, bearing market volatility, and resisting the temptation to sell in a panic.

What does HODL mean?

So, what does HODL mean? In simple terms, HODL—or "Hold On for Dear Life" as it’s been retroactively cheekily defined—refers to a strategy where investors buy and keep their cryptocurrencies, regardless of price fluctuations. Rather than reacting to market swings, HODLers maintain their positions, often for months or even years.

This contrasts with more active strategies, like day trading, where assets are bought and sold in rapid succession.

HODL vs. ‘hold’

Is there a difference between HODL and 'hold'? In essence, 'HODL' is a playful misspelling of 'hold', but it has taken on a much bigger meaning in the crypto community. ‘Hold’ might simply mean retaining your investment, but ‘HODL’ reflects a firm, deliberate decision not to sell, especially during moments of high volatility.

The HODL vs hold debate is mostly cultural: HODLing implies a long-term commitment and a bit of defiant optimism, while simply holding is more neutral.

Using the HODL strategy in crypto trading

When does it work best?

HODLing tends to work well for cryptocurrencies with strong fundamentals and communities. Historically, those who have held assets like Bitcoin or Ethereum over multiple years have seen substantial gains.

Anyone considering HODLing should, however, research the coins they’re interested in and stay up to date on industry trends.

Risks associated with HODL strategy

Every strategy has risks. When trading cryptocurrencies, it is important to remember that they can be extremely volatile and past performance does not guarantee future results. If you consider also opening a crypto wallet and buying cryptocurrency, there's also the risk of losing access to your wallet, scams, and regulatory changes that might have a long-term effect on prices.

Is HODLing right for you? 

Before fully committing to a HODL approach, consider:

• Do I believe in the long-term potential of the crypto asset?
• Am I able to tolerate price volatility without feeling pressured to sell?
• Can I securely store my assets for an extended period?

If so, HODLing could be a suitable strategy alongside your broader trading goals.

Can I HODL on Deriv?

On Deriv, you can trade a wide range of cryptocurrencies. While many traders use these for short-term speculation, you can also use the platform to take longer-term positions, aligning with HODL strategies.

Things to consider when HODLing on Deriv

HODLing involves holding your positions through both upswings and downturns. Here are some tips to help you manage risk while adopting this approach:

• Diversify your holdings: Consider spreading your trades across different cryptocurrencies to reduce exposure to the risk of any single asset dropping in value.
• Set clear goals: Define why you’re HODLing each asset – is it for long-term growth, a specific project you believe in, or another reason?
• Know your risk tolerance: Only use funds that you can afford to lock away for an extended period, and be realistic about your comfort with price swings.
• Regularly review your portfolio: Markets change, and so should your strategies. Periodically assess whether your HODLing positions are still aligned with your goals and risk profile.
• Stay informed: Keep up to date with market news and any regulatory or technological developments affecting your chosen cryptocurrencies.

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The HODL strategy goes far beyond a simple typo—it’s a mindset that’s shaped the way many people approach digital assets. Whether you’re new to crypto, or looking to diversify your strategies, understanding HODLing and how to implement it can be invaluable.

Ready to try out the HODL strategy? Sign up for a free demo account on Deriv.com and practice crypto trading today.

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