Once a typo, now a popular crypto term
Originally a typo for “holding”, HODLing or HODL is now a widely used term for holding cryptocurrency as opposed to selling. HODLing has also become an acronym for Hold On for Dear Life, referring to the tactic of holding crypto when prices are increasing.
With beginnings in a Reddit post from 2013, the term quickly caught on and became apart of the vocab of the crypto community.
The art of patience
Beyond its origins as a typo, the HODLing strategy can be traced back to the tactics of the infamous Wall Street Trader, Jesse Livermore.
Reaching his peak in 1929, Livermore perfected the art of waiting. Though his tactics changed frequently, Livermore would often wait or ‘hold’ for trends to occur in the market before making a trading decision.
As put so succinctly by Livermore himself:
“There is only one side of the market and it is not the bull side or the bear side, but the right side.”
In a 21st century context, HODLing is closely linked to what is called position trading. This still embodies the long term approach of Livermore and the focus on finding trends within the market.
However unlike Livermore, who did not have access to the tools of the modern world, position trading relies on careful consideration of current charts. Position trading is also carefully planned out and generally encompasses three crucial steps.
- A plan for entry
- A plan for exit
- A plan to negotiate the risks involved
Where does crypto fit in?
The crypto universe has a history of taking things from the outside world and making it their own.
This is very much the same for terms like position holding, which the community have turned into the more dynamic HODLing.
Now a popular Twitter hashtag, HODLing or HODL is embedded in the language of the crypto sphere as a financial term and a word reminiscent of its comical origins.
Private companies = buy & hold.
FAANG stocks = buy & hold.
S&P 500 = buy & hold.
Alt coins = buy & hold.
Bitcoin = buy & hold.
Patience is key. The same strategy works regardless of asset.
— Pomp 🌪 (@APompliano) December 7, 2017
Is patience truly a virtue?
Just like any trading strategy or tactic, HODLing and position trading are just one way of approaching financial markets.
In fact, when looking at the impressive rise and tragic fall of someone like Livermore, it becomes clear that no strategy is a true guarantee of success.
In the memory of Jesse Livermore, we leave you with the wisdom of the man himself:
“Set your own rules and stick to them; never argue with the market; never make a play you can’t afford; never give way to irrational exuberance. Above all, don’t be a sucker.”
Claire is a passionate researcher, writer and analytical thinker with an interest in strategy & technical topics such as blockchain and cryptocurrency.