WHAT IS BETTER: NFT TRADING OR DAY TRADING AND WHY?

As a trader — and considering you likely don’t live under a rock — I imagine you’ve heard a lot about NFTs of late.

It’s the new “it” thing that has grabbed the attention of people from all kinds of fields around the globe. As a matter of fact, “NFT” is 2021’s “Word of the Year,” Collins Dictionary announced recently. There’s a fact to impress your friends. Unfortunately for most people, even the ones who consider themselves internet-friendly, understanding what an NFT is isn’t as straightforward as trying to understand the features of a new iPhone. The whole process can seem a little daunting!

That’s because it involves knowing about fancy and internet-y terms such as blockchain, Ethereum, token, and fungible. But don’t worry. Once you begin to understand NFTs and NFT trading, it becomes easier to compare it to our good old Day Trading. This article is an attempt at making these terms clearer for you so you can dive into what NFT and NFT trading are. I will also get into why I think Day Trading is a better and safer option than NFT trading for a smart trader in 2021. Let’s dive in…

WHAT ARE NFTS?

NFT STANDS FOR NON-FUNGIBLE TOKENS.

Yes, that doesn’t make it any clearer. Here’s a simple way to try and understand it. First, let’s begin with knowing what the word “fungible” means. It simply means replaceable. So obviously Non-fungible means something that is not replaceable.??

IN A NUTSHELL...

Consider a $100 bill. In general, this bill is fungible because it can easily be replaced with ten $10 bills or hundred $1 bills.

But let’s say you have a $100 bill from the 1970s that belonged to someone famous. Technically, both the bills have the same value since the number 100 is written on them. But practically, the old $100 bill that looks different from the current $100 bill and belongs to someone who is well known, definitely holds greater value.?That makes it a Non-fungible $100 bill.?It’s essentially like anyone being able to own prints of the painting The Starry Night by Vincent Van Gogh, but only one person owning the original painting that costs millions.??

BLOCKCHAIN

Blockchain is another term you need to understand before moving on to learning what NFTs are.

Blockchain, simply put, can be called a digital ledger that’s distributed across the entire network of computer systems (this makes it hard to be hacked or cheated). It acts as a large digital database for all transactions that happen using?cryptocurrencies. Each transaction is sent throughout the entire blockchain network to be verified as being legitimate, so once it makes it through the chain and comes back, it is listed as a legitimate transaction. If it doesn’t make?it’s?way all the way through the chain, then it is not seen as a legitimate transaction. Speaking of cryptocurrencies, Ethereum is a cryptocurrency like Bitcoin.

As a blockchain network, Ethereum is a decentralized public ledger and is the blockchain that supports NFTs. So putting it all together, NFTs or Non-fungible Tokens can be referred to as unique pieces of digital content stored on a blockchain. They can be created, sold, and traded. You can think of it as a one-of-a-kind asset in the digital world. To think of NFT’s even further, consider the UPC code on a scannable item for something at the grocery store. Within that UPC code, there is data for exactly what kind of item you are selling, whether it be a type of cereal or a type of bread.

The UPC code stores the data within itself of exactly what the item is. That is the type of data that can be stored within an NFT.

DIVING INTO NFT'S

An NFT can be any kind of a digital file.

Today, you will see common NFTs in the format of a picture, video, gif, and even a tweet! In the future, an NFT could potentially be seen as documentation methods for both physical items and potentially even the deed to a home. Where NFTs will go is all up to government and business adoption, however, so it is purely speculative as to where exactly we will see NFTs in the future. As of right now, NFTs have seen the biggest response in the art world where many artists have now “tokenized” their artwork (and received some impressive investments as a result!).

ARTIST SUPPORT

In fact, a lot of digital artists have been able to earn profits and make money from their art.

…when earlier they would have had to rely on art galleries.?NFTs has given them a way to sell their work to an audience that has made a lot of “money” through cryptocurrencies, but has not really had a way to spend it on real world items, since withdrawing from their cryptocurrency accounts and transferring the assets into fiat would make the income taxable under each country’s specific jurisdictions. As a buyer, art based NFTs allow you financially support your favorite artists. And you don’t even need physical space to store the art you’re collecting.?

ART INTERESTS

People who were never even interested in art are warming up to art thanks to NFTs.

It’s pretty wild. One popular example is?Beeple’s “Everydays: The First 5000 Days”. This was a significant milestone for visual artists around the world as it was the first purely digital NFT artwork that underwent auction. It was sold for $69.3 million in 2021 — the most expensive NFT so far. 2021 has been big for NFTs, as it saw a massive buying surge — over $200 million worth of NFTs were traded in the first three months alone.?Jack Dorsey’s first-ever tweet even sold as an NFT for nearly $3 million?after more than two weeks of bidding.??

MORE TRACTION

NFTs are gaining a lot of traction among other fields such as the NBA and gaming industry.

Trading card companies like Topps, who make baseball cards featuring players in the MLB, are moving into the space as well. They are turning their collectible cards into digital assets for their existing audiences. Maybe they know something about the future and about sustainability, and how collectible items made out of cardboard could soon become something of the past. Or maybe they are just expanding into a new industry just to see what happens. The thoughts behind why a company like Topps would make a move into this space is all speculative. Needless to say, NFTs are not confined just to the crypto world anymore.

Despite this, NFTs aren't without their flaws, and trading with them is still considered risky. Let's take a dive into how NFT trading works.

HOW DOES BRANDED ART WORK?

NFT TRADING

Buying and selling of art based NFTs, like you would with any financial instrument, is trading the NFT for a type of cryptocurrency, the most common being Ethereum.

Just like how regular artwork that you would have in your home or office made by famous artists like Shepard Fairey and Freehand Profit are seen as investments, NFT art is also considered an investment and a way to make profits. Currently, the largest marketplace to buy and sell NFTs is OpenSea. There are several other platforms and new ones are popping up frequently. Here, you can either create NFTs or you can buy an NFT that you feel has the potential to sell at a profit. Usually, you need an Ethereum wallet to access a certain marketplace but it also depends on how the creator or the seller of an NFT decides to sell it.

As a trader, you have to buy the NFT of choice by using the cryptocurrency they ask for the NFT to be bought in— you can then sell it using the one you prefer.

RISKS IN NFTS

There are many risks involved with NFT trading and it’s important for us to understand them!

1.

YOU NEED IN-DEPTH KNOWLEDGE

Just like in a regular real-world art space, you need an eye to weed out the mediocre art from the good and the great, you need an eye for weeding out the bad art based NFTs from the good ones. By good art based NFTs, I mean the ones worth investing in. And you only get a “good eye” with some amount of knowledge and experience in the industry. Without it, you’ll end up making bad decisions that might cost you huge sums of money.??

2.

THE TEAM BEHIND THE BRAND’S NFT

The team behind the brand’s NFT plays a big rold in where an NFT will go.?Aside from just having an eye for artwork, you need to understand the power behind the brand of the artist or the team who is creating the art, and who is marketing the art. For example, according to CNET, Bored Ape Yacht Club was launched in April 2021 by a team of four pseudonymous developers. They sold 10,000 art NFTs within 12 hours, all for .08 ETH. The prices of the Bored Ape NFTs started to increase steadily, but soon grew significantly.As of late November 2021, the original Bored Ape NFTs sold for 49 ETH at the cheapest price.

When you are looking for an NFT opportunity, it becomes difficult to distinguish between which brands of NFTs will see an upward trend in their values, because there are so many different artists, many who may be talented, but have horrible marketing teams, and on the contrary, many mediocre artists who are extremely talented at building hype and the brand behind their NFT’s brand. This makes it extremely difficult to decipher which brand’s and specific NFT will increase in value, while making it even harder to determine which ones will stay at the rate it was originally purchased.

3.

PRICING OF THE NEW NFTS

NFTs are run by all types of brands.?Some brands have teams who know how to increase the value of the new work that they create, based off the demand for them.?These types of branded NFTs could see steady gains in profits. However, on the contrary, many branded NFTs are ran by people who are struggling to get by. Someone who may be operating a struggling NFT business may end up decreasing the price of their newer NFTs in order to make sure they are able to pay rent for the business, which could greatly impact the price of the existing NFTs you hold regarding that brand.

In addition to this, some branded NFTs will be sold and distributed at a low price and continue to do so. Many artists do not know how to play with the pricing of their items, so while they may see a high volume of orders, they may not understand how to increase their pricing accordingly. This will keep these types of branded NFTs on the lower scale of the market, yielding little of any return at all.

4.

AMOUNT OF VOLUME OF NFTS

Unknown variables in the amount of volume of NFTs that will be available under the brand: just like with any type of company, branded NFTs can very much do anything that they want.?In 2020 and 2021, Pokemon cards started to gain popularity and demand for them increased. This brought the pricing of the individual cards to far above retail pricing. In mid to late 2021, Pokemon, being a company that wants to ensure that children are able to enjoy their product, decided to go and increase the production of the amount of cards that were available on the market. This significantly dropped the value of the cards on the tertiary market and people saw values of cards drop from hundreds of dollars for a Darkness Ablaze Charizard VMAX, to a little in between $50-60. With branded NFTs, the same thing could happen.

Even if something is within a limited production run, a second edition of that same item, or a third edition of the same item could be released. This would significantly reduce the value of the once heavily desired items, as more of them would be released into the market. On the contrary, some branded NFTs would maintain their positioning in the market and ensure they do not release additional NFTs that are similar to the ones they have already created. However, just like how any type of business could encounter cash flow or operational issues or changes in management, all of these conditions could heavily impact the future value of the NFTs that you are holding.

5.

HIGH VOLTALITY

As of now, the NFT marketplace isn’t regulated like the stock market or other such market places where you’d usually trade. This makes any kind of investment extremely volatile. Art is subjective to the value of the beholder. What was once worth millions of dollars could lose its value overnight (and vice-versa). In the future, if too many people move into the NFT market and it becomes the mainstream form of artwork being created, then even physical collectibles could hold more value than NFTs.

6.

TONS OF UNKNOWN VARIABLES

This is one of the major reasons to be skeptical of NFT trading. Since the technology is so new, the risk factor is higher compared to something like?day trading. If you want to do?thorough research on day trading?before investing in it, you have access to all the resources you need to make a calculated decision. Unfortunately, this kind of research isn’t something that is currently possible with NFT trading.??

7.

PRONE TO FRAUD

Unfortunately, there are many ways you can get duped while trading with NFTs.?There have been cases of people creating NFTs of art that don’t belong to them. To the untrained eye, an NFT with a number that is a copy of another original NFT could seem to be the original NFT itself. Additionally, some may even inflate the price of an NFT by pretending to sell it to their other accounts and pretending the NFT is in demand and gaining value. Although, as mentioned before, if you’re a seasoned NFT trader, you’d pick up on frauds like this.

But a new trader won’t be able to tell the difference between a genuinely valuable NFT and an NFT with a fraud hype. Also, since the industry is so new, there is little to no regulation that is being taken against the fraudsters in the marketplace. And especially so since they are operating in the world of the blockchain, which is unregulated by any one specific government agency.??

8.

ENVIRONMENTAL CONCERNS

The backbone of NFT technology is blockchain.?This digital public ledger is essentially the heart and soul of NFTs as a concept. There are calculations of transactions and documentation of everything happening on this blockchain, literally all the time! In the physical world this means that out there, there are computers (which are nothing like our usual computers) constantly performing micro calculations while using tons of electricity.?

This means that a lot of heat is emitted from these machines and they tend to cause a strain on the environment we’ve worked so hard to protect over the past decade. The numbers are alarmingly high and understandably concerning for many because of the carbon dioxide emissions. Several methods have been proposed to decrease these emissions but nothing as of yet seems plausible enough to fix this problem.??

Because of these risks and cons, my recommendation is that you stick with Day Trading...

HOW DOES BRANDED ART WORK?

WHY DAY-TRADE?

Yes, we have all seen the displays of wealth that popular traders often do on their Instagram. Yes, day trading can make you money. It’s tempting for sure but is it worth it?

BASIC CONCEPT

The basic concept of day trading is to buy a stock, hold it for a short period of time and then sell it making a profit.

The profit is gained by taking advantage of short-term changes in the stock price. The thing is, this doesn’t happen randomly. This is based on proven patterns and statistics. There has been so much historical data that dates back for over 100 years on how stocks have moved over the course of time. Patterns that are spotted are completely recognizable to the trained eye and there are so many data points that exist, which seasoned day traders use as indicators to make their trades. Good traders don’t just day trade as a fluke, they do it based on logic, data, patterns and strategies.

MANY FACTORS

And within that logic, they take the historic data of what patterns exist…

…how many times they reoccur each year, what signals indicate a pattern is about to evolve into a play for a particular strategy, which strategy to use in each particular event, what the win and loss rate is for each specific strategy that is implemented, what the average rate of return is, what risks are associated with each investment that is made, and how to ensure that you absolutely minimize your losses if you are on the wrong end of a trade. These movements and actions are only able to be done because of the amount of historic data that exists in the stock market. That doesn’t even exist in an even remote sense in the world of NFTs, because there is not enough data behind what is moving trends.

If there are people with large amounts of cryptocurrency who are behind the scenes manipulating the NFT market.?There is a lot of transparency within the stock market as well. Buy and trade orders are all documented, so each sized transaction is clearly documented. This allows a sense of transparency where day traders are not only able to see how much of what is being bought, but how often it is being bought and for what amounts. Also at the same time, there is an extremely high volume of stock traders who move the markets on stocks with high market caps, so the amount of trades that are made ensure most intermediate to expert traders to be able to move their money in and out of stocks as quickly as possible.

If you were to buy an NFT, you could be holding onto it for a very long time, and even without the possibility of a potential buyer for your branded NFT in the future.

DAY-TRADING

So, yes, day trading is a great idea. And definitely worth it. The potential for huge profits with day trading is very high.

This is because the small movements that happen throughout the day on a large position can result in significant returns.?The objective is to buy low and sell later on the same day for a profit.?This essentially means you’ll make and lose money on the same day sometimes. The focus is on?market patterns and research. Once you understand these patterns, you’re able to make profits every single day.?Additionally, most day traders tend to be self-employed which makes them completely independent in a way that you often don’t see with other kinds of trading.?

But with any kind of investment, no investor should ever jump into day trading without doing their due diligence.

IS IT WORTH IT?

In short, thorough research before investing your money is a crucial and non-negotiable step on your journey.

So to answer this again… Is day trading worth it? Yes. Is it for everyone? Not exactly. Day trading takes an astounding amount of patience and an understanding of the market. If you can dedicate time, commitment, and effort… Day Trading is for you. Think about the following before investing time or money in day trading. Becoming a day trader is a gradual process that involves learning, gaining knowledge, aptitude, persistence, and patience. But it is oh so worth it.?Truth is, this industry completely changed my life.?

STOCK VS. NFTS

It’s fairly obvious from the risks mentioned above that it isn’t fair to compare day trading with NFT trading.

So how does Day-Trading compare to NFT trading? One has been around for a long time and the other is still in its beginning stages. This doesn’t mean that NFT trading won’t gain more traction in the future or that it will become obsolete. It simply means that considering the current situation, day trading is undoubtedly the smarter option compared to NFT trading. NFT trading, as of recently, is the shiny new trading method that everyone wants in on. But like any new thing, the craze for it will eventually wear off.?People will move on to the next big thing and the tokens that cost millions right now might start losing value.

This is not to say there’s no value in NFT trading, but this is more about the trading being very new to place your trust in yet.?Day Trading on the other hand is always a reliable way to make some profits, as long as you study the market meticulously, and even more so if you have an experienced mentor who knows what they are doing to guide you to becoming an even better day trader.?If you understand how it can work for you, day trading can be one of the safest options to trade. So, it’s best to take the smart decision of sticking to day trading while trying to make profits with your?hard-earned money.?

CONCLUSION.

You are probably thinking about NFTs because maybe you’re looking for a change right now.?You are ready for it and prepared to reignite your zeal for life.

Day trading, if done with the right guidance and awareness, can help you earn not just money…?but freedom.??If you’re ready to step into the world of day trading, start?here.?This is the first article in my series of Investing for Beginners. Also, make sure to check out?The Freedom Challenge.?Here I help my students based on my knowledge of what to do and what not to do.?Many of my students?have gone on to make six figures in a short amount of time (some even seven figures). If you’re new to all of this and have limited knowledge as to how the stock market works, you may find it’s the program you need to get to where you desire. You may also want to?Join My Free Day Trading 101 Newsletter.

I write these emails for people who want to learn the basics of Day Trading for beginners, and the realistic, no-nonsense steps you should take to get started. Primarily, I want you to know that I’m here for you, creating the content you need. Day trading, if not done properly, can be extremely risky… but if you tread carefully, and let go of the temptation to earn huge profits in a short period of time, you will be successful.?