Cryptocurrency trading guide based on news
In some cases, cryptocurrency trading is similar to forex and stock trading. All of these assets can be leveraged through a wide range of trading strategies and the use of technical and fundamental analysis .
In this article, we will focus on fundamental analysis and how to trade cryptocurrencies based on the news . Fundamental analysis is analysis in which the analyst examines the news, events, and external conditions of an asset .
In the stock market, as you probably know, corporate news has a huge impact on prices. Especially for low-value stocks, positive news can lead to strong price growth. The same goes for forex. In forex, technical analysis is mainly used for short term and fundamental long term analysis.
Trade cryptocurrencies based on the news
Trading based on the news in the cryptocurrency space of the stock market and forex can be much more profitable. The main reason for this problem is the lack of institutional investors and mutual funds in the cryptocurrency world. In this area, the scales are highly skewed towards independent and regular traders, which means that if you act on time, you have a great opportunity to profit from cryptocurrency news.
The most important things to watch out for in trading based on the news:
You should evaluate the news well. Is this news new or has it already affected the market?
Follow how the price moves after the news is released. Does the news only report the outcome of the transition based on that event or does it provide new information?
Is this news effective in increasing the price? Or is it normal news? Will it be effective in the long term or will it only lead to a slight uptick?
Does the cryptocurrency in question have room for growth in the short term? How many people are already following the news of this digital currency ?
All of the above items in the news item should be thoroughly reviewed in order to minimize investment risk to the lowest possible level. Therefore, if you consider the news a positive sign of a rise or fall, act rationally. Note that practice and experience in reviewing news is very important. Remember, too, that negative news can appear after positive news and upset all of your equations.
The news has just been released and the first price reaction has been felt. This is your first opportunity to position yourself in the market and take advantage of it. And if bounce and growth are a good asset, you can make your first trade at that level.
Stage 2 – Buyers join the new audience :
After an initial profit, the price moves slightly back in the opposite direction at a small point. This often happens because all the traders who were willing to buy have already fulfilled their orders. The market now needs new buyers to continue the upward movement. And if the news is significant, as the news spreads, new buyers will be added and the price will go up.
?ow long should we wait to sell digital currency?
This process will continue until new traders take advantage of this opportunity. Usually, after a short period of time (depending on the type of news), the hot news fever subsides and the market changes direction to a downtrend after a few hours of almost flat price. This is where you need to sell it ASAP. The best thing you can do is to set a profit target and a stop loss for yourself.
One way to predict the length of an uptrend and get a price target is to use Fibonacci levels. You can also check the asset’s past trends. Across all asset classes, including cryptocurrencies, the record repeats itself.
Take events seriously
Take events seriously in cryptocurrency
The big global conference, listing of the digital currency on a major exchange etc. will serve as a launching pad for a digital currency. Also, these events can be complementary to checking the news.
Listing a digital currency on major exchanges can lead to good price growth as the markets for buying and selling the digital currency in question expand and attract attention. Therefore, knowing this will help investors or traders in their analysis.
Another important event that a fundamental analyst should know about is important meetings and conferences. At these conferences and meetings, fateful decisions are sometimes made that could be fateful in the future of digital currency or blockchain in general.
In the new section of the Cryptocurrency website, you can see all the cryptocurrency events. Like Twitter, Twitter is also a good tool to check for upcoming events.
Enter the events section
Litecoin is a large and practical digital currency. This currency has a lot of room for growth due to its high transaction speed and lower fees than Bitcoin. Twitter news about LitePay starting to provide Litecoin payments and also the news of the Litecoin cash hard fork caused the price of this popular currency to increase by more than 30% in a single day.
Enter the events section
A day later, the price went down, but the price drop was not so fast that it had a huge impact on the profits of the traders. And always remember that the longer you wait to make more profits to sell, the higher your risk.
Just as these strategies work with stocks and forex, they will also make you profitable in cryptocurrency trading.
As legendary merchant Jesse Livermore said over a hundred years ago:
“People’s pockets change, bulls and bears change, stocks change, but Wall Street never changes, because human nature is immutable.”