Cryptocurrency Trading Strategies: News Based Trading
It is legitimately assumed that the prices of the cryptocurrency are strongly affected by the news. News-based commerce is one of the popular methods to trade in cryptoexchange. Let's take a closer look at some of the fundamental principles you must meet to preserve and increase your funds.
Most merchants operate as follows:
– When the news is bad, all traders fear a fall in the price and commit to a "sale".
– When the news is good, they buy cryptocurrency.
This is an adequate response to the news. However, in terms of profit, this is not always the right strategy.
If you want to make a profit, the correct strategy would be the opposite:
– When the news is bad, buy cryptocurrency.
– When the news is good, sell cryptocurrency.
In this case, you can make a profit because the price of the cryptocurrency is lower when the news is bad.
A lot of beginner investors and traders note that the news has an impact on the price of Bitcoin. Many of them try to trade based on their own interpretation of the news. Soon they can see that they suffer losses or do not make a profit by misinterpreting an event.
The key reason for misinterpretation is the use of an unreliable news source or, more often, a source that publishes the news too late to make business decisions.
Therefore, you need to find an adequate source of news. One of the best sources is forums and blogs. It is also important that the participants of the forum and the blog share their knowledge and business experiences and analyze the errors and problems.
Some players in cryptocurrency exchanges configure groups in charge of initiating the movement of the price of the cryptocurrency in the correct direction. They can have significant means and use them to quickly increase or decrease the price.
However, local handlers do not need to spend their own funds, they could only make a big splash around a story and force merchants to buy or sell cryptocurrency. This is exactly when the handlers make a profit by making the right offers. If an exchange has a chat, it is an advantage for the manipulators, since they can use it to directly influence the merchants.
There is some speculation, although we have no proof yet, that certain global news regarding cryptocurrencies are also initiated by manipulative groups. The operations of some exchanges were even suspended this and the last few years under suspicion of insider trading.
Therefore, even if you trust your source, you should always check all the news, use analytical tools and compare the movement of prices on various commercial platforms.