Trading News and Cryptocurrency

In crypto-currency trading, much in common with both forex and the sale of shares. Each of these assets can be traded using different trading strategies and technical, quantitative or fundamental analysis. In this article, we will focus on a fundamental analysis and how to succeed in crypto-currency trading with the help of news trading.

We all know how news can affect prices on the stock exchange. This is especially true for small-scale shares, in which case one corporate statement can have a huge impact on the price. The same is true of forex, which largely depends on the fundamental indicators in the long term and on the technical ones - in the short term.

CRYPTO CURRENCY IS IDEAL FOR NEWS TRADING

There is an opinion that crypto-currency space is better suited for news trading than stock exchanges or forex. The main reason for this is the lack of institutional traders in the crypto-space, including high-frequency ones. In this area, retail traders still dominate, which means that a quick and reasonable reaction to news reports will bring a much better chance of making a profit.
What are the important things to consider when trading on the news?

• Is the news fresh? It is necessary to see if this is really "news" - otherwise it has already affected prices. Look also at how the price moved before the appearance of this information. Think whether the news has confirmed the expected outcome of the market or brought with it new data.
• Is the news important for the price of a crypto currency? Can it affect the price in the long term? Or is it a one-off impulse?
• Is the crypto currency sufficient enough to trade profitably in the short term? How many
  people follow her and the relevant news?
  
  Let's see what the real scenario can be:
  
  Stage 1 - the first transaction: The news has just appeared and the first reaction to the price is already visible. This is your first opportunity to open a position in the market with which you can profit. Feel free to open with good dynamics and liquidity.
  
  Stage 2 - to come into play new buyers: After the initial euphoria has passed, you can often see the movement in the opposite direction. This is expected and happens due to the fact that all traders who were ready for immediate purchase have already received confirmation of the order. To further increase the market, it is necessary that new buyers enter the business. Most often this is what happens. More and more traders come into play as the positive news about a particular crypto asset spreads. This makes the price move up.
  
  Stage 3 - is an opportunity for swing trading: Medium and long-term traders are already looking at the opportunity to make money on this asset "in the game" instead of those boring pieces for which they are currently holding and which do not bring them any income. This type of traders is eyeing the long-term opportunities among the Crypto-currencies in the trend. As soon as the upward trend is formed, they try to enter as early as possible and "saddle" the
  trend.
  

HOW LONG SHOULD I TRADE

The trend will continue until new traders stop rushing to this opportunity. Traditionally, trends act as a self-fulfilling prophecy: the longer a trend lasts, the more people hear about it and join the current. When we reach a point where there are more sellers than new customers, the trend ends, and the cycle can repeat in the opposite direction.

One way to estimate the duration of the trend and calculate the target price is to apply the Fibonacci extension. You can also study the earlier trends of the asset and try to find a model. In all classes of assets, including the Crypto currency, trends move in the form of waves, which are most often repeated.

Personally, I prefer to trade until the market gives a clear indication that the trend is over. Usually this indication is a sharp drop in prices below the level of one of the moving averages, for example, 20-day trading during the day. This allows you not to think about when it's time to stop trading. I never change this rule by starting to trade. It is not so important what strategy you use to exit trading, but it is very important to have a predefined exit plan and really comply with it.

These strategies work in the trade of crypto-currencies no worse than in the case of stock exchanges and forex. As the legendary trader Jesse Livermore said more than a hundred years ago:

"Pockets change, dummies change, stocks change, but Wall Street never changes because of the immutability of human nature."

The material is taken from the site Hacked.com .