Welcome everyone to my post. This week's topic of the learning contest topic is"Trading the News . News is an event that brings volatility to the cryptocurrency market. Good news increases the price of everything and bad news crashes the market. We get all this news from various institutions and large companies that have staked in crypto currencies. In addition, the Federal Reserve publishes a news every month on which the BTC price is very dependent. Sometimes we see big price fluctuations on the US Federal Reserve interest rate. In addition, many other types of fundamental news are fundamental. Normally, we give a lot of priority to CPI data to monitor the BTC price, so let's discuss the topics of this post in detail below.
For example, I will mention an example with you. A news in which we came to know that Justin Sun is buying and staking Steem. If the news is correct then of course we can see the price of Steem increase in the market. Because everyone will buy based on this news to make a profit.
Explain the concept of trading the news and its significance in the cryptocurrency market. Highlight its advantages and risks with examples related to Steem/USDT.
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The news trading implies making decision on cent operations depending on news events and their impact on the rate of cryptocurrency. This approach is grounded on the assumption that, catalytic events spur instantaneous price fluctuations such as regulatory adjustments, technological development, partnerships, and macroeconomic influences. Businesspeople and Investors consider how such occurrences influence the business environment and how to respond by either acquiring or disposing of the asset.
Hypersensitivity of cryptocurrency markets can be attributed to both inherent and specific characteristics: cryptocurrency markets are relatively young besides and highly volatile. While in normal markets, information sharing is long and pre-planned, such news spread as a flash on the social media and forums related to cryptocurrencies. It means price fluctions tend to occur in a short period of time.
Positive news about one ‘ giant ‘ adopting the use of blockchain technology can push prices higher. On the other hand, the negative news with regard to the regulatory crackdown can bring about the significant drop. Hence, they are usually sensitive to the news feeds. Uses technical analysis in combination with efficient analysis to harness such specimens.
Trading news cannot be done without knowledge of the psychological characteristics of the market. This is so because to be effective the trader has to know not only which direction he expects that the price will take but also exactly how the rest of the trading community will comport themselves in response to that particular event. As such, it becomes an essential tactic of those seeking to maximize their profits from the volatile market of crypto currency trading.
Benefits: It is possible to make great profits by trading news and especially when the news is good. For example, if we are informed about a major partnership between Steem and another company or firm. Traders will expect more usage of Steem and therefore buy Steem in large quantities against USDT. Such rapid price movements are always good for those who are willing and able to make quick decisions to act on them.
Risks: However, there is a considerable potential for risk involved in trading based on news. Any negativity such as government regulations or a hack of Steem could trigger a halt in coin sales. For example, if a government comes out to give the green light to restrict cryptocurrency trading. People will run and as a result, the price of Steem will drop against USDT. Also, the nature of the markets involved in cryptocurrencies is unpredictable. Therefore, prices can react quickly to news events that affect potential outcomes.
Overall, although news trading has become a good way to make high profits based on informed decision-making regarding STEEM/USDT, traders must be aware of such potential risks.
Choose a past event (e.g., a major exchange listing, regulatory update, or macroeconomic announcement) and analyze its impact on the Steem/USDT market. Discuss the price action and market sentiment surrounding the event.
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It is best to choose the time of the hard fork of our platform to define and extrac it. Here we noticed a significant variation in the prices through the news of the hard fork, which must be remembered.
Event Overview: Another critical record of Steem blockchain history occurred in early March of 2020 called the “Steem Hard Fork 0.22”. This update as intended sought to address the functionality and the governance issues within the platform particularly recording to the excessive centralization and control of the network as expressed by its community.
Price Action: Prior to the implementation of the hard fork, trade volume of Steem (STEEM) rose notably especially against Tether (USDT). THE news on new features and improvements serve as information that elicits the bullish sentiment within investors. by March 1 st, 2020, STEEM, was valued at $0.20. When the news occasioned the hard fork, the prices started to increase steeply soaring to around $0.30 by mid March. However, there were split feelings in the market regarding the hard fork. Firstly, there was short-term action when some of the early investors unloaded the gains they received from the pre-fork upswing. A month after the revelation of Steem, STEEM had depreciated to a value below $0.25, by the end of the March 2020.
Market Sentiment: Concerning the event, feelings were divided. Holders driving this change believed that a hard fork was the way Steem could become more decentralized and possess better-governed rules to support its long-term development. On the other hand, critics pro-offering, their concern was the possible instability and division amongst the consumer base by the change of governance structure.
In other words, while the hard fork was stimulate the positive reaction and activate STEEM price the internal conflicts appeared after that and showed increase in volatility.
Propose a strategy for trading the news in the Steem/USDT market. Include: Criteria for selecting impactful news. Tools for monitoring and analyzing news events. Entry, exit, and risk management rules tailored to news-driven volatility.
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Stay informed: Daily scan through newspapers journals or even the larger social media in search of any significant information concerning Steem regarding changes in the law, partnership, or new technology.
Analyze market sentiment: Considering how similar news impacted the market in the past and to analytically predict changes in prices.
Set alerts: Based on the trading platforms, ask for notification on the specific occasions when important news concerning the price of Steem will be released.
Act fast: For those that believe in the trend of Steem that is, buy Steem immediately that positive information has been released to the market and sell when negative news comes into the market. It's a no-brainer.
Risk management: In all cases, one has to use stop loss orders in order to avoid catching a flight at unexpected moments.
Thus, the selection of impactful news is based on several main criteria. Extraordinariness denotes the chances of an occasion to be rare or peculiar and due to such characteristic the news is bound to gain attention. Threshold confirms that greater events, for instance, wars or natural disasters are accorded more coverage. This is also important; negative as usually dramatic or adverse stories attract more attention than positive ones. Other factors include relevance, which means how close the event is to the audience location, or nearness, and recency or how recent an event is.
There are different ways by which traders can be able to monitor and analyze news events with ease. Blogs, social medial platforms, or online newspapers such as Google News, or Feedly CPI Data just to mention but a few gather articles from various sources. They enable users to monitor content of their interest based on topics that can impact their trading plans. Moreover, using solutions like Bloomberg, Reuters, and others, clients can get critical analysis and real-time information connected to the market they serve.
With regard to entry, exit and risk management regulations which cover news shocks as an additional factor of volatility. Traders can thus begin using a more structured approach. Before the actual news releases, which are defined based on historic price changes associated with it. They mainly include placing entries such as those related to sheer quantity. For instance, an acquiring company may open a position in anticipation of high amplitude movements in the stock during the earnings announcement.
Two common approaches to create and set exiting rules should be utilizing forecasted profit thresholds or another criterion which considers increased volatility during news announcement periods. Traders can tend to use trailing stops in order to secure profits and wittingly permit additional returns.
Last but not the least, good risk management means evaluating the likelihood of news affecting the price of the assets and use that to manage position size. Tools like options can also minimize negative motions due to a different interpretation of any type of news.
Discuss the risks associated with trading the news, such as slippage, overreaction, or misinformation. Suggest practical measures to mitigate these risks and improve decision-making during volatile periods..
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One main challenge of trading news is slippage whereby a trader orders the currencies at one price but the order ends up filling at a new price. This is usually exercised during a period of high fluctuation. For example, after the inflation rate has been released or after some major political event in the world. For instance, if a trader has placed a market order right after the important news release, the fast market will cause execution at worse price than the trader anticipated.
Some information in the market may be over-reaction which translate to higher price volatility. This can open up opportunities for profit but as this shows the risk of loss is far higher because if the market readjusts then the loss is instant. Traders also face a situation where they make decisions to buy or sell stocks in reaction to feelings or emotions that are elicited.
As the constantly fast moving information cycle is in place, fake news easily trends in the social media platforms and other forums. Some traders using fake news as their source of information make impartial decisions because they receive wrong information which in turn leads to poor trading outcomes.
Use Limit Orders: To minimize slippage, traders, therefore, should use limit orders and shy away from using market orders. The limit order type enables the trader to set a desired price the trader wants to buy or sell at to help minimize the possibility of unfavourable execution at further periods of high volatility.
Stay informed: This is especially important because traders have to rely on information that is available through the news and it has to be checked to be sure about the authenticity of the received data. Preferable sources of financial information provide the basis for making decisions can include such reputable sources as Bloomberg and Reuters.
Implement risk management strategies: Using stop-loss orders and finding out position sizes also assists to handle probable losses at the period of aggressive movements of the market. Also, to eradicate the situation of getting trapped by shocking market volatility, traders should refrain from taking large positions.
Practice patience: Since trading needs to be done within specific periods, favorable entry points must be taken after a little volatility when the underlying shares are experiencing major news announcing. This is very helpful when it comes to checking the sentiments of the market then making appropriate decisions appropriate for a trader.
From the analysis of these risks, and application of the relevant measures, traders can enhance their strategies during volatility.
Explore how tools like sentiment analysis algorithms, trading bots, or real-time news aggregators can enhance the effectiveness of news-based trading strategies. Provide examples of tools or platforms relevant to the cryptocurrency market.
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Sentiment analysis algorithms try to determine a positive or negative sentiment behind news articles, social media messages and other textual inputs. They are used in News Trading strategies most of the time. These algorithms employs the ontological analysis or sentiment processing where one can tag the sentiment as being positive, negative or neutral using natural language processing. In the world of cryptocurrencies, similar to LunarCrush and other analytics tools, they can track how the big picture of social media sentiment influences prices. For instance if sentiment analysis indicated that the views surrounding Bitcoin and the evolving stories were highly positive, traders would be able to new based on such news flow.
They execute trades based on specific conditions such as signal generated from news event. For instance, 3Commas has trading bots that allow users to react to news events as soon as they happen. If a major regulation is due on cryptocurrency, then a bot can be programmed to sell or buy the asset depending on what the market will respond to. This automation enables the trader to get full potential of high volatility that typically comes after news alerts without spending most of his or her time staring at the screen.
On-line current events compilers collect and relay current information from as many sources as possible within minutes, if not seconds. Cryptopanic is one such aggregator designed for the news pertaining to cryptocurrency exclusively. If the event is of importance in the exchange it will help the traders make real time analysis of the turn of events like exchange hacks or new technological advancement and make a switch on the portfolio. The rate of its processing is important, especially in an unpredictable market where the value of cryptos can drastically vary within a matter of minutes.
In brief, incorporating the application of sentiment analysis algorithms trading bots and real time economical news feed extends the efficiency of the news trading approach in the cryptocurrency market and allows the trader to move quickly and in a measured way in response to the flow of new information.
In conclusion, trading the news is an active strategy that has to be kept updated and has to act instantaneously concerning any events in the market. If the trader is aware of the kind of news that influence different classes of assets and how to go about it, then there is an opportunity that the trader will make a good outcome. The key indicators of successfully trading news are thus the strict management of trades processes, the efficiency of managing risks of news trading and capability of screening out unwanted and irrelevant information. In the end, one can get improved trading results and increase the speed and efficiency of making decisions on the financial markets.
Considering the current situation, we are hearing news that Donald Trump is a pro in crypto. He is very passionate about crypto and has taken up several projects related to it. He has also created a meme $TRUMP token in his own name. So based on all this news, we expect it to reach an all-time high again.
Thanks to everyone here is an invitation @stream4u, @josepha , @fjjrg
https://x.com/mostofajaman55/status/1880653028799447083
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