Hello guys,
I welcome 🤗 you all to my blog. Today, I want to share my entry in the contest, which was organized here in this community by @malikusman1, which talks about The Tech Quiz - Season 39. I'm going to be discussing a true life story so please read and enjoy.
| What is narratives trading? |
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The word narrative trading is a word used for a kind of trading that is done based on different talks or narratives given by people in the crypto or financial space. The word narrative trading, as the name implies, means trading that focuses on the different talks made by people in the space.
When people take into consideration the news about investment, technical analysis based on previous history and talk about it and many other factors, and then at the end of the collation if all of these talks or narratives they decided to make an informed decision then we can say that they have implored narrative trading in their trading strategies.
So, in summary, we can say narrative trading is a trading strategy that has to do with the many talks and news as well as speculation driving the crypto market or financial market, which also enables traders to make some decisions of either buying, selling, or holding the trade for a period.
These types of trading involve, among other things, technical analysis, news, fundamental analysis, market sentiment, psychology, etc.; when all of these are taken into consideration, then we can say that we have used narrative trading to make our decisions.
| Which narrative can grow in the next year? |
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There are many narratives I heard of that I believe may grow next year, and most of which I have heard of is the AirDrop we earn from the current crypto telegram mining. The latest, which I'm certain about, is the $BLUM token whose listing is soonest. The hype on this very asset by a lot of people has shown that there are possibilities that the token will do well when listed.
Coming down to the Steemit platform, we have a memo coin that was launched by the Amarga Bangla Community, which we call the $PUSS token. When the token was first launched, we saw that before 3 days, those who purchased the said token made up to 100% of their profit as the asset Rose to 50X of its initial price.
I wasn't left out in the purchase as I used about $29 to purchase a few of the tokens, and within 3 days, my portfolio rose to about $75. This is a massive profit if you ask me. So, I didn't just buy the asset. It was the hype from people within and outside the Steemit platform that made me purchase a little of the token.
So, based on the narrative and many other factors, such as trading and contests encouraging people to hold on to the asse,t, I'm of the opinion that by next year, the $PUSS will be the front line of the crypto assets.
| What risks come with focusing too much on narratives in trading? |
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Every form of trading has a risk, and in the case of narrative trading, we can also see some risk associated with it in the paragraph below, so read through it and then see my opinion on that matter.
First and foremost, one of the main risks associated with this type of trading is that you are at risk of losing your asset and your money if the speculation and prediction about the asset are wrong. Check, for instance, when the analysis about the market was that the price would rise and, in the end, it fell below expectations.
Another thing I consider a risk is that we may end up investing in an asset that is not worth it because sometimes the hype is to draw the small investors and whales will use us and cash out and that will be a very risky business for us because we may end up losing everything we ever invested.
Finally, I wish to invite my friends @malikusman1, @solaymann, and @josepha to also join this contest today and share their own opinions about this wonderful topic.