February 5, 2023

Trading Signals! | How to make money on information from the public domain

Trading Signals! | How to make money on information from the public domain
A small guide about trading with a news background
Why news trading is as old as time

Surely everyone knows what trading is onnews. For those who are not in the know, I explain: the point is to buy it and wait for the price to rise when good news appears on any asset, and when bad news appears, sell immediately, wait for the price to fall and buy the same asset at the bottom.

People first started trading this strategy back in the days when shells and mammoth tusks were money.

For greater clarity, we give an example with shells.: Suppose the news came out that the hunters fromtribe Stone tigers killed a mammoth, cut off tusks - an overabundance of tusk was created in their tribe, it immediately began to become cheaper in relation to shells (the law of supply and demand, hello). And soon the next news came out - this mammoth was the last on the planet, respectively, there will be no more tusks. Under this news, the price of a tusk in relation to shells increased a thousand times. If at the release of the first news we sold tusks, and at the release of the second we bought for the whole cutlet, we would have made good money in shell equivalent.

Two thousand years have passed, but the essence of such trade is nothas changed: only the objects of trading have changed - there were tusks and shells, there were dollars, stocks and cryptocurrencies. We buy on good news, we sell on bad news, no other knowledge is required.

Thank you all for your attention, this was possiblefinish the article, but as always, the devil is in the details, which I will now try to tell you about and where to start for trading cryptocurrency on the news, where to get information and whether it is worth doing it at all.

Why Cryptocurrency

All markets are subject to the influence of the news background withoutexceptions: precious metals, currencies, stocks. But the fact is that the cryptocurrency market is the youngest and most volatile (the most drastically changing, if in a simple way).

Now I will describe one case that someone is a millionaire (not me, if anything, so everything is fine, I'm not just another information gypsy).

Once upon a time there was one person (what is there, he is still alive and well), His name was Elon Musk.

Cryptocurrencies have been receptive to his tweeting.

Trading Signals! | How to make money on information from the public domain

The head of Tesla during The B Word conference,devoted to bitcoin, admitted that in addition to bitcoin itself and Dogecoin owns Ethereum. After this announcement, the price of "ether" rose by 12% and exceeded $2,000.

Thanks to another tweet from him on December 26, 2021 alonefrom meme-crypto coins showed fantastic growth. The head of Tesla posted on Twitter a photo of his dog Floki dressed as Santa Claus. The tweet was captioned Floki Santa.

After a short time, the demand for the token skyrocketedSanta Floki (HOHOHO). The trading turnover increased by more than 20,000%, and the coin rate increased by more than 4,000%. From $0.000000012935, it soared to $0.0000005899. Later, the quotes of the coin decreased slightly, but this is not so important.

This is not the first such case with Elon.Musk, who should have gotten used to accusations of manipulating the cryptocurrency market long ago. So, on September 13, 2021, when he first posted a photo of his new Shiba Inu puppy Floki, titled Floki has arrived, the value of the Shiba Flocki token rose by 1300% in three hours. Then the price of the coin fell by 70%.

Trading Signals! | How to make money on information from the public domain

That is, what he did: he bought an asset at a low price, threw out an informational reason (the asset began to grow), Comrade Musk sold the asset at inflated prices and counted his millions in profits.

Let's calculate if we bought the Santa Floki token on10$/100$, given the growth of 20.000%, the asset grew 200 times, that is, our 10$/100$ would turn into 2.000$/20.000$. Not bad? Not bad, too bad I spent my $100 that day on sneakers. If I had bought the notorious Santa Floki instead, I would have bought an apartment.

It is noteworthy that Musk makes his tweets with an enviable frequency, and the markets, it would seem, should have gotten used to such performances, but the manipulations are still working.

Trading Signals! | How to make money on information from the public domain

But it is important to understand that in trading onnews has a very important point: everything must be done on time. Buy before the price rises, that is, as quickly as possible, immediately after the release of the news and sell before the price collapses.

Cases where public figures and ownerscompanies make statements and press releases, natural disasters and accidents occur - all this affects the value of company shares, currencies, energy resources, grain, precious metals, etc.

How to profit from the news

Since its inception, the cryptocurrency market has been very sensitive to the information background. Yes, all markets are sensitive to news, but in cryptocurrency this is especially pronounced due to:

  • relatively low capitalization;
  • lack of specialized education for most traders and investors;
  • overall market volatility.
  • That is, in the cryptocurrency market, price dynamicsmuch more active than in the stock or bond market, and at the same time its participants are more susceptible to news and psychological factors. This environment opens up opportunities for traders who follow the news and are able to predict their impact on the market.

    In other words, profit from the newsYou can use pumps and dumps that cause resonant news. Some events, such as the Fed’s rate hike, can trigger a response from the entire crypto market, others provoke a reaction in a specific segment or just a single coin. The ability to collect news about such events and respond to them in time is the basis of a news trading strategy.

    How to act to turn $10 into $10,000?

    news trading strategy

    At first glance, the news trading strategy is one of the simplest on the market and requires only two actions from the trader:

  • Buying on good news is good newslikely to attract the attention of other market participants and give investors hope for growth. This means that after the release of good news for the asset or the market as a whole, demand will increase, that is, prices will go up.
  • Sell ​​on bad news - at bad newsthe opposite effect, they indicate the failure of the project and increase the risk of investment. Many investors will choose to throw too risky assets out of their portfolio, or at least reduce their share. This will lead to sales and prices will go down, which means that you need to sell before the price collapses.
  • Sounds simple, right? Problems arise when trying to put the strategy into practice. Here are just a few of them:

  • Where to get news?
  • How can you tell if the news is bad or good?
  • How to understand how important an event is for holders?
  • How to manage to make deals before the bulk of traders react?
  • Some of these questions are purely technical ororganizational and we will analyze them in more detail below, others require the trader to have a basic understanding of the psychology of the market and its individual segments, and for this you need to “plunge” into the information environment and monitor the response of market participants for some time. For trading on events, it is impossible to use patterns prepared in advance by someone, as in technical analysis, you need to have a system for evaluating the experiences of other market participants formed on your own observations and experience. It is impossible to trade on the news without becoming a part of the market and without plunging into it so deeply that you literally “feel” its mood.

    What news to follow

    There are several categories of news that will help predict the price movements of a particular cryptocurrency or the market as a whole:

  • Project announcements.
  • Governance offers.
  • political events.
  • Economic events.
  • Announcements of investment funds.
  • Actions and transactions of major players (whales).
  • Sometimes the market can be influenced, it would seem, in no waynon-cryptocurrency related events. For example, a flood in a country with a high concentration of miners or the introduction of mandatory visas for workers from third world countries. But since other traders rarely follow such news, its impact may be delayed.

    All received news should be marked as"good" or "bad". The former can cause a pump (growth) in prices, the latter can cause a dump (decrease). Sometimes it's easy to place news in a specific category, sometimes it's more difficult, sometimes they may not cause a market reaction at all.

    Trading Signals! | How to make money on information from the public domain

    Where to get news

    Establishing fast and reliable information channels is the first task of any event trader. For this you need:

  • Find sources of information.
  • Build them into one information system.
  • There will be no problems with finding information if you have the Internet and a laptop. The main news sources are:

  • Social networks - primarily Twitter,Medium and some Reddit threads. Twitter is usually the first or second source of news for any cryptocurrency project. Between the publication of an announcement on a social network and its mass distribution through news sites, it can take from several minutes to several hours - this is your head start.
  • News aggregators are the most popularis CryptoPanic - this aggregator collects publications from Western and Russian-language publications. True, working with the aggregator requires more time for “filtering”, and the possibilities for setting up information channels are inferior to the same Twitter.
  • Pro Trading is a news service that constantlymonitors Western publications and social networks and selects really important events. The bot-parser instantly sends the event directly from the source to the administrator, who publishes it in the telegram channel.

    Turn disparate sources of information intoa single system will help the browser with the grouping of tabs. Working directly with Twitter is even more convenient, as you can group news accounts and project pages into separate lists and track notifications sequentially.

    I solved my problem in the following way:set up parsers from twitter accounts that have an impact on the crypt and the real sector of the economy - all this news and publications are pouring in to me and I already manually check which of them are fake and which are not.

    You still need to watch the price of Bitcoin and preferablySNP500. This routine takes a lot of time, but sometimes the profit from transactions that you enter according to such an analysis more than covers my labor costs. I hope the article was useful and if you want to trade news with me, visit my Pro Trading channel.