Crypto Trading & The Curious Case of Price Chart Analysis vs. News Analysis: Blog #3
Hello Steemians !!
If you are a crypto lover or trader then by now you must have got familiar with these technical terms (thanks to the sheer number of posts on Steemit) :-
- Price chart
- Candle stick patterns
- Statistical trends
- MA, EMA, Force Index etc.
There are experts analysing price chart & giving their recommendations (Let’s call this ‘Price Chart Analysis’). Based on these recommendations, amateur traders generally take buy/sell decisions.
‘Price Chart Analysis’ has its root in stock trading. That is where this concept was developed. Now, the experts are simply copying & pasting the ‘Price Chart Analysis’ to crypto trading. Does it really work?
We need to understand that, fundamentally, stock market & crypto market are different (at least as of now)
Stock Market
- Comparatively less sensitive to news & rumours
- Regulation environment stable
- Negligible chances of scam
- Less chances of market/price manipulation
- Long term trading decision generally is based on financials / numbers
Crypto Market
- Extremely sensitive to news, statements, announcements & rumours
- Regulation environment not stable
- High chances of scam
- High chances of market/price manipulation
- Long term trading decision generally is based on speculation / assumption
Taking the aforesaid differences into account, it can be said that relying purely on price chart analysis (& related recommendation) for crypto trading can be extremely risky.
On the other hand, relying on ‘News Analysis’ may result in better returns. I personally prefer sites like CoinDesk & CoinTelegraph for updates on crypto world. This practice helps me in minimizing losses & increasing returns.
PS: I am aware that some of my colleagues are going to suggest me using price chart along with news analysis. Now, my answer is: In crypto world, where a new rumour or announcement is being every minute, do I need to invest my time & energy in charts? What if I do an hour of analysis & suddenly a bad news breaks in.