How to start trading cryptocurrency news
You need to be extremely careful whilst trading cryptocurrencies during events such as news, exchange downtime or other unnormal trading conditions. Throughout this article we will introduce you to the dangers, advantages and best practice when trading the news.
It is recommended not to trade within either side of 15 mins of a high impacting news announcement. This is not only because of the high volatility involved in the cryptocurrency markets but the uncertainty of how the market will react.
We have seen traders be humbled by the markets time and time again, entering highly leveraged trades expecting the market to react a certain way to news announcements and the market going the other way. After you have learnt all the tips laid out here, you will be much less likely to make the mistakes beginner traders are making on a daily basis.
There is a famous saying from a well-known economist John Maynard Keynes > “The market can remain irrational longer than you can remain solvent.”
It is important to remember that the market is created by a large group of human beings constantly deciding the price of a currency, stock or cryptocurrency. Humans are naturally irrational, its only natural for the market to be irrational too. Take this into consideration when trading and refer to our 6 essential risk management tips to stay when trading.
Why trade the news at all?
The simple answer to that question is “To make more money!”
But in all seriousness, as we covered in our How to start trading cryptocurrencies using fundamental analysis article, the news is a very important part of the cryptocurrency market because it has the potential to move price drastically. Market manipulation is also common due to the unregulated trading environment that decentralised assets offer. Meaning, that there is little that can be down to someone manipulating cryptocurrency prices to line their own pockets.
When news comes out, especially important news that everyone is watching, you can almost certainly expect to see some major movement. Either positive moving price up or negative moving price down. Your goal as a cryptocurrency trader is to get on the right side of the move, in turn creating and securing a profit.
Best places to get cryptocurrency news
With so much going on in the world of crypto every day, it can be tough to stay on top of the latest news. Luckily, there are a few wonderful cryptocurrency news sites out there that’ll help you stay abreast of the latest goings-on.
CoinDesk reports on cryptocurrency related news from across the entire cryptocurrency and blockchain sector. The extensive site publishes several articles every day and covers more than just cryptocurrency news. You’ll also find thought-provoking feature-length articles, market analysis, and opinionated pieces.
There are news sections dedicated to the underlying technology, crypto investments, and real-world applications of blockchains.
Lastly, traders might find the Coindesk Data and Research section to be useful. This powerful tool monitors prices, tracks ICOs with the ICO calendar and includes a mountain of industry insight.
Note: Some ICOs are scams! Read our article on ICOs to avoid these scams and make sure you do plenty of due diligence before parting with your cash.
Cointelegraph was launched in 2013, quickly growing to become the second most widely-read crypto news site on the web, #1 being CoinDesk mentioned above.
Cointelegraph has news sections dedicated to several of the major cryptocurrencies, including Bitcoin, Litecoin, Ethereum, Ripple, and Monero. There are also sections dedicated to uncovering scams, smaller altcoins, and industry regulation.
Away from the news, Cointelegraph also offers a handy ICO calendar so you never miss the launch of a next big coin, a selection of market and price analysis tools, and an impressive amount of feature-length content.
Bitcoin Magazine is a news site that reports on all things crypto, although the name suggests it is Bitcoin-focused it is much more than this. They have 14 distinct categories covering everything from real-world adoption, investing in crypto, mining, startups and much more. Other crypto assets also get plenty over coverage, especially Ethereum.
Similar to CoinDesk and Cointelegraph, the site also offers cryptocurrency learning resources, market information, and an extensive opinion section.
CryptoCoinsNews (or more commonly known as CCN) is a sister site of Hacked. However, while Hacked tends to focus on coin analysis and trading advice, CCN is purely news-based. Bitcoin, Litecoin, Ethereum and the Top 10 Cryptocurrencies tend to receive the lion’s share of the attention, but some smaller altcoins also get coverage when big news is quiet.
The content is slightly more business-orientated than the other pages we’ve covered so far. If you want to learn about mergers, price changes, and new product offerings, this is the site for you.
Despite the Bitcoin-focused name, NewsBTC covers all the leading cryptocurrencies as well as Bitcoin. The news is divided into six primary categories: Bitcoin, Crypto, ICO, Blockchain Projects, Crypto Tech, and Industry News.
The great thing about NewsBTC is that they publish at least 10 new articles every day, making it unlikely that any of the biggest crypto headlines will slip through your net.
Like many of the others mentioned you will also find an ICO calendar, some learning resources, and a crypto business directory.
Be careful trading the news
As with any trading strategy, there are always possible dangers that you should be aware of.
During high impacting cryptocurrency, news events price will likely become much more volatile. Seeing as cryptocurrency is already such a new and emerging market it is already extremely volatile. Often showing large fluctuations sometimes shifting from around 5-10% on a normal day! Compare this to the Forex market which tends to fluctuate between 0.5%-1% on any given day.
You may be asking yourself, “how will cryptocurrency volatility decrease?” The short answer to that question is, its not a matter of how but a matter of when. The market needs to mature, cryptocurrencies as a whole appears to be something that is going to be here for the long run.
A major danger to look out for is price slippage. Slippage occurs when you wish to enter the market at a certain price also known as an order, but due to the extreme volatility during these events, you actually get filled at a far different price. Big market moves made by news events often don’t move in one direction. Often times the market may start off flying in one direction, only to be moved back in the other direction.
Trying to predict the right direction can often be difficult. Profitable as it may be, trading the news isn’t as easy as reading an article. The markets are simply a connection of human beings all over the world stating the prices of an asset, it is almost impossible to predict what they will perceive the news as, either positive or negative.
We recommend waiting at minimum 15 minutes before entering a trade as this will give you much more clarity as to the impact and trend that the news event or announcement has had.
Trading the news CAN be profitable but carries high risk. Only professional level traders should trade the news. News releases are used by Smart Money to make big fast moves to their targeted levels while at the same time reaping huge profits. Liquidity is increased as huge numbers of traders line up to take a shot at fast profits. This added liquidity becomes easy pickings for Smart Money who have a high level of trading education.
We recommend you educate yourself on all aspects of trading, keep a high focus on Risk Management. It’s always good to have an experienced trading mentor to guide you in the right direction, after all, they are likely to have experienced all the rookie mistakes and can stop you making the same mistakes yourself.