The impact of the market mood on trading results in the CRIPTO currency
Crypto currencies have become popular in recent years, and their prices are known for being very unstable. One of the key factors that affects trading results in the crypto currency is the mood of the market. In this article, we will explore how the market mood affects the trading of the Crypto van and discuss its influence on investment decisions.
What is a market feeling?
The market mood refers to the collective attitude or mood of investors according to a particular class of supplies, bonds or assets. It is influenced by various factors such as economic indicators, news and opinions of investors. In the context of the Crypto currency, market feelings can be categorized in three types:
- Speculative feeling : investors buying cryptocurrency currencies in the hope that they will make a quick money from the price changes.
- Institutional mood : institutional investors such as Hedge funds, pension funds and family offices investing in the CRIPTO currency for diversification or for participation in the market.
- Main Sentiment : individual investors seeking short -term gains or guesses on the cryptocurrency market.
How the market mood affects trading results
The market mood can significantly affect trading results in CRIPTO currency in several ways:
- Price Volatility : A level feeling affects the movement of prices by increasing or damping. For example, bear market mood (eg sales signal) can lead to a sharp drop in price, while the bull market (eg purchase signal) can result in a rapid increase in prices.
- Risk tolerance : A level feeling affects the risk of investors. When the feelings are negative, investors can be more prone to risk and less likely to invest in a crypto currency, leading to a lower amount of trading and price.
- Trading Strategy : Disturbed available influence on investment decisions adopted by traders. For example, bear market mood can indicate dealers for sale of their positions, while bull’s market opinion can cause them to buy them on the market.
- Diversification of portfolio : Market distribution may affect the diversification of portfolio. When investors are optimistic about cryptocurrencies, they can assign more capital to this property, leading to increasing the amount of trading and price.
Case Studies: How the market mood affects trading results
Several case studies show how the market mood affects trading results in the Crypto currency:
- Bitcoin (BTC) : In 2016, Bitcoin price jumped abruptly with about $ 600 to over $ 19,000, guided by speculative feelings that grew while investors were looking for alternative investments.
- Ethereum (ETH) : In 2017, the price of Ethereum has increased from about $ 200 to $ 4,900, under the influence of an institutional sense of investment companies such as Circle and Andressen Horowitz supporting the project.
Risk relief of market feelings
To alleviate the risks of market feelings in cryptocurrencies, traders can use different strategies:
- Diversification : Spread investment in multiple CRIPTO currency to reduce exposure to any property.
- position size : Limit the size of position management and maintenance of consistent investment thesis.
- risk management : Spending stops, limited orders or other risk management techniques for loss control.
- Investment thesis
: Develop an investment thesis that takes into account the mood of the market and adjust the trading strategies accordingly.
Conclusion
The market in the moody plays a significant role in shaping trading results in cryptocurrencies. Although speculative feelings can lead to rapid prices, institutional available can affect long -term trends.