- Narrative trading involves making investment decisions based on the stories or news
- Sometimes also referred to as crypto narratives when news is related to cryptocurrencies
Trading has evolved drastically, whether it be in stock markets orthe crypto world. As more investors enter this amazing world of trading, numerous trading strategies are evolving. Some trading strategies include charts and graphs analysis, while other rely on key financial ratios of the companies to make a better assessment of the market.
However, there is one trading strategy that differentiates itself from this whole market. This trading strategy takes into consideration the news or story related to events particularly happening in the industry. The name of this strategy is Narrative trading and it is widely used in the world of crypto. To develop a clear and better understanding of the whole concept of Narrative trading, read the full article.
Narrative Trading – Trading Based on News or Events
Narrative Trading, also known as Crypto Narratives, refers to the trading or investment decision based on stories, news, and events related to a particular industry. It is based on a holistic approach to making assumptions regarding the future based on current events or news.
These narratives can be positive or negative depending on the news. Positive narratives can lead to price accumulation and growth, while negative narratives can lead to price suppression or decline. Additionally, multiple narratives can operate simultaneously, affecting the supply and demand of different cryptocurrency assets.
How Do Narratives Form?
Understanding how these narratives form is crucial, as they play an important role in the crypto trading world. Multiple narratives can be formed based on a variety of factors such as market sentiment, recent news and events, whale trading movements, and many more.
Identifying a Narrative
As mentioned earlier , narratives are pivotal in trading. The sooner you identify a narrative, the more unbiased your decision-making process becomes. Here are some ways to identify a narrative and make significant moves in the world of crypto:
1. Stay Up-to-Date With the News or Current Events
It’s essential to stay updated about the current events happening in the crypto industry. It will make you aware of what is ongoing in the industry and help you make effective decision.
2. Grow Your Network
Expand your network through social media platforms to increase the chances of hearing relevant information. You can also engage with other traders in the same industry.
3. Follow Venture Capitalists or Prominent traders
Big venture capitalists or whales or prominent traders make the investment based on the narratives. These firms or individuals get the narratives earlier with their high connections with market leaders. So, you can follow their investments as they invest in projects which have future prospects as well.
Concluding Thoughts
Crypto Narratives provide valuable insights into events or news related to the crypto industry. Moreover, the trading strategy can help the investors to make an appropriate and unbiased decision. However, keep in mind that the crypto industry is volatile, with multiple events happening simultaneously.
