In spot trading, information filtering is a significant process that should not be underestimated. Just like the various trading points I mentioned in other courses, the effectiveness of information filtering can directly influence trading decisions.
First, it's important to clarify the source of information. In the cryptocurrency world, sources of information are varied; official websites, social media, industry forums, etc., are all potential sources. These places will publish project developments, policy changes, and other news. Most cryptocurrencies will experience price fluctuations due to official announcements of new technological breakthroughs, so paying attention to these sources is crucial.
Next is filtering the information. Not all news has value; there is quite a bit of false and exaggerated information. We need to verify and analyze from multiple perspectives. For example, some lesser-known cryptocurrencies may have rumors about being acquired by large capital, but the result turns out to be false news. If we do not verify, we might make erroneous decisions based on that.
When making decisions based on information, positive news may push up the price of a coin, while negative news may pull it down, but one should not rely solely on news. For instance, there was a coin whose price rose due to favorable policy news, but technical analysis showed it was in an overbought state, and soon the price corrected. Therefore, factors such as technical analysis and market trends should be considered together.
Finally, there is risk control. The cryptocurrency market is highly volatile, and the impact of news may be temporary. It's essential to set stop-loss and take-profit levels to prevent excessive losses.
In short, information filtering is vital in spot trading. Everyone should strive to improve their information filtering abilities to make wiser decisions.
Note: The content of this series of courses is original, and any similarities are purely coincidental.
If there are topics you would like to learn, you can like and comment in the comment section. I will organize relevant knowledge points and publish corresponding courses within a day. Your likes are the biggest motivation for me to update my course posts. All feedback is welcome.