Sentiment Analysis in Cryptocurrency
“When everyone thinks alike, everyone is likely to be wrong.”
“The public is often right during the trends, but wrong at both ends”
“A ‘crowd’ thinks with its heart (that is, is influenced by emotions) while an individual thinks with his brain.”
-Humphrey B. Neill
Why use Sentiment in your trading?
Sentiment analysis in trading is an underused part of a trader’s arsenal. There are also many misconceptions about sentiment. The crowd thinks that when sentiment is high, it is time to buy and when it is low is time to sell. I am very anti crowd mentality, that is why I prefer to be a solitary trader. I have tried to trade while interacting with other traders, but in general it has not been for me as it causes me to be swayed by group think.
Now I want to get one thing clear from the start. The crowd is not always wrong. It is just when the crowd reaches extreme levels that you often see them be wrong. Sentiment analysis should not be your primary method for analyzing any trade-able asset. It is an outstanding complementary tool, however. Like anything else though, it…
