Do you believe that Google trends can predict stock market movements?
Today, we will walk you through the theory of forecasting stock market movements with free Google Trends. Throughout the guide, we're going to state how to do analysis using Google Trends, and will also put down a test to see if Google trends provide a real edge.
Whether you are a beginner or a pro trader, if you can predict the market tops and bottoms, then you may have the opportunity to be a little more strategic than the other traders. The free Google trend tool can give you valuable insight and information in understanding the behavior and desires of the market.
One of the key features is market sentiment analysis that can extrapolate from the google trends. If you can tap into the market sentiments, then you can make an analysis which asset is hot right now and can gain a valuable edge in any market.
So, what are you waiting for? Lets deep dive with some basics and learn how to use google trends to make market predictions.
Keys
What is Google Trends Prediction?
Google trends is a free tool by Google that will help you analyze what people (around all countries or in a specific country) are searching daily.
Let's summarise, and see that Google search statistics:
● According to research, Google processes approx. 5.6B searches every day
● Also, Google search engine processes close to 63K searches every second.
● And on average, each internet users makes around 3-4 searches every day.
Till now, only a few of the HFTs system and significant hedge funds can quantify the google trends data to exploit big profits from the market.
Now…
We're going to show how to use the Google trends tool to try to forecast price movements.
Google Trends for Market Research
You must be wondering if Google can actually predict the market movement?
In various theories, the retail market sentiments are hightly related with Google search.
When any trader searches for keywords such as
● "Buy crypto"
● Buy Bitcoin
● How to buy bitcoin
The users found the assets outperform in the market. So, it is clear now that the google trends can be a window to other traders intents.
In order to perform this, we are going through the basic google trends settings to make clear insights.
In the panel, you are do following adjustments:
● Analyse Interest by region
● See the searches for particular time period
● Can take a look at the searches by category
● Entity
When Google Trends Predict Market
Now, let's move forward and see how Google Trends can predict market movements.
The historical trading data revealed that an all of sudden spike for assets like bitcoin is connected to the number of Bitcoin HODLers.
So, it's easy to understand if the google searches we measure here is increase, that the asset will be traded more.
Unfortunately, this doesn't give you the predictions about the price behavior, but you can still measure the bullish and bearish trend sentiments.
Sentiment analysis can be performed by analyzing the keywords such as "what crypto to buy," "how to invest in bitcoin," "buy bitcoin," "top crypto".
This key phrase appears when the asset will be hot in the market, and when subsequently, new investors are allured by the Get quick rich schemes.
The traditional spike in Google searches on keywords that potentially indicates uptrend in the market.
Refer to the image below Google stats on these keywords for the past five years:
You can see there was a prominent huge spike in Google search volume in 2017 which produced a significant impact in the crypto market.
You can see there was a prominent massive spike in Google search volume in 2017, which produced a significant impact in the crypto market.
Google trends predict market prices because the traders are searching for these keywords.
Now, if everyone has already invested (bought) at a price, then it now the price won't shoot again as there are no new buyers in the market.
The market always needs new buyers (adoption) to make the uptrend continue and prices to go higher.
Please Note* The same theory is applicable in reverse for sellers.
Tips for Using Google Trends Market Prediction
Google keywords are extremely more valuable than any others. This eventually states that the general market sentiments can be gauged even better if we use specific keywords
For example: "bitcoin" or "ethereum."
Final Words
No doubt that Google records very precisely what the traders are trying to buy or which direction the market is going forward. The best part if the tool is entirely free, and Google trends trading strategies will help you to make yourself an additional tool to gauge the market sentiment before prices start changing direction.
If you are completely new and want to have a tool to sync and analyze the market for you, then you can try using News Crypto. We have a curated NewsCrypto Academy for all grades of traders, and unique indicators to make even more profitable trades.
