However, the Google Trends strategy yields an average of 10% per year, and the S&P 500 averages 7%. This data is then presented in the following chart:Īs you can see, both strategies have a starting position of 10,000 dollars. The search terms ‘how to sell stocks,’ ‘sell stocks,’ and ‘how to short sell’ are used to show negative market sentiment. Search terms such as ‘stocks to buy,’ ‘top stocks,’ ‘buy stocks,’ and ‘how to invest’ are used to show positive market sentiment. Based on various search terms, one can determine whether the market sentiment is positive, bullish, or negative, bearish. While the previous strategy focuses more on the individual stock, this indicator focuses on the overall market sentiment. Another paper presented by Harrison Schwarts for SeekingAlpha shows a different approach to analysis based on search volume data. However, this is not the only way to apply Google Trends. So keep an eye on the Google Trends data to spot a possible good time to buy! Market sentiment With the end of the year approaching, Apple will likely introduce new products soon. If you do not yet own a share, it could be wise to wait on the sideline for now. ![]() Therefore, if you own an Apple share, it is wise to hold your share for now. At the moment, both indicators are neutral, and no good prediction on the stock price can be made. This would have been the right time to buy the stock, which is reflected in the stock’s chart as well. This surge is likely the result of the announcement of the iPhone 12 or another product. However, around October of 2020, there has been a spike in search volume for the word Apple. If we look at the current state of Apple’s stock price, you can see that there has been a decrease in search volume on both terms. Conversely, if interest in the stock is low, it is a good time to buy the stock. If there is high interest in Apple’s stock, it is a good time to sell the stock. If interest in the products is low, it is a good time to sell the stock. If there is high interest in Apple products, it is a good time to buy the stock. He uses the principle of billionaire and legendary investor Warren Buffett: “Be Fearful When Others Are Greedy and Greedy When Others Are Fearful.” Here he implies the following two rules Global search volume for the term AAPL from 2004 to the presentĪccording to Thralow’s theory, you can use both graphs to predict what the price will do in the future. Of course, a logical assumption is that the price of the company’s share rises when more people are searching for the company on Google, but in practice, this often works very differently. For example, he shows how you can divide a company in the search term of the name of the company and the name of the share. He shows how he works when he makes investment choices based on Google Trends. As an example, let’s take an article written by Jon Thralow of Data Driven Investor. ![]() If you play it smart, you can use Google Trends to your advantage by analyzing the interest in certain assets. If you can predict trends, it will help you get ahead of the market, perfect in the investment world. All in all, it is a tool that allows you to spot a trend that is underway and possibly predict when a trend is imminent. With Google Trends, you also have the option to compare certain words to identify any connection. This data is taken directly from Google, which accounts for the vast majority of search traffic on the entire internet worldwide. In the Google Trends overview, you can enter a search term, one word or multiple, after which you will receive a graph and more interesting data that shows how much people are searching for this particular search term. It is a tool introduced in 2006 by search engine Google to see how popular a particular search term is. In this article, we show you how to approach this and how you could apply it yourself.įirst of all, let’s take a look at what Google Trends is. Now, there is a way of doing analyses that combines these two forms: trading based on Google Trends data. For example, what are the underlying motivations of the company, what is the potential in the long term, which patents does a company own, and how healthy is the company culture? In short, a lot of factors can help to decide if a business is a good investment or not. The fundamental side of analysis goes deeper into the underlying business. If you can recognize a particular shape or line, it could be considered a sign to take action. Technical analysis determines entry and exit points based on the chart of an asset. In general, two dominant concepts cover almost all factors regarding trading and investing: technical analysis and fundamental analysis. ![]() There are hundreds of ways to find the right assets to invest in. AugTrading bitcoin, shares, and more with the help of Google TrendsĪs a trader, you are always looking for the most profitable trading strategies.
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