7 Popular Technical Indicators and How to Use Them to Increase Your Trading Profits
Ever wondered how to use technical indicators in trading? Well wonder no more, this article expands on the concepts laid out in Mastering the Art of Cryptocurrency Trading: Essential Tips and Strategies for Success focusing on 7 popular indicators and the strategies you can use to profit from their signals.
Technical trading involves reviewing charts and making decisions based on patterns and indicators.
These patterns are particular shapes that candlesticks form on a chart, and can give you information about where the price is likely to go next.
Indicators are additions or overlays on the chart that provide extra information through mathematical calculations on price and volume. They also tell you where the price is likely to go next.
There are 4 major types of indicator:
Trend indicators tell you which direction the market is moving in, if there is a trend at all. They’re sometimes called oscillators, because they tend to move between high and low values like a wave. Trend indicators we’ll discuss include Parabolic SAR, parts of the Ichimoku Kinko Hyo, and Moving Average Convergence Divergence (MACD).
Momentum indicators tell you how strong the trend is and can also tell you if a reversal is going to occur. They can be useful for picking out price tops and bottoms. Momentum indicators include Relative Strength Index (RSI), Stochastic, Average Directional Index (ADX), and Ichimoku Kinko Hyo.
Volume indicators tell you how volume is changing over time, how many units of bitcoin are being bought and sold over time. This is useful because when the price changes, the volume gives an indication of how strong the move is. Bullish moves on high volume are more likely to be maintained than those on low volume.
We won’t cover volume indicators here, but this class includes On-Balance Volume, Chaikin Money Flow, and Klinger Volume Oscillator.
Volatility indicators tell you how much the price is changing in a given period. Volatility is a very important part…