Steemit Crypto Academy Season 4 Week 2 - Beginner's Course | Technical Indicators by @dulip for Professor Reminiscence01

지난달

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Homework Task

Entire Question

  • a) In your own words, explain Technical indicators and why it is a good technical analysis tool.
    b) Are technical indicators good for cryptocurrency analysis? Explain your answer.
    c) Illustrate how to add indicators on the chart and also how to configure them. (Screenshot needed).

  • a) Explain the different categories of Technical indicators and give an example of each category. Also, show the indicators used as an example on your chart. (Screenshot needed).
    b) Briefly explain the reason why indicators are not advisable to be used as a standalone tool for technical analysis.
    c) Explain how an investor can increase the success rate of a technical indicator signal.

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Technical Indicators


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Technical indicators are heuristic or pattern-based signals produced by the previous price, volume used by traders who follow technical analysis. So that we can say it is some kind of prediction based on the experience on each platform.
As I mentioned previously these technical indicators are consist of series of data so that indirectly we deal with a bunch of ideas of traders. In any kind of if we have previous experience then that activity will become easy and we'll be able to archive our targets without any difficulty. When we consider trading there are two kinds of people some of them doing their trades due to experiences and the rest of the people use the kind of technical indicators to analyze the market.

When we think about the importance of these tools we can identify several benefits.

  • This will help to predict an accurate signal for traders.
    Technical indicates give an accurate signal with a positive probability to decide the decision so that as a trader minimizing the risk they can trade.

  • No need for any previous experiences to use technical indicators
    If you are a beginner then using a technical indicator will be very useful to predict future behavior.

  • It shows a very clear image about the market positions
    As an example, we can easily identify whether uptrend or downtrend so that easy to take the decision.

Here we discussed the general benefits of technical indicators, in the next chapter, we'll move directly into Cryptocurrency and the relationship and is it worth using any kind of technical indicators in analyzing.

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Are technical indicators good for cryptocurrency analysis?


To the above answer here I'll express my personal idea so that my point of view is technical indicators are good analyzing tools for Cryptocurrencies.
"The trend is your friend" is a famous quote in the market so that these indicators will help you to find your friend that means trend. So that if you select the correct indicator for the correct situation you will be a successful trader in Crypto Market. Most investors in Crypto Market use these indicators as a support tool with their other technical tools. Anyhow as a conclusion, we can say these technical indicators are very beneficial for the traders, and they convey a correct signal to the user.

Here we'll discuss how to add indicates to a chart and how to configure them as needed. For this purpose, I use Trading View platform. So that I will explain the above questions by using several steps.

  • Step-01

After log in to the trading view platform then as the first step we have to select our trading pair so that here I'll select BTC/USDT pair.

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Select the Trading Pair Src

  • Step-02
    As the second step here you will appear the selected graph. After that click on the indicators and strategies button on the top menu.

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BTC/USDT Trading Chart Src

  • Step-03
    This step is one of the most important because here is the place we can select our indicator by its name. So that here I will write EMA (Moving Average Exponential) as an example to clear the idea.

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Select the Indicator Src

  • Step-04
    From this step, we can change some settings as per the requirements. So that in the image also you can see there are several options such as Input, Styles, and Visibility but in this example, I use only Input and Style tabs only.

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Customize settings Src

  • Step-05
    As an additional step where we can change the colour tone also but this is optional.
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    Customize settings Src

  • Step-06
    This step shows us the final result of our indicator. So changing the above mention setting we'll be able to get a clear indicator.

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Final View Src

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Different categories of Technical indicators


In modern days traders use different types of technical indicators so that here basically we can categorize them into three types. Further, we can classify these indicators such as the style of trading and the objectives which you use for the investment. Now we'll discuss those three types one by one.

Trend Based Indicators

If you remember that in the first chapter also I told about trends, so that as I said previously if you identify the trend of the market then it will be an easy job to gain some profit through the trading. Considering these points we can say indicators play a major role to find the future trend by using past data. This will very helpful to identify the strength and weaknesses of the Crypto Market. Here I can give several examples of indicators that fall into this category.

  • Ichimoku Kinko Hyo
  • Moving Averages ( Simple and Exponential)
  • Average Directional Index ( ADX)

Here I'll show you a very familiar trend-based indicator that is Moving Averages Exponential. So that it is also known as EMA.

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EMA Indicator View Src

Volatility Based Indicators

In finance, volatility is the degree of variation of a trading price series over time deviation so that simply we can get an idea about these indicators. If we simplify further then we can say it gives information to the trader when the market swing that means swings low or swings high. Hence it will be a good opportunity for a trader because then he can buy relatively low prices and sell at relatively high prices. There are few indicators that fall into this category.

  • Bollinger Bands.
  • Average True Range (ATR)

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Bollinger Band BTC/USDT Src

Momentum-Based Indicators

Momentum-based indicators called oscillators are used to analyze an asset that how far has traveled. An asset of a wealthy tendency does not always exist as a bad one. Depending on the forces of supply and demand, these assets become more expensive and investors begin to make profits, which puts selling pressure on the assets. It gives an idea about that asset is over-sold or over-bought. Here I'll mention some examples for this category.

  • Relative Strength Index (RSI).
  • Moving Average Convergence Divergence (MACD)
  • Stochastic

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Relative Strength Index (RSI) Src

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Indicators are not advisable to be used as a standalone tool


Indicators are not advisable to be used as a standalone tool because we can't trust 100% about its accuracy and also it may go wrong so that if we trust a single indicator and doing some trades means we are in the risk zone. So that we have to use more than one indicator before making a decision and the other hand there is some kind of technical issues also such as network lagging.

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How an investor can increase the success rate of a technical indicator signal?


First of all, the investor should have a better understanding of his field and also about the indicators which he is using. So that investors should know what are the limitations of using indicators as an example if some indicator gives maximum results for a 2-hour chart then he has to customize it properly as per the requirements.

And the other hand if you can use more than two indicators then you can increase your success rate of the technical indicator signals.

Like that after a small research investors can increase the success rate of the technical indicator signals.

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This is all about my homework post and Thank you very much for the valuable time you have spent reading this article.

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Hello @dulip, I’m glad you participated in the 2nd week Season 4 of the Beginner’s class at the Steemit Crypto Academy. Your grades in this task are as follows:

CriteriaRatings
Presentation / Use of Markdowns2/2
Compliance with topic1/2
Spelling and Grammar1/2
Quality of Analysis1/2
Originality1/2
Total6/10



Observations:

No need for any previous experiences to use technical indicators.

This is not true. You need to understand an indicator and its suitability to your trading style before you can effectively use them.

It shows a very clear image about the market positions

Why this is true. Note that some indicators lag or lead behind current market price. This is why other technical analysis tools are needed for accurate confirmation.

Recommendation / Feedback:

  • The student have completed the assignment for this lesson.
  • The student also answered all the questions in his/her own words.
  • Your overall presentation is good.
    • There were so many grammatical errors that can be avoided using Grammarly. So I suggest you use it in your preceding tasks.
  • You really need to improve your writing skills. It was very difficult to understand some of your points.
  • Meanwhile, you have tried your best to answer the questions correctly.

Thank you for completing your homework task.