How to use technical indicators for effective cryptocurrency trading
The world of cryptocurrency trading is a big game of stake in which market fluctuations can happen in an instant. While some traders are based on emotions and intuition, others are trying to use technical indicators to achieve a competitive advantage. In this article, we will explore the role of technical indicators in the effective trading of the Krypto -Wall and will provide step by step as to include them in our trading strategy.
Understanding technical indicators
Technical indicators are numerical values that show market data, such as prices, trends or models, based on historical data. These indicators help traders analyze the current market situation and foresee future prices. There are several types of technical indicators used in the cryptocurrency store, including:
- Mobile Environment : Calculate the average price of a particular period (eg average of 50 days).
- RSI (relative resistance index) : Measure the scope of prices changes to determine the conditions established or supervised.
- Bollinger Bands : volatility shown as a range between two mobile environments.
- MacD (average movement divergence) : analyze the changes in impulses and trend.
Using technical indicators for effective trading
To effectively use technical indicators, follow these steps:
- Select the right indicator : Choose an indicator that aligns with your trading strategy and market conditions. For example, if you are a short seller, consider using indicators such as RSI to detect overloaded purchases.
- Use more indicators : Combine two or more indicators to create a more accurate image of feelings on the market. This is known as “Multi-Indicator Trading” (myth).
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- Follow a few indicators at the same time : Use indicators such as a stohastic oscillator or cloud Ichimok to display more data, creating a comprehensive image of market conditions.
- Use technical indicators in combination with basic analysis : do not rely on technical indicators; Include a fundamental analysis, such as news and a sense of socialization, to achieve a deeper understanding of the market.
Popular technical indicators for cryptocurrency trading
Some popular technical indicators used in cryptocurrency trading include:
- Stokastic oscillator (14 periods) : measure the price and volume relationship.
- Bollinger Bands : volatility shown as a range between two mobile environments.
- MacD (12 periods, 26 periods) : analyzes current changes and trends.
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Example of trading strategy using technical indicators
To illustrate the effectiveness of technical indicators in the cryptocurrency store, to create a simple example:
Strategy: Buy Bitcoin when RSI falls under 30, and the cattle oscillator is over 80.
- Enter a long position : Open your purchase order for 100 CTC at $ 10,000.
- Confirm the long position : Make sure the RSI (14 periods) is below 30 and the cattle oscillator (28 periods) over 70.
- Go out to a long position : Close the store when the price reaches $ 12,500.
Advantages of using Technical indicators
By including technical indicators in your trading strategy, you can:
- reduce the risk : analyze market conditions more precisely by reducing the likelihood of significant losses.
- Increase in efficiency : Use one indicator to monitor more markets or property, effectively working.
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