[[[REPOST]]] - [@subconsciousness] - Crypto Academy / S4W2- Homework Post for @reminiscence01

Hello Everyone,
As we enter the 2nd week of the 4th season of Steemit Crypto Academy training, we continue to increase our knowledge by taking useful training. Thank you professor @reminiscence01 for this valuable explanation on Technical Indicators. You can see my homework below.

_{Image edited in Canva}

HOMEWORK

1.a) In your own words, explain Technical indicators and why it is a good technical analysis tool.

Cryptocurrency technology has now become a part of our lives. We are trying to evaluate our investments in this lane. There are some guiding methods when investing, there is no blind random investment. We can briefly call these guiding methods indicators. Thanks to technical indicators, the trend of the market can be seen and predicted. Indicators help find entry, exit and return points thats why it is a good technical analysis tool.

In fact, we can briefly say that the information that emerges as a result of mathematical calculations, in which price or volume data are calculated with different formulas, is called an indicator, and these indicators are an important factor in the decision point for investors. We also need to have the ability to make predictions with the technical analysis we will make by interpreting these technical indicators.

Although there are many indicators, they are divided into 3 features as functions. Some are used for Prediction. Some are used for Confirmation. Finally, it is used for Alert purposes. A more profitable result will be obtained if the position is entered or exited by knowing what purpose the technical indicators serve. There is a very important issue that no indicator should be used alone for decision making. It must be entered into the transaction by analyzing with more than one indicator. Thus, the risk is reduced to less.

1.b) Are technical indicators good for cryptocurrency analysis? Explain your answer.

As in other markets, technical analysis is of great importance in the cryptocurrency market. Cryptocurrencies with high volatility can take a very troublesome dimension if the right investment strategies are not created. The usefulness of technical indicators will undoubtedly be appreciated when a good analysis of cryptocurrencies is done using the indicators correctly.

The cryptocurrency market is slightly different from other markets. For this reason, there are also Cryptocurrency technical indicators that should be followed more carefully. These indicators are tools for crypto traders combined with technical analysis that can help them predict price movements more accurately.

Of course, a method should be followed in which several indicators will be used together in the right combination. When a single indicator is tracked, the trend in the price of the tracked commodity can be misleading. We should follow the buy, sell, hold signals by looking at the indicators, and we should not forget that the indicators are live and change according to the course of the price.

1.c) Illustrate how to add indicators on the chart and also how to configure them. (Screenshot needed).

I used tradeview in this section. All screenshots are taken from www.tradingview.com First of all, we open the chart of the cryptocurrency that I intend to analyze. I wanted to work with SLP so I added indicators to the SLP chart in this question.

​ _{Example of how to add indicators on the chart}

After entering the name of the commodity that we want to open the graphic on the first welcome screen. Here comes the line graph. We turn this into a candlestick chart, as I showed in the gif above.
In the gif below, after clicking on the part that says f(x), we will write the name of the indicator that we want to add to the chart in the window that opens. I have added two indicators, one of the type added above the price chart (Ichimoku cloud) and the other of the type with a new chart added below(RSI).

_{Example of how to add indicators and how to configure}

In the indicator graphic, when the settings button is pressed above the indicator name, the setting page for the indicator opens. From here, settings such as sensitivity, time and color can be made for the indicator.

2.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)

Indicators are the placing on the chart by examining the unique course of the past price movements of a commodity with mathematical formulas. With this new indicator graph, the direction of the price or trend of the commodity is predicted. Many indicators have been formulated. Indicators used in technical analysis can be examined in 3 main groups. These are trend, momentum, and volatility indicators. These are the main group titles. When we go into more detail, there are too many technical indicators under each of these categories.

Trend Based Indicators

Trend analysis is one of the most important technical indicators. It is a tool used to determine the general direction of the commodity. Looking at the trend, one can predict whether the price will go up or down. Trends can have different time periods. For example, a commodity that is in an uptrend on the hourly chart may be in a downtrend on the daily chart.

We can count these as examples of trend-based indicators. Moving Averages, Moving Average Convergence Divergence (MACD), Average True Range (ATR), parabolic SAR, (PSAR), linear regression, Wilder's DMI (ADX), Price Oscillator (PPO), Forecast oscillator

_{Moving Averages Indicator : SLP/USDT Chart}

I added the Moving Averages (MA) indicator to the SLP/USDT daily chart. The points where the price changes the direction of the trend by intersecting with the Moving Averages are clear. While this is easy to mark in retrospect, it is not enough for the future on its own. Momentarily, we can say that the downtrend continues as the price is below the moving average.

Volatility Based Indicators

There are changes in the price of a commodity over a certain period of time. This volatility is called volatility. Volatility indicators are trading channels drawn with the help of standard deviation depending on price changes. As long as the price stays inside this channel, it means the trend is continuing. If the price approaches or exceeds the limits of the band, it indicates that there will be a change in direction. When the volatility is said to be high, it does not mean that the price of the commodity has gone up or down too much, it means that the price has changed a lot in a short time.

We can count these as examples of trend-based indicators. Bollinger bands, Projection oscillator, Average true range, Trading bands (envelope)

_{Bollinger Bands Indicator : SLP/USDT Chart}

I added the bollinger band (BB) indicator to the daily chart of SLP/USDT. A change in trend is seen when the price approaches or crosses the lower and upper limits of the bollinger band. Momentarily, the price is at the lower line of the bolinger band, at the border, and we can say that there is a possibility of a trend reversal with a reaction.

Momentum-Based Indicators

The price of each commodity sometimes rises and sometimes falls. But it never rises steadily or never falls steadily. Sometimes it gets too high and goes into overbought territory. Sometimes, its price drops a lot and is in the oversold zone. Then they go into correction. Oscillators tell us about this. They help us make up our minds to enter a position to buy or sell at the right time.

We can count these as examples of trend-based indicators. Rate of Change (ROC), Stochastic oscillator(%K, %D), Relative Strength Index (RSI), Commodity Channel Index (CCI), Williams %R (Wm%R), Chande momentum oscillator (CMO), StochRSI, TRIX, Ultimate Oscillator (ULT), Aroon

_{RSI Indicator : SLP/USDT Chart}

I added the Relative Strength Index (RSI) indicator to the SLP/USDT daily chart. The oscillation between 0 and 100 in the indicator and its relationship with the price appears. A value above 70 is considered an overbought zone. The value falling below 30 is shown as an oversold region. In the changes between these two, incompatibility checks can be made. We can say that the price is in the oversold region for a moment.

2.b) Briefly explain the reason why indicators are not advisable to be used as a standalone tool for technical analysis.

The prices of commodities may or may not move in trends, may or may not resemble past patterns, and the direction they will go may or may not be defined. Knowing technical analysis is not just about being a professional trader by studying simple lines or curves. While the course of the price is especially within the limits of technical analysis indicators, it does not give certainty to the investor, as the psychology of the traders is also involved.

Investors are not advised to invest based on the signal given by a technical indicator alone. Knowing that sometimes it may give false signals, it should analyze together with many indicators, not standalone.

2.c) Explain how an investor can increase the success rate of a technical indicator signal.

In order for an investor to increase the success rate of the technical indicator signal, it must be well understood with what function the indicators are used. Also, great attention should be paid to the time frame. Depending on the course of the price, the signals given by the indicators may also change. Details should not be overlooked to increase success. should work with more than one indicator. By evaluating every possibility, it is necessary to put a stop loss on the price in case things go wrong. All these will increase the profitability and efficiency of the entered positions.

None of the charts or information I have included here are investment advice. They are amateurish assignments that I prepared for educational purposes only.
Thus, we have come to the end of our homework by answering all the questions. I tried to fix it in general, but since I use google translate, there may be a shift in meaning at some points. I hope you will excuse me. Thanks in advance for the review, professor.

Cc:
@reminiscence01