[Technical Indicators] - Crypto Academy / S4W2- Homework Post for @reminiscence01

anyiglobal (63)Beginner[2,3,4,5]in SteemitCryptoAcademy • 3 years ago

Hello Crypto Academy Family,

Am happy to participate in the week's assignment once again! All the Courses on Crypto Academy has been Interesting so far! Today, we have yet again learnt a new course "Technical Indicator" taken by Prof @reminiscence01. Am delighted to be in your classroom sir!

In this assignment today, I want to write about Technical Indicator according to my understanding based on the following questions below:

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.

1. TECHNICAL INDICATORS (a)

Technical Indicator is a mathematical paradigm which is gotten from past data and it is used by investors and traders to make a good prediction on the price trend of cryptocurrencies and it also aids them to make a better decision before trading or investing.

A series of data points from past price, volumes, and open interest data are derived from using a mathematical formula. For analysis sake, Price chart comparison is made with it's corresponding technical Indicator graph. Technical Indicator also captures the psychology of investors to ably predict future trends of price activities.

Technical Indicators as a tool of technical analysis helps traders to make investments in cryptocurrency. However, technical Indicator serves as a signaling tool that provides information for traders when used with other technical analysis tools. Technical Indicators are applied in technical analysis to predict price movements.

(b) Yes, Technical Indicators are good for Cryptocurrency analysis because it helps traders to determine when to enter into a trade and when to exit a trade for profit making i.e. to know market Entry and exit points.

(c) How to Add and Configure Indicator in Binance

Open your Binance on your device. In this content, am using the Binance mobile App. Click on "market" tab at the bottom of the page! when the page opens, choose any coin pairs of your choice, but for the sake of this assignment am using FTM/USDT pairs. After choosing the coin pairs, click on the signal symbol as shown in the screenshot below:

no indicator added yet

Add Indicator

From the screenshot above, click on indicator to choose an indicator of your choice. After clicking the button, the list of Indicators available will appear. As in the screenshot shown below:

The available Indicators include;

MA
EMA
BOLL
MACD
RSI
KDJ

Click on anyone of your choice and click on "Confirm" as shown in the screenshot below:

From the screenshot above, you can configure the Indicator by changing the colour, the Boldness, and the Value.

The Screenshot shown below is the output of the Indicator chosen above:

A chart with MA indicator

You can Further Activate other sub Indicators such as MACD, RSI, and KDJ as shown below:

CATEGORIES OF TECHNICAL INDICATORS AND THEIR EXAMPLES

There are several categories of technical Indicator that traders can use to make decisions on the market. These categories include; Trend-based Indicators, Momentum-based Indicators, Volatility-based Indicators. I will explain these with their examples below.

Trend-based Indicators As the name implies, this type of Indicator is used to determine the price trend of coin pairs by just looking at the price chart. This type of indicators help traders to identify market conditions that is trending. It also helps traders to determine the whole direction of the trend. Examples of Trend-based Indicators include: - Moving Averages (MA) - Moving Average Convergence Divergence - Average Directional Index (ADX) - Triple Exponential Average e.t.c

Moving Average Indicator: FTM/USDT pair

Momentum-based Indicators In this category, the value of the Indicator commonly oscillates around a predefined baseline and that is why it is also called oscillator Indicator.It is also used to determine the distance the price of an asset has travelled Due to the market forces (Demand and Supply), and this asset will be overpriced which leads to investors withdrawal of their profit. When this occurs, the momentum Indicators gives you idea of when the price is overbought. A great increase in price will result in strong momentum, while slower price changes will indicate a weak momentum Since the momentum measures the rate of change. Examples of Momentum Indicators include: - Relative Strength Index (RSI) - Stochastic - Moving Average Convergence Divergence (MACD)

RSI indicator: FTM/USDT

Volatility-based Indicators
Due to volatility of cryptocurrencies, the price of assets swing up and down. A trader has to take advantage of the price swing down by using the Volatility Indicators to measure the price swings. Traders can analyze price changes using Volatility Indicators so as to make profit.

Para Venture If Volatility does not occur in a market, there's a possibility of not having a profitable trading because the price doesn't change. Examples of this includes:

Bollinger Bands
Average Directional Movement
Average True range (ATR)

Bollinger Bands indicator: FTM/USDT

(b) Reason why Technical Indicators cannot be used as a standalone tool for technical analysis
Technical Indicators cannot be used as a standalone tool for technical analysis because on several occasions two Indicators will shot contradictory Information. The signals of Indicators is not 100% sure. It can bear false signals or lag behind the current market price. So it is not advisable to use it as a standalone tool for technical analysis, rather It can be used as confirmation tool for other technical analysis tools.

(c) How an investor can increase the success rate of a technical Indicator An investor can increase the success rate of a Technical Indicator by doing the following: - Using it to understand the market condition, hence make good predictions of their trade.