Crypto Academy / Season 3 / Week 8- Homework Post for Professor @assaj

This is the eight-week
of the Crypto Academy season, 3 and I am thrilled to take part in this week's task by @assaj This is where the fun is and with this lesson, we are learning more about Crypto Assets and the Random Index (KDJ). Let's get into it.

Q1.) Define the random index in your own words and explain how it is calculated

KDJ is a technical indicator we can use this indicator for analysis of the market trend, after analysis we can predict where the market trend goes if the trend is bullish we can invest in the market and take profit. If the market is bearish mode then we can avoid it, KDJ is a very practical and very common use for short-term market

KDJ is a very efficient indicator. These indicators are very new and very easy to use. This is also the same like other indicators that are help traders to buy any asset easy way.

This indicator also works like RSI and shows us over-bought (80) and oversold (20). This indicator has a Black J line which measures the convergence and divergence of the K and D lines. when you are using KDJ you will find many similarities stochastic oscillator

KDJ used to be used in futures markets but after its success, it started to be used in other markets as well. The KDJ indicator is a combination of the moving average and the power index, so the KDJ is giving a more reliable signal.

If you look in the screenshot you will see three lines k line which is blue color, the J line which is black color and the D line which is orange color. If we look for the difference between the KDJ indicator and the stochastic escalator, we will not find much difference. The KDJ indicator has only more J lines, all other features are common.

If we look at the measurements of KDJ and stochastic escalator prices such as stochastic escalator from zero to one hundred percent and its middle point is considered to be fifty percent. If we look at the measurement range of KDJ, it is the same. Fifty percent is considered the middle ground and the buying trend is higher than 50 percent and thus the selling trend is higher in the area below 50 percent.

The KDJ indicator performs more efficiently in volatile markets and similarly provides the wrong signal ever in flat markets.

How to calculate the KDJ indicator

As we know that KDJ indicators consist of three lines K, D, and J. We need some information to calculate these three lines such as high price, low price, and closing price. With their help, K line D line J line can be calculated.

Before the calculation of the K, D, J lines first, we need to know about RSV means an immature random index value. it could be a random index period (N hours, N days, N weak)

Calculate the Highest, lowest, and closing prices

H = Highest price

L = Lowest price

C= Closing price

Calculate RSV value

RSV = (C - L) / (H - L) × 100

Calculate K value and D value

K = (2/3 X previous K value)+ (1/3 X RSV of the current period)

D = (2/3 X previous D value)+ (1/ 3 X K of the current period )

Calculate J value

J value = (3 X K value ) - (2 X D value )

2.) Is the random index reliable? Explain

The random index is called KDJ. This signal consists of three lines K, D, J. These three lines provide signals of market trend. When these three lines come together. They either stop or cross each other, in which case they provide a signal

The random index gives the wrong signal in the flat market and if we talk about the volatile market then the random index gives the right signal.

If we talk about flat market signals, random indexes give us wrong signals, which is why we want to use other indicators along with random indexes when looking at the market trends of any asset.

That's why I can't believe 100% random index and we can't believe 100% Other indicators. that's why when we do technical analysis of any asset we must need to use a minimum of 3 indicators at the same time then we do an accurate technical analysis for any asset

Similarly, if we look, the random index works like CCI, RSI, and the stochastic oscillator. For example, when the market is between 70% and 30%, the buying and selling rate of the asset is higher. And so when the market goes above 80%, the asset has been bought a lot here, and finally, when the market goes up to 20%, the asset has been sold a lot.

The KDJ indicator tells us about the market trend, but if we talk about the trend of these three lines, it also tells us when the asset price will rise and when the asset price will decrease.

When J lines are above K and D it means asset prices are rising and the market is in uptrend mode. When the J line is below the K and D lines it means the asset price is going to decrease and it means the market is in a downtrend mode

3.) How is the random index added to a chart and what are the recommended parameters? (Screenshot required)

First of all, we need to log in to Tradingview.com open the chart and I will show you step by step how to add a Random index indicator on the chart

• First of all I open chart BNB/USDT 4 hour chart

• Second I click on the "fx" button

• Third in the search bar I write "KDJ" and then as you can see on the screenshot many indicators are open but you can select but you have to Click on ''ll21LAMBOS21'' that appears in the search results.

• Fourth as you can be seen on the screenshot "KDJ" is successfully added to the chart. there are three lines K, D, J line.

KDJ indicator settings

• First you have to click on input Period :9 Signal:3 is considered the best setting

• Second you have to click on the style in this section you can change the color of the K, D J line, and also you can change the background color. and also you can set the level

• Third you have to click on visibility there are you will see the setting of time frame such as second minute , hours.

what are the recommended parameters?

Every trader sets parameters according to his mind and also his trading strategy and according to market trend but according to my point of view the recommended parameter settings are 9:3:3 days.

Differences between KDJ, ADX, and ATR

Here you can see that I applied all three indicators on the chart I will explain the differences between all of them in below

Differences

KDJ	ADX	ATR
Random Index indicator	Directional Movement Indicator	Average True Range Indicator
KDJ uses 3 lines; K, D, and J	ADX uses 1 line	ATR uses 1 line
For better results indicators used along with ADX, ATR	For better results indicators used along with Moving averages, DI lines	For better Results used along only Moving averages
KDJ indicates the direction of trend	ADX does not indicate the direction of tren	ATR also does not indicates the direction of a trend
KDJ Indicator is 9 periods	ADX indicator is 14 periods	ATR indicator is also 14 period
KDJ identify buy signal, sell signal , oversold, and overbought	ADX indicator identifies only bullish & bearish trend	ATR indicator identifies only market volatility

5.) Use the signals of the random index to buy and sell any two cryptocurrencies. (Screenshot required)

Now I will tell you what I learned in this class through trading , I will buy and sell two cryptocurrencies with the help Of KDJ indicators

ADA/USDT Buy

As you can see on the screenshot I open 1 Minute chart as you can see the J line is oversold region means below (20%) but it is a risky point if the market goes down the I lose money but I open only a 1-minute chart after a while market goes up

as you can see I bought 1000 ADA at 2.4465 and right now is the current price is 2.4479 and I hope after a while I get a good profit when the KDJ giving me a Sell signal

ADA/USDT Sell

As you can see in the screenshot after a long wait I got a signal from KDJ to sell the asset and now I should not delay in selling because the market is going down Be out Have to go out now

I bought 1000 ADA at $2.4465 and then I sold at 2.4357 I lose almost $7 if I hold more then I get a big loss because that market right now is a bearish mode , i already talk about KDJ is not giving correct signal in short term market that's why i loss $7

SOL/USDT Buy

well in this screenshot you can see I open 1 minute SOL/Usdt chart here you can see the J line is below 20% and also you can see the k and D line a little bit up.KDJ indicator giving me a clear signal to buy SOL . It's the right time to buy SOL .

as you can see on the screenshot I buy 10 SOL at 75.183 when I get a sell signal then I will sell it

SOL/USDT Sell

on the screenshot, you will see the J line cross the K and D line and clearly giving me a sell signal its time to sell my asset

in 3 minutes I get 3 dollars profit as you can be seen on the screenshot. I bought 10 SOL at 75.183 and Three minutes after KDJ giving me a sell signal at the same time I sold out all SOL at 75.460 after calculation I got 3 dollar profit in short-term trade.

Conclusion

Thank you very much for your very useful lecture. Reading it will clear up a lot of my confusion. Before today's lecture, I didn't know much about KDJ Indicator but after today's class I have a good knowledge of it if I Talk about random index, it is a good indicator, if we understand the right way to use it, we can make a good profit and I will try my best to use it in future trading.