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Hi everyone! This time I want to try to participate in a task given by professor @reminiscence01 from the Steemit Crypto Academy community. The professor gave several questions related to volume indicators that are often used in cryptocurrency trading and investment.

Question 1

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

When trading or investing in crypto, every trader will always identify potential current trends and price movements in order to avoid losses and then technical analysts create or innovate technical analysis tools and indicators. Therefore, to forecast potential market trends, chartists/traders should use analysis of historical data derived from technical indicators. With this effect, technical indicators are very important in crypto trading dealings as they provide a chartist/trader picture of the price movement in the market in a given timeframe.

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Technical indicators are usually displayed in graphical form and placed below the indicators are used so that they can work together with graphical representations of asset performance to predict possible market behavior. This behavior, when confirmed, can help traders and investors to determine appropriate market entry and exit periods to reduce the severity of accrued losses or generate profits.

When you have the information, you can proceed to analyze the data obtained regarding prices, possible price fluctuations that may be determined by cryptocurrencies and predict what their value will be in the short, medium, and long term. It can be said that indicators are financial tools that allow us to observe how the market behaves in order to invest in trading funds in a safer way.

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

I would say that technical indicators are very important because they are statistical tools that will allow us to get information through certain indicators to see the movements taking place in cryptocurrencies then technical indicators also allow us to have an idea of ​​how financial markets are moving given that currencies are unstable and through this analysis, we can have a vision of what is happening in that market.

Another important use of technical indicators is that they provide traders with data from past prices and will inform them of future cryptocurrency price predictions. Then going through the trend will give us the opportunity to make the right decision at the time of investing, it also allows us to see how the support and resistance of different prices are to make a decision which is why we help ourselves through charts and formulas that will help us psychologically to make good decisions in financial markets.

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If we are not observers through technical analysis using the indicators, we can make mistakes when investing in the market which is why this strategy is used for self-guidance.

Technical indicators will also signal the movement of cryptocurrency if it has entered a bullish or bearish trend. Being able to learn and have knowledge of the price movements of cryptocurrencies helps traders and investors in making decisions to profit and avoid losses during trading.

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

To add an indicator to the chart, we select the Indicator option indicated by the white box.

Then we look for the indicator we want to add, after that several indicators will appear, usually the best indicator is at the top choice. Like here I want to add the Moving Average indicator and I choose the top option.

After that the Moving Average indicator has been added to the chart. If we want to configure the indicator, we select the settings menu that is written on the indicator.

Then in the input menu we can change the length of the Moving Average, Source, and offset length.

In the previous menu, namely the Style menu, we can change the line settings displayed by the Moving Average indicator, we can change the color and line thickness of the Moving Average indicator.

And on the visibility menu we can set the timeframe we want to include on the graph.

Question 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).

There are several categories of indicators that are often used by traders and investors, based on the learning given by professor @reminiscence01 there are 3 categories of indicators that are often used.

• Trend Based Indicators

The first category of indicators that I will discuss are those that show a trend. As we know that the trend is a very important thing that must be known by traders and investors. We are advised never to go against the trend in order to get profit when trading.

One indicator that can see the trend of a cryptocurrency is Simple Moving Average (SMA), how to use it is to put 2 SMA lines that have different line lengths, then there will be a moment where the two lines intersect so as to create a moment that referred to as the "Golden Cross" and "Death Cross".

The golden cross is a moment that indicates that there will be a bullish trend that will occur in a cryptocurrency, for example in the chart above. While the Death cross is a moment that indicates that the Bearish trend has started. By knowing these two things, traders will find it easier to trade in cryptocurrencies.

• Volatility Based Indicators

The next category of indicators is an indicator that predicts the movement of the price volatility of a cryptocurrency. Volatility is a very fast movement of a cryptocurrency price from rising to falling and vice versa. Many traders like the cryptocurrency market because it has a high level of volatility compared to other commodities.

One indicator that we can use to measure the level of volatility is the Average True Range (ATR), this indicator has a line that will show the movement of price volatility so that we can see whether a cryptocurrency market is busy or quiet. If the ATR indicator gives a signal that the market is busy, then at that time is the right time to trade, while if the ATR shows that the market is quiet, it is advisable not to trade on the cryptocurrency market and choose another cryptocurrency market.

• Momentum-Based Indicators

The last indicator category is the indicator used to see the momentum of cryptocurrencies. Many of the traders are confused about when is the right time to enter or exit a cryptocurrency, they are confused whether the price of the cryptocurrency is cheap or still expensive. Therefore this type of indicator will really help traders to make decisions in trading.

An indicator that can be used to determine momentum is the Relative Strength Index (RSI), this indicator is almost the same as the ATR indicator discussed earlier by having a line that will move to determine a momentum, but it has 3 horizontal lines that will become the limiting line as well as the line signal, the lines include "Upper Band, Lower Band, and Middle Band". If the line that moves between these three horizontal lines touches the Lower band, then this indicates that the market is at its lowest or often referred to as "Oversold", whereas if it touches the Upper band, then this indicates that the market is at its highest price or often referred to as "Overbought".

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

The essence of the usefulness of a technical indicator for both investors and traders is that it exists to communicate the status of an asset's performance in the market. The indicator can provide confirmation whether the asset is really moving in the direction of the bullish trend or the bearish trend. This will allow the trader to enter the market at the best point to make a profit or exit the market to properly manage the invested capital.

In addition, technical indicators help traders in managing their assets properly because certain indicators can show the volatility of assets and traders can invest the appropriate amount of capital and also set order limits to maintain the risk ratio according to the wishes of the investor funds trader. Therefore, traders with a deep understanding of technical indicators can consistently secure more profits with less losses here and there.

It should be noted that indicators are just a reference, they should not be used separately from technical analysis because in order to understand the statistical procedure of what indicators require for the realization and interpretation of chart analysis, indicators should be used where we can observe trend changes, types of patterns, support and resistance to being able to determine the time or time indicated to make a buy - sell, we must remember that this indicator can predict the future price and in turn determine in the timeframe how the financial balance in the market and for that we must analyze the technical reports very well when using indicators because they are all geared towards realization. No trades work separately.

Overall, technical indicators are great for analyzing asset performance in the market as they can assist traders in recognizing the patterns and performance of assets in the market in order to make sound financial decisions for proper risk management.

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

The first way that traders and investors can use to increase their trading success is to know how to carry out technical analysis based on indicators, and we must know what type of indicators we will use so that when interpreting distinguish the best time to be able to trade. If an investor or trader really wants to increase the success rate of a technical indicator, then he must make sure that he applies the indicator correctly where it is necessary to use it. For example, if you want the indicator to give you a signal when a cryptocurrency is overbought or oversold, that means you should use the Oscillator indicator but if you use the volume indicator instead, you will realize that wrong signals will be given that are different from what you were looking for.

Timing is very important when using technical indicators. We must be able to take advantage of every time we have to learn how to use indicators. Whenever we realize that a trading signal is given by an indicator then we must be alert to always be on time so that you can carry out successful trades without market fluctuations.

Use all of them because this can undermine the success we hope for because we can make inconsistent operations and make mistakes that is why we should use two or three that allow us to identify what we want to invest with clear and accurate decisions in trading and achieve great benefit.