THE RANDOM INDEX

The Random Index, commonly known as the KDJ Indicator, is a technical indicator that may be used to forecast market price changes over time. It is said to be a very useful technical indicator. There are three lines in the Random index: K line, D line, and J line. The K and D lines move in a similar way to a stochastic oscillator. The J line is a new addition that illustrates the divergence of D and K values.

The selling and purchasing movements are determined by the movement of the K and D lines. All three lines form separate curves that forecast the golden price trend. The random Index aids in determining the trend as well as the best entry points.

CALCULATION OF THE RANDOM INDEX

The KDJ indicator is calculated using the lowest, highest, and closing prices during a certain time period. The price chart has two horizontal lines from 20 to 80 that represent a price reversal when the price travels above and below. In the price chart, the indicator ranges from 0 to 100. When the price rises beyond 80, it is considered overbought, and when it falls below 20, it is considered oversold.

To begin, find the highest, lowest, and closing prices for a certain time and multiply by n. So, let's say the following are the pricing.

Hn = highest price of the day
Ln = lowest price of the day
Cn = closing price of the day
The asset's relevant day's Reserve value (RSV) must then be obtained.
Day's RSV = (Cn-Ln)/ (Hn-Ln) X 100
The RSV value is always in the range of 1 to 100.

The K and D values must then be calculated using the procedure below:

The day's K value equals 2/3 of the previous day's K value 1/3 X RSV of the day + K value

The day's D value is equal to 2/3 of the previous day's D value. D value + 1/ 3 X the day's K value

If you can't find the K and D values from the prior day. 50 can be used by users.
J value equals 3 X day 2 X da D value = K value

Starting at the week level, the KDJ indicator may be used to determine short- and medium-term price movements.

CAN THE RANDOM INDEX BE RELIED ON???

The KDJ is a technical indicator for trend analysis. I believe there is no such thing as a perfect or trustworthy indication or approach. Users may add moving averages, ATR, or ADX with the KDJ indicator to detect the price trend and make it more trustworthy. KDJ may also generate erroneous signals. So, my recommendation to investors is to utilize a few additional indications and techniques to check the true price movements before investing.

HOW TO ADD THE RANDOM INDEX TO OUR CHART AND WHAT PARAMETERS ARE IMPORTANT?

1.First things first, Log into Tradingview.com and select "Charts" to add the indicator to the price chart.

2.Then it will be sent to the window with the price charts. In the window, you'll see the price chart of the cryptocurrency pair you've chosen. To show the indicator behavior, I've chosen the DOGEUSDT cryptocurrency pair.

3.Then, above the price chart, click the "Indicators" icon. The window will then display a search option box. We may put the name "KDJ" into the search field. Then it displays a selection of KDJ indications, but we must choose KDJ. Because it is more trustworthy and has a high ranking, “ll21LAMBOS21” from the library of indicators was chosen.

4.Finally, three indication lines may be plainly seen after applying the indicator.

NEEDED PARAMETERS

The %K9, %D3, and %J3 indexes are the default parameters. Based on my personal experience checking the KDJ and conducting some analysis, I have discovered that the KDJ index of daily K-line parameters of 9,3,3 is prone to fluctuation, involving many sensitive and too many invalid signals, causing the KDJ index to be ignored by traders who believe it has no value.

However, if the parameters can be changed, we may envision the index being a suggested tool for analyzing an asset's trend price. The following values are recommended for the KDJ index parameters of the daily K-line: 5,19, 25. Users may simply set their index parameters based on the assets they are trading and the time frames they are dealing with.

WHAT ARE THE DIFFERENCES BETWEEN KDJ, ADX AND ATR?

1.KDJ: The KDJ indicator evaluates the price movement to determine if the asset is overbought or oversold. When the indicator's K value is more than or equal to 80, it indicates that the market is overbought. When the K value is less than or equal to 20, the signal is considered oversold. Investors should evaluate other technical indicators as well in order to make an appropriate purchasing or selling decision.

ADX: An asset's trend strength is plotted using the Average Directional Index. It is determined by extending the price range over a set length of time. It's a single line that goes from 0 to 100. This aids traders in identifying the most profitable price patterns to trade. There are values that may be used to determine the strength of a trend.

Below are the ADX values and their corresponding trend strength

0-25 is Weak trend

25-50 is strong trend

50-75 is a very strong trend while

75 – 100 is a an extremely strong trend

ATR: The Average True Range Indicator is used to calculate an asset's market volatility over a given time period. This is computed by taking into account the differences in price fluctuations. A single line represents the volatility.

SELL ORDER

I've chosen the DOGEUSDT cryptocurrency pair to trade. By crossing the lines, the KDJ indicator gave me a sell signal, and the yellow line moved from top to bottom.

I chose the DOGE/USDT cryptocurrency pair to execute the sell order. My starting price is 0.294603, and my stop loss is 0.25236. This order resulted in a profit of 0.042243 USDT. For me, this sell order is profitable.

BUY ORDER

I've chosen the ADA/USDT cryptocurrency pair to execute the buy order. As you can see in the screenshot, I bought at 2.0800.

After that, I put in a buy order. 1.8000 is my entrance price, whereas 1.9229 is Mark's. I made a profit of 0.1229 USDT on this transaction as well.

CONCLUSION

The KDJ technical indicator is used to determine the price trend of an asset over time. Random Index is another name for this indicator. For investors, no indication is 100 percent dependable. Before buying, it's a good idea to check the KDJ indicator's results to those of other indicators like the ADX and the ATR.

Thank you for reading my post.

Cc: @steemcurator02
@asaj