Crypto Academy Contest / S14W2 - Volatility in cryptocurrencies.
In our life we have many ups and downs so just like this in Crypto market we also see ups and downs in the prices of different assets and this is called volatility of cryptocurrencies have different effects so let me discuss about them.
Volatility can be very beneficial and can be very detrimental.Let me explain about it
Volatility can be very beneficial in a way that traders and investors can earn a lot of profits from volatility and for this you have to suppose that if there is an assets which price is increasing or pumping then it would let users to buy low and sell high so in this way if someone time it right then it could be very profitable.
For example;
Suppose you buy Bitcoin when their value was 10000$ and after that there was a huge pump and price reach to 40000$. Now this is very beneficial for you and how it is detrimental let's discuss about it. If you buy Bitcoin when it's value was around 40000$ and after a dump occurs and price reach to 10000$ then it would be a huge loss for you and in this case it is very detrimental.
Volatility is detrimental in a way that it is not too much trustworthy and it is not one of the most reliable source of exchange. Volatility can create a fearable situation among investors when it leads to uncertainty. This is because there are many investors that hesitate investing in cryptocurrencies because they feel nervousness about losing their rewards give to any unfavourable situation.
Volatility is not very unique for cryptocurrencies. Volatility can also be experienced by stocks and commodities. The thing that make difference between volatility of stocks and commodities as well as in the volatility of cryptocurrency is that cryptocurrency have a lot of price swings so in this way it can be very exciting and can be very unfortunate so before you invest in any cryptocurrency you should know about history of that Crypto currency as well as predictions from an expert.
Average true range is an indicator about which I am going to explain
Average true range is an indicator that is used to measure market volatility and it is one of the most versatile indicator as well as it is very useful for all traders for assessing volatility of any particular asset.J.Weller was a well known person who introduced this technical indicator for the measurement of volatility in market. It permits traders to make certain decisions by keeping in mind range of price fluctuations.
Working of ATR
Average of high and low prices of a particular cryptocurrency over a specified period of time can be calculated through this indicator.So that average let you know about volatility in market
Average true range can be shown in the form of line chart that fluctuates and gets up in the case of any pump and that moves down in the case of any dump. If value of average true range would be greater than it would be a condition of greater volatility. In the same way if value of average true range would be little than it would be a condition of lower volatility. So in this way high and low volatility can be determined by using this indicator by different traders.
Setting of ATR at stop-loss, take-profit is another way of using this indicator.Proper distance for their stop loss orders can be determined by traders by the use of ATR.If ATR value is towards rise then it is an indication of significant price swings of a particular cryptocurrency and vice versa.
Breakout level of a particular cryptocurrency can also be determined by ATR.If price of a particular cryptocurrency is moving beyond a certain level of resistance or support then it is in the condition of breakout. By the comparison of current ATR values with historical levels,it is very helpful for traders to determine a breakout.
ATR don't tell you about ups and downs in price of a particular asset because it's not a directional indicator but it provides information about volatility which let traders to make valuable decisions.
Bullingar bands are another indicators that are used for measurement of volatility in market
Working of bullingar bands
In Bullingar bands there are three lines which are upper band, middle band and lower band. When we talk about middle band then it is simply the average of a particular cryptocurrency price over certain period.
When different number of standard deviations are added into the middle band then upper band is calculated and same if we subtract certain number of standard deviations from middle band then it gives us lower Band.
When market becomes more volatile then it causes bands to become widen and if market become less volatile than it causes band to be narrow.Potential breakouts and reversals can be measured by traders by the use of Bullingar bands.
Crossing of price or touching of price to upper band is an indication of asset overbuying as well as when prices touch or cross lower band then it indicates over selling of an asset.
I have explained about ATR as well as about Bullingar bands but I am much comfortable with bullingar band
I am describing all about it in the following steps so let's discuss it in below steps.
Step 1
First of all we would open the site tradingview.com and we would select and search STEEM/USDT chart as I have shown in the screenshot.After that you would click on the chart and then it would be opened for you.
Step 2
After opening of STEEM/USDT chart there would be an option of indicator at the very top in the menu as I have also shown you guys in the screenshot.
Step 3
When we would click on indicator then there would be a search bar we would be able to see so in search bar we would see BB (Bullingar bands).
Step 4
When we would click on BB then indicator would be applied there as I am showing you guys in screenshot.
Hopefully through all these screenshots now it is very easy to understand for all of you that how indicator could be applied at STEEM/USDT chart.
I apply indicator at STEEM/USDT chart then in last 30 days indicator of Bullingar band is indicating that market of STEEM/USDT volatility is continuously decreasing or slowing down.
There are blue lines above and below the candles you can see and these lines are decreasing continuously which are showing decrease in fluctuations or volatility in market so according to me it's a positive news for coming days.
Future of cryprtocurrencies would be more stable or not this is a very lengthy topic at which there could be a lot of debate. There are some predictions that cryptocurrencies would be much impactfull as well as would be much stable in coming years and their are some also opinions about high volatility in Crypto market so I want to give an overview about both predictions.
It's a believe by some predictors that when cryptocurrency would gain mainstream acceptance then there would be much stability in it and fluctuations susceptibility would decrease. Reasons behind it could be improved regulation and infrastructure and high level of usage in everyday transactions.
There are some also sayings of predictors that by the introduction of stable coin it is becoming more easier to see cryptocurrencies more stable. In this way it leads to maintenance of fixed value of cryptocurrency which would reduce volatility in return and it could also be associated with other cryptocurrencies.
Inherent nature of cryptocurrency like decentralized nature make cryptocurrency prone to volatility which is another point of discission among predictors. If there are a lot of regulatory changes as well as technological advancements then there are high risks of volatility in cryptocurrencies.
There could be other factors involved that don't let a particular cryptocurrency to be stable and these factors are fluctuations in global economic conditions as well as investors sentiment so if we keep in mind all these factors then there could be high level of volatility and price swings in Crypto market.
Cryptocurrency is one of the most evolving and with the emergence in technology there are some associated pumps and dumps so can be seen mostly in early-stage markets and then cryptocurrencies get mature and gain wider adoption then they will become more stabilize.
Greetings friend.
You have given such a simple example to explain about this topic. It makes this topic easy to understand. Bollinger bands and ATR Indicator both are excellent indicators as these help in measuring the volatility of the price chart which helps in taking entry and exit positions from the trades. And I also believe that Future of Crypto is more stable after these kind of adoptions and regulations.
Good luck for the contest.
Thank you so much for commenting at my post
I am happy to see your comment here as well as I really like that you love my imaginary example in which I tried my best to like you know guys that how increase in price of cryptocurrency can effect and how a sudden decrease in price of cryptocurrency can effect and how they are positive and negative respectively
I agree with you that bullinkers band and one of the best indicators that can indicate and measure of a particular cryptocurrency and I have applied bullingers band also and its nice to know that you consider a more secure future about cryptocurrency in accordance with more stability of cryptocurrency in future
Upvoted. Thank You for sending some of your rewards to @null. It will make Steem stronger.
Has explicado con ejemplos que la volatilidad del mercado de criptomonedas dejas beneficios en unos y pérdidas en otros. Dejas claro además que la volatilidad es mucho más oscilante que el mercado tradicional. Obviamente es mas inestable o susceptible a los factores globales, la especulación de las ballenas y el ciclos de emociones (sentimiento del mercado).
Explicaste claramente el funcionamiento del indicador ATR para medir la volatilidad de una criptomoneda en su paso a paso.
El resultado de tu análisis de la volatilidad del STEEM/USDT en el último mes es acertado, observando las baja volatilidad en los días más recientes, esperando buenas noticias en los próximos días.
Resaltas que es difícil predecir la estabilidad futura de la criptomoneda sin embargo, mencionas aspectos que contribuirán sin duda a su estabilidad futura.
Saludos y te deseo muchos éxitos.
Thank you so much for commenting at my post. I am very happy that you understand everything in my post in true meanings as well as I agree with you that volatility exist in cryptocurrency but it is important to understand that there cannot be profit for every time and there cannot be loss for every time due to a volatile nature of cryptocurrency
Secondly I tried my best to explain ATR indicator as well as Bullingar bands indicator for the measurement of volatility of cryptocurrency but in step by step explanation I was more comfortable with bulingar's band that's why I explain it in question number 3
If I talk about 4th question then I am happy that you liked my explanation as well as according to STEEM/USDT chart you can see that my analysis and observations accurate so your comment is over all very motivating for me I would also like to visit your entry too.
Thanks for best wishes and I also want to wish best in this engagement challenge in advance
Saludos amigo ¡Mucha suerte!
🥰
Hey friend friend I enjoyed your content and the quality of the post, you wrote so well about for the activity and RC you did a perfect job and you actually deserve more
volatility and cryptocurrencies work handy hand to achieve success, in fact whenever this for activity there is high chance that so many people will come out of that trade as profiters instead of regreting
I am happy that you like and enjoy my contact whatever I write as well as I am happy that you like the quality and over all presentation of my post and it is really very appreciating words for me
Volatility and cryptocurrency are together for achieving success I agree with you because just like in our life we see many ups and downs but when our life goes to once success then we feels very happy so just like in Crypto market when a pump occurs then it makes everyone happy and then everyone can get success I agree with you I would like to visit your entry too. Thanks for this extensive comment
Greetings friend,
Indeed, Bollinger Bands and the ATR Indicator are great tools that help us understand how much the price of a cryptocurrency goes up and down. They give us a way to measure this volatility, which is important because it helps us make decisions about when to buy or sell.
And you're absolutely right, when there are more rules and regulations in place for cryptocurrencies, it makes them more stable and reliable for the future. It's like having a solid foundation to build upon. All the best
Bullingar bands and ATR I one of the most common and well known tools that are very helpful for all investors and traders if they want to invest or trade any particular cryptocurrency then they can predict and have an idea about a particular cryptocurrency price fluctuations or price movements
I also agree with you that most of the investors and traders in Crypto market like to measure volatility because most of the time they want to make certain decisions for their success and on the basis of in accordance with market conditions they why or cell their currency
I have also visited your entry that was really very informative and valuable I wish you good luck and success again in this engagement challenge to you and thanks a lot for wishing me best
True, Bullinger Bands and ATR are indeed widely recognized and helpful tools for investors and traders in the cryptocurrency market. They provide valuable insights into price fluctuations and movements, allowing investors to make informed decisions. Volatility measurement is crucial for many traders, as it helps them navigate the market and make strategic moves. I'm glad you found my entry informative and valuable. Thank you for your kind wishes, and I wish you the best of luck and success in the engagement challenge as well.
ATR and bullingers band I really very helpful for determination of volatility or ups and downs in market I agree with you and yes I find out your entry informative and I wish to read informative posts from you in future also
Yes the ATR and the Bollinger bands both are very strong and useful indicators to check out the volatility. You have explained very well about that topic and shared a very interesting post with us. With the help of Bollinger bands indicator you have explained us about the volatility of Steem USDT chart and made it very easy for us to understand the working of indicator. I really appreciate your views about that topic and wish you very good luck 🤞
Thank you so much for your valuable comment at my post and I am happy to know that you understand both of my examples of indicators that I have shown you guys
Secondly I have explained and applied bullingers band indicator at step by step explanation to show the volatility at chart and time happy that you clearly understand about it whatever I tried my best to explain as well as I have also visited your entry it was very informative also I wish you good luck again and thanks for wishing me
TEAM 4
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