STEEMIT CRYPTO ACADMEY SEASON 3 WEEK 8||CRYPTO ASSET AND RANDOM INDEX (KDJ)||BY @steemdoctor1
Hello everyone!
I pray to Allah to keep us in his blessing. Today in this article, I want to complete the task of professor @asaj, the professor of intermediate courses. He has discussed the indicator in his article. Let's start our homework.
Question no.1
Defination of the random index and its calculation.
RANDOM INDEX
The random index is a type of indicator and it is also known as the KDJ indicator. It is the indicator of practical type.it is used to predict the market prices concerning time and is very reliable for traders. It helps us a lot in the determination of market trends and buying and selling of assets with the help of different lines. It is almost the new indicator that is inspired by the stochastic oscillator.
The KDJ indicator consists of three lines to show the ups and downs of the market. These lines are K D and J as indicated by its name. Its two lines are the same as that of the stochastic indicator, but the third line which is theJ line, is different, which mainly differentiates them. The J line depicts the divergence K-Line from that of the J line.
CALCULATION OF RANDOM INDEX
Its calculations are based on different prices. Such as the highest prices, lowest prices, and closing prices in different time intervals. The two horizontal lines indicate the prices of the market from 20 to 80. If the price moves above 80 its position of overbought and if the price moves below 20 in the market it is an oversold position indicated by the indicators.
To calculate the random index the strategy will be following.
- Hn Indicates the highest prices of the day and Ln indicates the lowest and Cn indicates the closing prices of the day.
To find the reserve value of the relevant day.
RSV of the day= (Cn-Ln)/ (Hn-Ln) X 100
its value is in the range of 1-100 mostly.
To calculate the values of K, D and J the following equations are used which I have written below.
For K = 2/3 X previous day K value+ 1/3 X RSV of the day
For D =2/3 X previous day D value+ 1/ 3 X K value of the day
For J = 3 X day K value- 2 X day D value
Here are the calculations of random index values Or KDJ Indicator which is used to indicate the values for the short term. So next we will move towards the next question which is to discuss the reliability of the random index.
QUESTION NO.2
Is the random index reliable? Explain
No indicators are 100% believable but some indicators are most trusted in the market.KDJ indicator one of them its different indicated lines makes it a reliable indicator. You can use different indicators along with the random index indicators for a better indication signal. It works well with the other indicators and gives trusted signals to the traders.
So answer to the question about its reliability is yes it is but must use it with other indicators for better results.
QUESTION NO.3
How is the random index added to a chart and what are the recommended parameters? (Screenshot required)
The random index or KDJ indicator can be added to the chart very easily. In the following steps.
Step no.1
Go to the trading view website and then make your account if you don't have one. I have already an account as I explained the method of making an account in my previous post. Go to the home page of your account and then
Click on the chart option as you can see below. In the screenshot.
- A chart will open which is the chart of different markets. You can see the chart or prices ups and downs of your desired market that you want to see.
Step no.2
- Click on the option of indicator on the above bar of the chart as you can see below in the screenshot.
The list of the different indicators will open.
Step no.3
- Search for the KDJ indicator to add this. This is very easy to add the indicator. Just one click on the desired indicator.
The KDJ indicator will be added as you can see in the below screenshot. I also mentioned its different lines which are K-Line D Line and J line respectively.
Parameters of the chart:
So now we will discuss different parameters of the chart. Which are very necessary to learn the indications of the different indicators.
Overbought and Oversold
Overbought Condition When the J line of the indicator goes up to the 80 in the indicator this signal shows the most people are buying the asset and its overbought condition. In this way, this indicator signal helps the traders sell their assets for profit or better trading.
Oversold condition When the J line goes below the 20 this is the condition for traders to buy the assets at low prices to get more benefit from their trading.
Up and Downtrends:
Downtrend you can see in the below screenshot when three lines intersect with each other and lines go down this indicates that it's the downtrend and price reversal will occur in the market.
Uptrend when three lines intersect and the lines go up this is the indication that surely the price reversal will occur and this is the uptrend signal through the indicator.
You can see the up and down trend signals in the screenshot above.
Dead and Golden fork:
Dead Fork is the signal when the lines go above and k and D lines intersect this is the signal of buying assets in the market.
Golden fork Is the signal when the lines intersect at the point below the 20. This is the signal for buying assets in the market.
So these were all the essential parameters that are necessary to understand the indications by different indicators in the trading and that helps the traders most to see the ups and downs of the market for better trading and to earn profit.
QUESTION NO.4
Differences between KDJ, ADX, and ATR
Now we will discuss the differences between these indicators we will discuss it in the form of a table.
| KDJ | ADX | ATR |
|---|---|---|
| It is also known as the Random Index. | It is the Average directional index indicator. | It si the Average true range indicator. |
| It is Three lines indicator. | Its singal line indicator. | Its singal line indicator. |
| It tells about the signals of the overbought and oversold in the market. | It is used to determine the strand strength of any asset in the market. | It helps us in the determination of the market vitality. |
| It helps us to see the trends by using different lines of indicator which are K, D, and J that shows the traders signals of a dead and golden fork in the market. which helps the traders to determine the trends of the market. | The average directional index can be calculated by using the expansion of the price rate for a certain time. | It determines the trends of the market by the highest and lowest prices of any assets in the market. |
| It determines the trend in the range above and below 20 -80. | it determines the trends range between the 1-100 | It indicates the trend by considering the gaps between the movements of the prices as the highest and lowest prices. |
| It indicates the direction of price by its different lines. | It does not indicate the direction of the prices of the market. | It also did not indicate the direction of the price's ups and downs. |
| It is good to use ADX and ATR Indicators before making the decisions | combine with the average moving before deciding on trading. | Also combine it with the Average moving the make the decisions. |
- So this was all about the difference of the indicators I have explained a little and main points. So now we will move towards the next question.
QUESTION NO.5
Use the signals of the random index to buy and sell any two cryptocurrencies.
Buy order:
- First of all, I selected the pair of the USDT/TRX by using the Binance trading. The K,d, and J lines are intersecting at the point below the 20 so it was the oversold condition. It was a good signal to buy the asset at that time. So I buy the TRX from USDT. As all screenshots can be seen.
- So, here you can see the buy order created by me through my Binance account. The screenshot is below.
Sell Order:
I use the same pair and sell this when the lines intersect above the 80 as the J line was gearing up to it was a good sign to sell. It was the signal of Overbought and I sell the TRX to earn profit.
- So, here you can the Sell order created by me in the Binance exchange.
CONCLUSION
This was a great lecture by professor @asaj who has explained about the indicator KDJ indicator which is used by the traders that indicate the trends of any asset by the golden and dead forks in the market. It can be used better by using it with different indicators in the market. But we will not trust the signal indicator for making big decisions for the great assets but other parameters are also necessary to keep in view.
So this was all about my post. I hope that the professor will like it and will give me good grades. I am making his post for the first time hope to get good results and guide me in case of any mistake.
Special Mentions:
For the review of my post.