Crypto trading is no longer a game of chance. It is a game of strategy and patience. If you want to be a successful crypto trader, it is important that you know how to use the right indicators and metrics, as well as when to use them. So, here are some popular indicators that can help you make better decisions during your trades:
An indicator is a tool that helps you make decisions in the market. It can be used to measure different aspects of market activity, such as volume and price movements, and come up with an opinion about what is going on.
The most popular indicators for crypto trading are Bollinger Bands, MACD and RSI.
Moving Average Convergence Divergence (MACD)
Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of prices. The MACD is a histogram that plots two exponential moving averages (EMAs) against each other.
The MACD line consists of three lines: the 12-day EMA, the 26-day EMA and the 9-day EMA. When these lines cross at zero or below, it indicates a bearish trend and vice versa for bullish trends
Relative Strength Index (RSI)
The Relative Strength Index (RSI) by J. Welles Wilder was introduced in the late 1970s. It measures momentum, whether an asset is overbought or oversold, by comparing the closing price to its 50-day moving average. If the current price is within 10% of its 50-day moving average and has been trending upward for at least two days, then it is considered an RSI reading above 70 degrees; otherwise it is below 70 degrees.
If there is strong upward momentum on this indicator, it may indicate an impending rally; however, once prices begin to fall back below their averages—which will eventually happen if they are not pressured by other factors—they will likely continue to fall until they finally break through old highs (the red line). In other words: just don’t get too excited!To learn more about RSI and how to calculate, Read here: LINK
Bollinger Bands
Bollinger Bands is a technical trading tool that can be used to determine the relative high and low of a crypto asset over a set period of time. The bands consist of an upper band (Top line), which is typically wider than the lower band; and two bottoms, one higher than the other by about 20-30% (Centerline) in either direction from this centerline.
The center line is what determines where prices will always trade when using Bollinger Bands: if it is below your center line, prices will tend to fall, if it is above your center line, prices will tend to rise.
To better understand how Bollinger Bands work, read here: Bollinger Bands Indicator in Crypto Trading Explained – LCX
Stochastic oscillator
The Stochastic Oscillator (SMO) is an indicator that measures the momentum of an asset and determines overbought and oversold levels. It does this by calculating the average of two moving averages, one slower than the other.
The Stochastic Oscillator was first developed in 1962 by Arthur Levitt and his fellow researchers who were looking for a way to measure whether they had found a trading strategy that would outperform traditional methods such as moving averages or Bollinger Bands. using tapes (a popular method at the time). Although there are many different variations on this theme today, they all share similar characteristics:
A long-term moving average (either exponential or simple)
A short-term moving average
Exponential Moving Average (EMA)
Exponential moving average (EMA) is a moving average that gives more weight to the most recent data points. It works well as an indicator because it smooths out price fluctuations and can be used as a trading signal. The EMA is also useful in conjunction with other indicators, such as the RSI or MACD, allowing you to get more accurate signals when there are sudden shifts in market prices.
Crypto Trading Metrics
Crypto trading statistics are used to make better trading decisions. For example, if you want to buy BTC, but there is a high chance that the price will drop in the short term, then you might want to wait some time until the price starts to rise again before buying it.
Crypto trading benchmarks help measure the strength of currencies by comparing them to other currencies or assets., which are used as reference points when calculating their performance metrics such as daily returns vs volatility indices (DVSI) over time periods ranging from one hour to seven days tall..
Closure
We hope this article helped you understand the best crypto trading indicators and how they can be used to your advantage. You may have noticed that we haven’t suggested any specific indicators or metrics here, but these are the ones we’ve found most useful. LCX enables users to explore a wide range of statistics and indicators with integrated TradingView charts to help traders make informed decisions.
Disclaimer for Uncirculars, with a Touch of Personality:
While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
No legal, tax, investment, or financial advice should be inferred from these pixels. We’re not fortune tellers or stockbrokers, just passionate crypto enthusiasts sharing our knowledge.
And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
Ultimately, any crypto adventure you embark on is yours alone. We’re just happy to be your crypto companion, cheering you on from the sidelines (and maybe sharing some snacks along the way). So research, explore, and remember, with a little knowledge and a lot of curiosity, you can navigate the crypto cosmos like a pro!
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