Goldmine: what technical indicator traders use most often?
Source:
Traders use dozens of technical indicators, which help determine the status and the movement of the market in accordance with the trading strategy. But be sure to understand the diversity of complex graphs? Can I use any one?
Based on the results of a survey conducted by journalists Coindesk, the most popular tool was the trading volume. Second place went to the Relative Strength Index (RSI). Finally, the bronze went to the moving average. The respondents also had their own variants of the answer. Most often, they mentioned the wave theory of Elliott, divergence and stochastics.
How to use
So how to actually evaluate a trading volume of cryptocurrencies? The graph below shows the price for last days of December. The day ended in the middle of the price movement with noticeably high volume. If the volume greatly increases, but the price drops, that is usually one of the signals for the formation of «traps». In other words, the traders expect a quick change in this situation, sooner or later will be forced to exit their positions.
Source: Coindesk
The converse is also true. If the price is in uptrend and the volumes are growing, the upward movement is possible long trades. In other words, try to catch the divergence — if the numbers dropped dramatically in a bull market, it's time to think about opening short positions.
Note that the readings of volume has its drawbacks. For example, not all of the crypto currency exchange accurate information regarding trading on its platform.
This is Especially true in trading pairs with Althingi, whose liquidity is much lower than the liquidity of Bitcoin. According to the trader Josh Rager, the analysis of volumes to be undertaken only on trading pairs BTC/USD, which are posted on major exchanges.
The candles in the graphs and other basics of cryptocurrency read .
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