Crypto trading basics: Identifying indicators of market trends

Part of what it takes to be a good crypto trader is having a keen eye for changes in the ebb and flow of market trends. The secret to doing this is not at all about predicting the future but simply knowing what to look for in the present day. It can be found right there on the candlestick charts.

These are called ‘indicators’ and they can come in various forms. How to read them depends on which type of indicator you are looking for. Each one comes with a formula to help calculate potential upward or downward trends based on how the graph currently looks. You just need to know how to read them.

Play fun slot games using Bitcoin at Gamdom

What is an indicator

An indicator is a type of lens or framing device analysts use to interpret present data. Using these, they can make an educated guess of the market’s future so traders can make the best decisions at the right time. Theories in market analysis are also usable in how to read indicators in crypto. It lets you capitalise best on your Gamdom winnings by trading them at the perfect times. 

What are indicators in crypto trading? Since crypto is a much more volatile asset than stocks or other properties, they tend to have shorter spikes intervals. Thus, you need to either be attentive to the charts 24/7 or rely on crypto trading bot indicators with automatic portfolio management. 

Candlestick charts are the best for tracking trends

Crypto indicators are best viewed at a candlestick chart than any other graph. That’s why most wallets or exchanges have this set at default. The colour-coordinated bars are great for indicating differences between the open and close. If you are going to practice using crypto indicators, then it’s better to get acquainted with the candlestick graph.

Examples of important indicators in crypto trading

There are quite a few crypto market indicators to see at markets. It’s just better to focus on the most popular ones as a beginner. Not only can you have more references to compare your findings using popular ones but you also have the opportunity to consult strangers for their interpretation. Here are five of the best crypto trading indicators to use:

• Relative strength index (RSI)
   

The RSI is one of the most popular crypto chart indicators for getting a general idea of trends but it’s not a reliable means for deciding when to best buy or sell. It’s more effective as a means to give you a signal when to pay closer attention to market trends. 

It’s a concept centred around monitoring while the assets are either overbought or oversold relative to its market price. The general rule of thumb is, trends that continue to persist above 70% or below 30% are likely to stay there. However, if trends drop below 70% or rise above 30%, then it is going to continue until it reaches the threshold in the opposite direction. 

• Moving averages (MA)
   

The MA is one of the most versatile crypto technical indicators having different versions for all kinds of traders. Simple MA is for those who like to trade in a shorter-term as they monitor market trends for lag. Those who are engaged in long-term investments are better suited with using exponential moving averages (EMA) as indicators. Rather than being stand-alone factors, they can also work as parts of other useful formulas to help you make more precise predictions. 

Bet on live sports events at Gamdom 

• Moving average convergence divergence (MACD)
   

The MACD is focused on following trend momentum to predict when it will eventually change and which direction it will go. Its concept revolves around the difference between the 26-period exponential moving average (EMA) from the 12-period EMA. This allows traders to use a long history as a reference to guess what kind of trend crypto will take in the immediate future. 

However, this has a weakness in which it can create a false positive for very volatile cryptocurrencies like Bitcoin and Ethereum. It’s ideal for identifying when’s the best time to buy new assets but when looking for signs to sell, it’s better to rely on other indicators. 

• Multi-year coverage (MYC)
   

MYC is similar to MACD in which they are both momentum oscillators, meaning that they attempt to identify a secure momentum in market trends. The main goal is to find when the reversal is going to happen. Its biggest difference is that MYC has a clearer indication of entry and exit so traders can focus more on the scale of their position or leverage. 

• Bollinger bands
   

The Bollinger bands is one of the oldest market indicators used by traders since it was founded by John Bollinger in the 1980s. Its core concept revolves around identifying when trends are most or least volatile over a period of 20 days. 

Market trends are associated with rubber bands as they are observed to have resistance no matter how far their volatility stretches their price far from the average. The questions that Bollinger bands aim to answer as a crypto scalping indicator are how long is the market volatile and which direction is it pulling towards.

Why trading indicators are important

Monitoring market trends is not a waiting game but a job that requires foresight. What makes a successful trader is their ability to read the current situation and use the given data to predict what’s about to happen. Although gambling with opportunities is fun, it’s better to leave that kind of entertainment in Gamdom casino games. Traders need to be attentive to market trends to make a guaranteed profit. Just keep these indicators in mind and study how they work to use them in capitalising profit from your Gamdom winnings.

Play the best Bitcoin casino games at Gamdom

Words: Clarence Clarke