Disclaimer: not financial advice, not an expert. Trading Chia or any other crypto is done at each individual’s own risk.
As we finally get into reading the charts (and other strategy information) we must first quickly cover what exactly is being presented in them. That is indicators; some not all, so make sure to know which indicators do what and when to use them. Absolutely we will go over some of these more in depth in later posts however walking before running we must understand what an indicator is. There are two main types: technical indicators and economic indicators. Economic indicators are a more broad scope of the general economy of a country; examples are unemployment rates and GDP. For this guide we are going to focus on technical indicators which are more trading focused.
What is a technical indicator?
An indicator when it comes to trading is any statistic used to measure the past, present, and future trading conditions for a given market. Essentially when it comes to exchange indicators they detect investment patterns within the market using: Volume, General interest and Overall Price. Some commonly used trading indicators are market volume, moving averages (and versions) and relative strength index(RSI); there are many more and no one is better than another. They should be used together; the more indicators you can understand the better overall understanding of the market you will have. Without getting overly confusing technical indicators can simply be broken down into two categories: lagging and leading.
Lagging technical indicators
Lagging indicators are measurable market factors that change only after a variable has been varied. Lagging indicators essentially confirm what has already happened within the market. They help us spot changes in the market by trailing the price action to confirm patterns. Your basic trading candlestick is a perfect example of a lagging technical indicator; it represents the movement of price over a specific time range, as well as the opening and closing price. Unlike other lagging indicators that compare two indicators vs each other, lagging technical indicators generally are matched versus their own averages or other historical data characteristics. Because lagging indicators show past market movement they can not always be solely relied on; as the market movement has already taken place it could already be too late to move on a trade.
Leading technical indicators
Leading technical indicators are good for timing, they forecast future market movements. They Try to predict the market movement before it happens. These indicators can include any piece of data that corresponds with a future movement or change in valuation. In order for information to be considered a leading indicator it must be measurable (so no Fomo or FUD) and it must come from a reliable source. RSI (relative strength index) is one leading indicator used quite often in trading. Another is the candlestick pattern reading (i like to call them the market tea leaves). However much like lagging indicators; leading indicators are not a perfect science, things happen and numbers do not always pan out. Perfect research when it comes to the markets does not always mean perfect accuracy especially when used by themselves.
The key takeaway to understanding indicators is that we must use them together to get as good of an understanding of the overall Chia marketplace. It pays to do your research on a project before you invest in it. Even though trading is not a perfect science if you follow some basic trading strategies and stick to your guns; more often than not you will find yourself on the winning end of a trade. Also understanding indicators and what they mean for your investment will help you be more confident in your timing of when to enter and exit trades. Sometimes new traders panic sell but just as (if not more) often they get caught not doing anything at all. Use lagging and leading indicators to your advantage and continue to be confident in your investments. Large traders are banking on you to make mistakes so the less mistakes you make the less they can take advantage of your loss.