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What Technical Solutions Help You to Trade Cryptocurrencies?
Crypto trading involves buying, selling, or exchanging cryptocurrencies on broker platforms, and using the right trading strategies to make the right decisions. Most brokers offer proprietary tools that traders use to make trading decisions. For example, traders may check price forecasts before they buy Bitcoin or other crypto assets. The tools used to make these forecasts are collectively called technical tools. There are several categories of technical solutions that brokers adopt and offer to traders who either use them as proprietary tools or customize them to fit their needs. Here, you’ll discover the top technical solutions that crypto traders use to achieve their trading goals.
Charts (Graphs)
Financial market charts show historical data on the price and volume of assets as a graph. Charts are popular because they typically show how an asset’s price is moving as well as the various prices. Traders can see certain information on charts, such as the opening and closing prices. There are different kinds of charts, but the three common ones are:
Line charts are the most basic charts used in technical analysis. They use a simple line to represent the price and display the information without complex tools. Line charts typically use closing prices and not opening prices. This makes them more suited to identifying trends and more effective when combined with technical indicators. The best advantage that line charts offer is reduced market noise, allowing traders to track price movement easily.
A bar chart is a price graph with multiple bars showing an asset’s open, high, low, and closing (OHLC) prices. These charts allow traders to monitor price trends, volatility, and momentum easily. The length of the vertical and horizontal bars reflects the buying or selling intensity. Bar charts are easily combined with technical indicators to improve technical analysis. They are also flexible and work well for any timeframe.
Japanese candlestick charts are more common, especially for beginner traders, as they are the easiest to read while providing the most information at a glance. These charts show volume, trading intensity, volatility, and trend information. The body shows the trading intensity, while the wicks (shadows) show the opening and closing prices. Candlesticks are customizable for color and timeframes.
Technical Indicators
Although charts provide much data about an asset’s history, traders combine them with technical indicators to get better information. Technical indicators are mathematical formulas designed to display certain information about an asset. Indicators react to the market, aggregating data to show clear information in a graphical form. All indicators measure the movement of price relative to several different parameters. There are several categories of indicators based on the data they capture:
Volume indicators display data on the strength of a trend, showing the buying and selling volume. There are three common volume indicators; Chaikin Oscillator, On-Balance Volume (OBV), and Volume Rate of Change. These indicators measure the increase or decrease in the flow of funds and the rate of volume increase.
Volatility indicators measure the rate of movement of an asset’s price in no particular direction. Whether price increases, decreases, or ranges, volume indicators display the movement rate so traders can determine the market interest. The Bollinger Bands is a common example of a volatility indicator. Others are Average True Range and Standard Deviation.
Momentum indicators measure the speed of an asset’s price changes in a particular direction by comparing the successive closing prices for a defined period. They are quite useful in determining likely trend reversals and momentum changes. Examples are the Stochastic Oscillator, the Commodity Channel Index (CCI), and the Relative Strength Index (RSI).
- Trend and Reversal Indicators
These indicators help traders identify trends and reversals either before they begin or immediately after. Trend indicators are especially useful for capturing small changes in the trading direction as they react to market forces. Some trend indicators also measure the momentum of change. Examples are Moving Average Convergence Divergence (MACD), Parabolic Stop and Reverse (Parabolic SAR), and Moving Averages.
- Support and Resistance Indicators
Support and resistance indicators capture the levels and zones where the price reaches a high and tends to reverse and where the price reaches a low and tends to reverse. Examples are the Fibonacci Support and Resistance (Fibonacci Levels), the Wolfe Waves, the Camarilla Pivots, and the Murrey Math Lines (MML).
Trading Platforms: Brokers and Exchanges
Trading platforms are software developed by brokers and exchanges to provide trading solutions for various financial markets. Brokers and exchanges act as market makers, connecting traders in the forex market. Traders can access the crypto market through two categories of trading platforms.
- Proprietary Trading Platforms
These are the native trading platforms that exchanges and brokers provide. Proprietary platforms are typically available as mobile and desktop applications and are web-hosted. They are designed to meet the needs of traders as the broker deems fit.
- Integrated Trading Platforms
Integrated trading platforms are usually third-party software such as TradingView that allows traders to connect their brokers and exchanges for analysis and trading. These platforms usually have more trading tools and solutions, which may or may not come at a fee.
Final Words
Traders must make the right choice of technical solutions as they perform analysis and create trading plans. Finding the best technical solution to get the best from your trading performance is crucial. In addition, the right solutions make trading easier.
