Why Technical Indicators are Important in Cryptocurrency Trading?

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After entering the world of digital stocks and cryptocurrencies, as a beginner or professional trader, we must study the needs or fundamental and technical indicators related to trading needs. In this post, I will explain "Technical Indicators" and things related to these indicators to the digital asset and stock market.

Technical analysis is a method used to analyze asset price movements in financial markets using statistical tools, like graphs and mathematical formulas. In simple terms, technical analysis is a technical analysis tool aimed at observing patterns like market data, stock prices, and stock transaction volumes. The purpose of studying technical analysis is so that traders/investors can make an assessment of current market conditions based on price history in the past, as well as provide an overview or prediction of future market movements. Technical analysis has many indicators that can be used to sharpen and simplify analysis.

^source Technical indicators are generally used by active traders because these traders must always analyze all market price movements in the short term. Hence, technical analysis is mostly used by those who like to analyze commodity price movements and foreign exchange, an activity that makes more use of short-term price movement analysis. On the other hand, investors also use technical analysis to analyze long-term market prices to determine the right time to enter or exit the market.

Technical indicators are broadly divided into two groups, called Lagging Indicators and Leading Indicators, both indicators have their respective functions that are often used by traders.

1). Lagging Indicator is an indicator that serves to detect trends, like the Moving Average (MA).

2). Leading Indicator is an indicator that has a function to read the momentum of a market whether it is oversold or overbought. For example, a technical analysis indicator called the Relative Strength Index (RSI).

Whether or not the use of a technical indicator is good for analyzing prices in the cryptocurrency market depends on the trader/investor itself, each trader has their way of using technical indicators as a tool to help them make profits. Many traders abroad create technical indicators for themselves which are used based on the results of their analysis and previous experience, some of the popular technical indicators used by many traders are just because they join in and some are because the impact given by these indicators supports the results that traders want to achieve.

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The use of these technical indicators will be very good in the cryptocurrency market if used by traders/investors correctly and not carelessly. On the other hand, if the indicator is used without the necessary experience and knowledge to support it, it will not have a good impact.