Steemit Crypto Academy Season 4 Week 4|Beginner's Course|Technical Indicators 2|Homework post | by @dhanux94 |for @reminiscence01

Hello Steemians,,,

1.) a) Explain Leading and Lagging indicators in detail. Also, give examples of each of them.
b) With relevant screenshots from your chart, give a technical explanation of the market reaction on any of the examples given in question 1a. Do this for both leading and lagging indicators.

Lagging Indicators

A lagging indicator is a stochastic one. This is useful to know where the price is going. A logging indicator is displayed after a price move. For example, when a house catches fire and the smoke goes up, we know the house is on fire. Smoke does not escape before it catches fire. We do not know the exact entry. But shows the direction.
Lagging indicators cause traders to lose relevant market tendencies. Slow indices lead traders into a trap, which can be reversed when traders have a weaker tendency to enter the market. Lagging indices are used as confirmation tools in a strong trend market.

Examples include Moving average divergence, Moving average convergence, Parabolic SAR, The MACD indicator and Bollinger bands.

Leading Indicators

A leading indicator shows before something happens. For example, there is a cricket match. If we say that a very talented person in that team is not playing today, we know that the probability of that team winning today is less. A leading indicator is one of those. Early detection of price fluctuations by traders in the market can minimize their losses. Leading indicators help traders to make predictions about price indices. When the market price is one of two zones, there is usually a change in the trend. It is a wise decision to use leading indicators with other technical analysis tools as leading indicators tend to manipulate prices. On balance volume identifies the behavior of the volume relative to the price movement. That is an example of a leading indicator.

Examples include Hidden bullish divergence, Hidden bearish divergence, Relative Strength Index (RSI), On-balance volume (OBV) and The stochastic oscillator.

Example of a BTC/USD chart with the Moving Average indicator.

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Example of a BTC/USD chart with the Stochastic RSI indicator.

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2.)
a) What are the factors to consider when using an indicator?
b) Explain confluence in cryptocurrency trading. Pick a cryptocurrency pair of your choice and analyze the crypto pair using a confluence of any technical indicator and other technical analysis tools. (Screenshot of your chart is required ).

Identifying and understanding indicator types:

Since we can now distinguish between the leading and the backward indicators, we need to know the significance of each of them. Also, if you do not know how to use them at the right time, you will incur losses. Therefore, weaknesses should also be considered. Then you can understand its function before using the indicators. When using an industrial indicator, you need to pay attention to whether it is lagging behind or ahead of the price. It is important to consider the type of indicators you choose and how they work. This will help the trader to keep abreast of market trends as well as counterfeit currency.

Understanding Trading Strategy:

This simply means choosing the right technical analysis tools for market conditions. This means knowing which indicators are best suited for the market strategy and also helping the trader to set an index based on that.

Knowing market trends:

It is very important to know the range of a particular market. This allows the market to use accurate indicators. Large ups and downs in the market make it possible to identify selling areas. It is good to understand the tendency of the market to identify over-bought and over-sold areas in order to make good trade decisions.

b). The combination of cryptocurrency trading is simply to create opportunities for successful trading. This combination is a situation where two or more indicators are applied to a chart and the same results are obtained. In short it is the place where more than one trade index is connected. This is a combination of two or more indicators showing the selling and buying areas at a large price. By understanding this correctly you can choose the right indicators.

Below is a chart with RSI and Stochastic showing the same results of an oversold region of the chart.

^{screenshot of tradingview}

3.)
a) Explain how you can filter false signals from an indicator.
b) Explain your understanding of divergences and how they can help in making a good trading decision.
c) Using relevant screenshots and an indicator of your choice, explain bullish and bearish divergences on any cryptocurrency pair.

a). First let's see what are the wrong signals. In technical analysis, we call a false signal a prediction that does not give a correct idea of ​​the future price movement and the economy. There are a number of reasons why such false signals may occur. These include time delays, malfunctions in data sources, smoothing methods, or algorithms that calculate the index. The sign that the price has been reversed is also a false signal. This means providing an indicator with a signal that does not correspond to price movements.

When using technical indicators, it is important to have a good understanding of this so that false signals can be detected. Many vendors use a mix of technical indicators to act as a testing mechanism. Trading on fake signals can be very expensive.

Removing noise from a chart helps traders better identify the true elements of a trend. One way traders can do this is by generalizing the candlesticks on a chart. Traders can more effectively identify true signals by using multiple indicators and charts that cancel out noise. The pseudo-identity of the signals can be verified by looking at a chart that cancels out the sound when one trader puts multiple indicators on a standard chart and one receives the signal when the others do not.

b). Diversification is a very important aspect of business management. Divergence is very resourceful in making good decisions in trading as price reversals can be found in the early stages. Divergence gives traders an understanding of when to enter a trade and when to leave it. When there is a visual change the indicator signals a lower or lower adjustment but the price movement shows it in a different way. Although the deviation indicates that the price will change, it does mean that the trend will reverse. It signals that the trader should consider strategic options.
When entering a price range, strategic options should be used considering the weakening momentum of the moving average convergent resolution. Making a profit or selling a call option is an appropriate strategy. If the deviation between the price and the index leads to a recession then the trend continues. If you look at the center where the price is lower than the following trend, it can often be identified as a trap. Divergence allows the trader to use strategies to make huge profits.

c).

Bullish Divergence

Bullish deviation is when an index shows a higher category. Although it shows a high price, it shows a fall as the price movements show a lower down trend. This indicates that there is an expected reversal from the fall to the rise.

^{screenshot of tradingview}

Bearish Divergence

In the trading pattern, the index makes low values ​​and prices maintain high values. Then there is a valid change. This signals the trader to withdraw from the trade to minimize or prevent losses.

^{screenshot of tradingview}

Many thanks to Professor @ reminiscence01. Your lecture was very important to me in providing answers to this lesson. And I'm so excited to be able to learn so many things I do not know about indicators. Again my sincere thanks to you.

Thank you😊