What are indicators? What is KDJ indicator? Instructions for using the KDJ Random Trend Indicator tool on TradingView
What are indicators?
Indicators are data points that show the direction in which a currency will move. Indicators are widely used by investors to optimize trading strategies. These indicators are used according to time frames and currency pairs. Indicators when properly combined can help build an effective and successful trading strategy in a volatile and volatile currency market.
If you are reading this article looking for an indicator to help you trade coins with continuous profits, you are wrong. This article does not share you any kind of Indicator for buy or sell point, but you will find more interesting stuff and a different perspective on how to use Indicator.
Trading is a very complicated job, many new Traders think that this job is too simple when just looking for trading signals by Indicator… then you just need to press the button, that’s it. Trading as simple as that, there are not many Traders who have to fail and burn their accounts continuously. Part of the reason why traders fail is because they rely too much on indicators when trading.
The best type of Indicator, not the one that makes you the most profit or gives the most accurate trading signals. Such kind of Indicator is just a cheap product and a scam, such an Indicator only makes a profit for those who sell it.
The best indicator is the type of indicator that suits your use when trading The best indicator is the one that suits the purpose of the Trader:
- If you want to use an indicator to identify trends, the best type of indicator is the moving averages.
- If you want to find signals that the market is moving slowly, there is a possibility of a reversal in the future, you should choose momentum indicators.
- But if you don’t understand what the trend is or what the momentum of the market is, you should stop searching google for the best indicator for day trading. Learn about technical analysis, along with the basics, before trying to apply indicators when trading.
Do you really know how to use indicators?
Please stay away from Indicators that have an arrow message telling you where to buy and sell, especially freebies. Indicators like these are a poison for Traders who are new to trading coins, you will be dependent and think that trading is easy (just look in the direction of the arrow, you will not be profitable). But no matter what style of coin you trade, you should first understand how the Indicator works.
You don’t need to learn how to program an indicator, but you do need to understand when they will appear on the price chart. Sometimes, all you need to do is draw your own hand according to the formulas of those indicators. For example, using a moving average is generally quite simple, you need to understand why when the price closes below the moving average, many traders think it is a signal to enter a sell order.
Once you understand the nature of the indicator, it will be easier for you to detect the noise signals, the times when the indicator announces the entry point but is a fake signal, you can compare which order is better (because no Not every entry point has a high probability of winning if it depends only on the indicator).
When do indicators work, when do they fail?
Indicators can report the wrong entry point, that’s completely normal because every instrument has its own error. I think it will be very short-sighted if any Trader believes that indicators are all fake and uses price action as the only tool to trade.
Indicator is also just a tool and the good or bad depends on the user even though your tool is very ordinary. For example, if you understand that moving averages don’t work when trading the sideways market, don’t use moving averages when price enters that zone; or don’t use overbought/oversold signals of momentum indicators when you are trading against the trend.
The best indicator is not RSI, MACD or bollinger bands. The best indicator is the one that you can use and that best suits your trading purposes. In other words, the indicator is best when the trader has good skills in using the indicator. By the way, you also need to be open to many types of indicators, the more you understand and understand the characteristics of each type of indicator, maybe you will add yourself a lot of great trading tools in your own system.
What is KDJ indicator?
The KDJ is an indicator designed for the sole purpose of making trading as efficient as possible, and it certainly deserves your attention. KDJ is perfect at identifying both trends and optimal entry points.
For investors who already know fundamental technical analysis tools, KDJ might look like the Alligator or the Stochastic Oscillator. Just like these two tools, it allows you to determine the direction and strength of the trend and optimal entry points.
How does KDJ indicator work?
KDJ was formed and developed on the basis of the Stochastic Oscillator with the only difference of having an extra line called signal line J. The value of the %K (gold) and %D signal lines (green) displayed if in an overbought (above 80) or oversold (below 20) position. Line J (purple) represents the divergence of the 2-line value %D from %K. The value of J can exceed [0, 100].
When the KDJ touches or exceeds the reliable oversold (near 0) and overbought (100) zones, that is the time when we watch the trade (take profit or look to buy). AD recommends investors to participate only when seeing the KDJ reaching these zones or exceeding it indicates an impending reversal.
KDJ is suitable for short-term timeframes and more accurate for short-term timeframes : m15 m30 h1 h4
With longer time frames, the waiting time for price changes will be longer and therefore not suitable for short-term strategies.
So when will we prioritize to enter orders: Priority to enter orders when KDJ is in overbought/oversold areas and when the 3 KDJ signal lines are about to pinch each other – this is the time to explode or have large price fluctuations. In addition, there are times when the J line (purple) shows signs of “curving up” or “curving down” when it has reached the overgrown areas.
For best results, the KDJ can be combined with other indicators, such as the average directional index (ADX) and the average real time interval (ATR).
Remember that no indicator is capable of providing 100% accurate signals. Even the best indicators fail over time, leading to negative performance. Regardless of the indicators you entrust to yourself, do not forget to follow the basic rules of risk management and invested funds.
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