Cryptocurrency scalping indicators

Cryptocurrency scalping indicators

Contents of this article:

Indicators are specially created algorithms that help traders find signals to enter the market easier and faster. Indicators play an important role in scalping, one of the most popular trading styles. We will look at standard indicators and tell you how they work.

What are indicators and why are they needed?

Trading indicators are the trader’s tools in the cryptocurrency and other financial markets. They work well with most profitable trading strategies and analytics, help you better understand the state of the market and increase your chances of success. The main task of the indicators is to generate trading signals that help to open a position to buy or sell a digital asset in time.

Scalping is a complex type of trading where a quick response to price changes is important. Scalpers open a large number of short-term trades to profit on a few pips, so they often have little to no time to analyze. Scalping by indicators simplifies the task, helps to act not only quickly, but also carefully, reducing the risks of losing a deposit. Indicators help to assess the situation with a minimum of time.

Standard indicators for scalping on crypto exchanges

On the crypto market, players have access to a variety of indicators for cryptocurrency scalping . Conventionally, they can be divided into several categories:

  • volume indicators showing the activity of trading on the market for a specific period;

  • trend indicators that allow you to determine the trend and its movement in time;

  • moving averages, which show the change in the price of an asset over a set period;

  • oscillators that determine trend reversal points when creating positions in the opposite direction.

The choice of indicators is up to the trader himself. We will look at some of the most effective and commonly used. The first one is OBV, a popular technical analysis tool. It shows the dynamics of the growth or fall of the crypto exchange rate, provides data on the number of transactions for a specific period. OBV helps to confirm the emerging trend. If the indicator corresponds to the market maximum, the uptrend is strengthening, if the indicator corresponds to the market minimum, the downtrend prevails.

AD is another important indicator and is based on the OBV and the accumulation or distribution index. The tool shows how strong support among market players the current trend has, and also helps the trader to understand when the trend will change.

One of the basic indicators of technical analysis is the Moving Average index (moving average). It is needed to calculate the average rate of an asset for a certain time. The Moving Average chart allows a trader to estimate the support and resistance levels for most coins.

Another popular indicator is Bollinger Bands. They are based on the SMA (simple moving average). On the chart, these are two SMA lines that form a corridor along which the asset price is moving. The narrowing of the corridor indicates a decrease in the volatility of the coin and vice versa.

Important! Indicators are just tools for trading cryptocurrencies and other assets. Even the most effective of them will not replace the trader’s ability to analyze the situation on their own.

Advantages and disadvantages of using indicators

Scalping indicators have more pros than cons, so they are actively used by professional traders for trading. Main advantages:

  • fast and automatic chart analysis;

  • simple definition of entry points and stop losses;

  • a variety of programs for most popular strategies;

  • ease of use.

The disadvantages of indicators include the delay of signals, but this applies only to some of them, so it is always worth checking the instruments on a demo account. It is also important to filter the signals, not to trade only one indicator.

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