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What is Stochastic RSI?

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  The Stochastic Relative Strength Index, abbreviated as StochRSI, is a technical analysis indicator used to determine whether an asset is overbought or oversold, and also to determine the current market dynamics. As the name suggests, the StochRSI is a derivative of the Standard Relative Strength Index (RSI) and is therefore considered to be an index capable of measuring indices. It is an oscillator that fluctuates above and below the center line. StochRSI was originally described in a 1994 book entitled The NewTechnical Trader by Stanley Kroll and Tushar Chande. It is often used by stock traders and is also applicable to other trading environments such as the forex and cryptocurrency markets. How does StochRSI work? The StochRSI is generated from the standard RSI by applying the Stochastic Oscillator Generation formula.The generated result is a single numeric rating that oscillates up and down around the center line (0.5) over a value range of 0–1. However, a modified version of ...

Explanation of Moving Averages

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  Technical analysis (TA) is not a new concept in the world of trading and investing. From traditional portfolios to cryptocurrencies such as Bitcoin and Ether, TA indicators are used with one simple goal in mind: to utilize the available data to make smarter decisions and get better results. As markets have become more complex, hundreds of different types of TA indicators have emerged over the past few decades, few of which have achieved the popularity and consistency of moving averages (MAs). While there are many different types of moving averages, their fundamental goal is to improve the clarity of trading charts by smoothing out the graphics to create an easily recognizable trend indicator. Because these moving averages rely on past data, they are recognized as lagging or trend following indicators. Nonetheless, these moving average indicators can still be effective in removing noise and help determine the direction of the market. Different types of moving averages The various ...

Explanation of the Bollinger Bands Indicator

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The Bollinger Bands (BB) indicator was created in the early 1980s by financial analyst and trader John Bollinger. The Bollinger Bands Indicator is widely used in the field of Technical Analysis (TA) as a (financial analysis) tool, and is basically an oscillator that is used to indicate high and low fluctuations in the market, as well as overbought or oversold conditions. The main principle of the Bollinger Bands indicator is to emphasize how prices fluctuate around the average. More specifically, the indicator consists of an upper rail, a lower rail, and an intermediate moving average (also known as a mid-rail). The two horizontal bands react to market price behavior, expanding (running away from the mid-rail line) when volatility is high and contracting (running towards the mid-rail line) when volatility is low. The standard Bollinger Bands formula sets the center line as a 20-day Simple Moving Average (SMA), while the top and bottom rails are calculated based on the market volatility...

What Risk-Reward Ratio is and how it is used

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  Should I risk my time to get the information in this article in return? Risk-return ratio captures the corresponding risk taken to achieve a certain potential reward. Good traders and investors choose their bets very carefully. They seek investments that have the least potential disadvantage and the greatest potential advantage. If an investment can deliver the same return as another investment, but with less risk, then it may be a better choice. Are you interested in learning how to calculate your own risk-reward ratio? Read this article to find out. Whether you choose to day trade or swing trade, there are some basic concepts about risk that you should understand. These will give you some initial insight into the markets and provide you with a basis on which to direct your trading activities and investment decisions. Otherwise, you will not be able to protect the money in your trading account and grow it. We have already discussed risk management, position adjustments, and sett...

What are leading and lagging indicators?

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  Leading and lagging indicators are tools for assessing the strength of an economy or financial market. Simply put, leading indicators change prior to the onset of an economic cycle or market trend. In contrast, lagging indicators are analyzed based on historical events and provide a reference to historical data about the performance of a particular market or economy. In other words, leading indicators provide predictive signals (before an event or trend occurs), while lagging indicators generate guidance signals based on trends that have already occurred. Both types of indicators are widely used by investors and traders who use technical analysis (TA) and play an important role in stock, forex and cryptocurrency trading. The history of technical analysis indicators in financial markets dates back to the early 1900s. The idea behind these indicators stems from the Dow Theory, which emerged between 1902 and 1929. The core of the Dow Theory is the assertion that price movements are ...