Effective Trading Strategy using Line Charts -Steemit Crypto Academy || S6W1 || Homework Post for @dilchamo

^{This Thumbnail Created By Me}

1. Define Line charts in your own words and Identify the uses of Line charts.

We mean by chat is the expression of any information or data through pictures. One of the tricks we use to understand market conditions is the line chart candlestick pattern. It is very important for a trader to know the movement of the market so it is usually used in such a way that the trend of the market can be easily understood.

The line chart is one kind of chart that representative the price movement very easily. The line chart pattern is very simple and noise-free from other chart patterns. It is very easy for a new trader to get an idea of ​​the market.
The reason is that there is no such thing as opening high-low type information is not given here. This chart pattern is based solely on the closing price. One of the characteristics of line chart patterns is that traders can easily understand the market movement from line patterns as well as determine support and resistance.

^{Screenshot from Tradingview}

I have shared above a screenshot which is a screenshot of a line chat and through it we can easily see the movement of the market. This line chart is presented to us depending on the closing price of the market in a specific time frame. Simply a line indicates that when the line goes down it is considered a downtrend. On the other hand, when this line goes up and goes up in a certain time frame, it is considered an uptrend.

Use of Line Charts.

It is most commonly used by a long-term trader because he can easily understand the conditions of the market. If a new trader does not have a clear idea about the market then it is difficult to identify support, resistance so he can easily use this line chart to determine support and resistance so new traders are seen to use it a lot. So we can say that A line chart is used to make trading decisions. From the above discussion, we can say that the most commonly used chart to get an idea of ​​the market about the closing price of the market is the line chart.

2. How to Identify Support and Resistance levels using Line Charts (Demonstrate with screenshots)

Support

I think the person who sat down to trade without a full idea of ​​the market was gambling, not trading. We know how important technical analysis is to know the market conditions. Determining support and resistance is part of a technical analysis based on market movements.

To find out the support we first need to open the line chart pattern. A support line is a segment where the market no longer follows and when it does, it is called a break off of the support line. In other words, if we want to say very simply, then we have to say that the support line is a zone where it bounces back to the market and starts going upwards. This is because a trader finds out of the support zone so that he can enter the support zone in the market. Let's see a screenshot for better understanding.

^{Screenshot from Tradingview}

Resistance

I have already said that it is a kind of technical analysis to diagnose support. It is also a kind of technical analysis to diagnose resistance. Resistance area means when a market goes to the highest position and bounces back from there to the bottom, that area is called resistance. Resistance plays a vital role in establishing a trader's takeprofit. Market price goes to a certain area and touches the market again and again and returns to that area is called assistant. Let's see a screenshot for better understanding.

^{Screenshot from Tradingview}

3. Differentiate between line charts and Candlestick charts.( Demonstrate with screenshots)

Candlestick Chart.

The most widely used and globally known pattern is the candlestick pattern.
This is the main reason behind the popularity that we get a lot of information together here. Here we can easily understand which market's high, low, opening, closing price, higher high, lower low different information here. It plays an important role in performing technical analysis and from here people can easily perform technical analysis. Another important feature of the candlestick pattern is that it produces candles of different colors, such as green candles when the price of a product increases in the market on the other hand when the price of a product goes down at a certain time, it produces red colored candles. It is used by all types of traders.

Line Chart

We already know that the line chart shows the movement of the market through only a single line. Line chart does not give any idea or information about opening price and high, low price which is totally different from candlestick pattern. Because we get that type of information from the candlestick pattern. The chart pattern is easier for a new trader to understand than the candlestick pattern because it does not require much information to understand.

4. Explain the other Suitable indicators that can be used with Line charts.(Demonstrate with screenshots)

Indicators are very necessary for an ideal trader because line chart does not give enough information. Gambling is a form of trading without adequate understanding of market conditions. We use various indicators to understand the real condition of the market such as when the market is overbought and when it is oversold and to know the market volume. In answer to this question, I am going to write with you about the indicator, its name is RSI. Let's see how RSI works.

Relative Strength Index

RSI is a widely used and popular indicator used by many traders. The mechanism that it usually works on is volume because it shows us overbought and oversold depending on the market volume. That is why the RSI indicator is known as a volume-based indicator as well as it confirms us the trend reversal.

In RSI, there is a range where we can understand the overbought. When the RSI line crosses the 70 lines it refers to the overbought on the other hand when the RSI line cross below the 30 lines it refers to oversold. Let's see a screenshot for a better understanding.

^{Screenshot from Tradingview}

5. Prove your Understanding of Bullish and Bearish Trading opportunities using Line charts. (Demonstrate with screenshots)

I mentioned earlier that with this line chart we can easily determine the bullish and bearish trends. A trader who wants to make a good profit must identify a bullish and bearish trend so that he can open his buy or sell position.

Bullish Trading Opportunity

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First I entered the tradingview website and there I opened the line chart. I have added the Moving Average indicator to confirm the bullish trend. If we take a closer look at the picture below we can see that we could make a good profit when the market crosses the Moving Average and goes up.

^{Screenshot from Tradingview}

Bearish Trade Opportunity

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If we can identify the bearish trend then we can make a good profit from there too. We all know how the four moving averages work when the moving average crosses the bottom. We regard that situation as bearish. I have shared a screenshot below and if we look there carefully we will see that there is a bearish trend.

^{Screenshot from Tradingview}

6. Investigate the Advantages and Disadvantages of Line charts according to your Knowledge.

Advantage of line charts.

• First of all, it is easy to use and easy to understand. If he can get a little idea, he will know that the market movement is uptrend or downtrend.
• The condition of the market is beautifully illustrated in just one line through this line chart.
• Since there is only one line, support and resistance can be easily determined.
• Although there is little idea about the market, technical analysis can be done here.
• It is good for long-term investors.

Disadvantages

• Only closing price determines the uptrend and downtrend but other information is needed for a trader like opening, high low, etc. It is very bad side in the line chart that there is no other information.
• It is very difficult to use in short trading. In other words, In other words, it is not possible to get enough information that is needed to trade short term.
• It is very risky to take any trade just by relying on this chart.

Conclusion

One of the things I learned from today's lesson was the line chart. Lines are beautifully illustrated about who uses the Line Chart and where it is used, and how this line works. We learned how a new trader can get an idea of ​​the market from that line through lessons. Usually, we can easily get support and resistance from here. Support and resistance are very important to a trader so it is necessary to know. Using only a single line we can understand the movement of the market this has been made possible through line charts. I want to thank professor @dilchamo for his beautiful lesson.