CRYPTO TRADING STRATEGY WITH MEDIAN INDICATOR - Steemit Crypto Academy- Homework Post for Professor @abdu.navi03
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Hello fellow stemians,
Hope you all are doing good?? This is the fourth week of the season six(6) in steemit crypto academy and i must send my regards to none other than professor @abdu.navi03 for this great lecture about CRYPTO TRADING STRATEGY WITH MEDIAN INDICATOR. In trading crypto currencies, indicator are one of the key tools that can aid us predict trends and make profit decisions to buy or sell.
Q1. Explain your understanding with the median indicator.
Trading cryptocurrencies is all about reading and analyzing upward and downward trends in a market and knowing at which point to buy in a pair of share or to sell. Now there are tools which in recent times now at our disposal to help us analyze those trend to determine the most and liable movement of a trend and these tools are known as technical indicators. There are many and different types of indicator that all uses different methods of analyzing and algorithms to help in predicting a trend or trends, but in one way or the other these tools have made an impact in the trading. Among some of these indicators is one of which this lecture is about and that is the median indicator.
The median indicator is a trend-based tool that determines the direction or movement of a market that is, whether the market is moving upward or downward. The median indicator is also used to measure the volatility of the market that is, the tendency for the market to rapidly or instantly change direction or movement. The median indicator helps show the trend of the market by the use of ATR(Average True Range). This shows the high and low of median value of a specific length of the chart.
The ATR(average true range) uses a thick median line which acts as a moving average, indicating whether the it is a bearish or a bullish trend. When using this indicator, it displays lines with colors indicating different meaning and situations. There is always a green and purple line trend. The green line trends indicates that the median line has passed above the EMA(exponential moving average) of the same length and the purple line trend also indicates that the median line has passed below the EMA(exponential moving average) of the same length.
Q2. Parameters and Calculations of Median indicator. (Screenshot required)
Parameters are the factors or conditions which lead to the formation of a trend. Median indicator is consists of a few parameters just like the other indicators, these parameters are established to help the trader to set specifications on how or what he or she wants to read. I will be showing some of the parameters in the median indicator in the images below.
First we will have to visit the Tradingveiw site and click on the charts button shown in the screenshot below.
After you click on charts, you then search for the pair of crypto you want to trade in this case i will be choosing DOGEUSD.
You then select your pair, which will now show you the chart for that pair. Then you click on the indicator button on the top.
Click on the indicator button, and enter the indicator you want in this case that will be the median indicator.
So now we are done with adding the median indicator lets move to exploring some of it's parameters. To do so we first have for click on the setting icon inside the median indicator which will display a pop up with three different categories consisting of a few parameters each as shown in the screenshot below.
As we can see under the input category we can see the parameters under it, which are,
- Median source
- Median length
- ATR length
- ATR multiplier
Also for the style category, the parameters are as follows
- Median
- Upperband
- Lowerband
- Median EMA
- Plot background
This category and parameters allows for traders to customize the chart to their liking for easy reading.
And finally the last category visibility as shown in the screenshot below.
Calculation of the median indicator is based on the percentage difference between the median value and the EMA. In mathematically terms, the median value is calculated by summing the highest price and the lowest price within a time range and divide by 2. The mathematical formula will look like:
Median value = sum of highest and lowest price/2
Also the EMA value is in respect to the mathematical formula below.
EMA value = Closing price x multiplier + EMA (previous day) x (1-multiplier)
Q3. Uptrend from Median indicator (screenshot required)
The median indicator is basically used to predict and determine the movements of the market with the use of moving average. With the median indicator, one can identify an uptrend by the just by looking at the color of the trend lines. We stated early the trend line colors and how they come about, and in this case to identify an uptrend, one has to look for the green clouds in the trend movement. The green clouds signify an uptrend which means that the median value is currently above the EMA and when that happens there is always an uptrend.
Screenshot fromTradingview
From the image above, you can see the green clouds indicating an uptrend or bullish trend which is the opportunity for traders to buy into the crypto to make profits.
Q4. Downtrend from Median Indicator (screenshot required)
In using the median indicator to determine the a downtrend, is the exact opposite of determining an uptrend using the median indicator but, in this case the color of the cloud is purple. As i said earlier, when the median value pass below the EMA, it indicates a downtrend or bearish trend displaying a purple cloud signifying an incoming bearish trend as can be seen in the screenshot below.
Screenshot fromTradingview
From the image above, you can realize the purple clouds which as i said indicates a downtrend or bearish trend which is the time for traders to sell their assets to avoid losses.
Q5. Identifying fake Signals with Median indicator(screenshot required)
Indicator are just like most of any every other tools, they can be manipulated to give wrong readings. These kind of false readings are mostly prone in the trend- based indicators. The people responsible for the manipulation and falsification of the market are they huge investors involved in that market, they are often referred to as whales. These whales own large portions of the asset and can easily manipulate the market to decide other traders to capitalize on their loses.
One can identify false signals by the use of one the common indicators that is the RSI(relative strength index) indicator. This indicator measures price changes to analyze the overbought and undersold condition of the asset. In a situation where an RSI indicator reads 30 or below it implies that the asset has been oversold. In identifying an uptrend with the help of an RSI indicator, the reading is normal or correct when it hovers above 30 and up to 70.
Also, in a situation where an RSI indicator reads 70 or above, it implies that the asset is becoming overbought. Apart from using the the RSI indicator to identify false trends, one can capitalize on the opportunity. For example, when an RSI reads 70 above it means that the asset is being overbought which can mean that there is going to be a trend reversal. So you as a trader can capitalize on it by buying or selling in the trends reversal. The RSI indicator is the most common and used indicator to identify false trends and are known to be very effective and efficient.
Screenshot fromTradingview
From the screenshot above, you can realize that the asset have been oversold. According to the normal reading of the chart the asset should have gone up but instead it came down signifying a downtrend instead of an uptrend notifying traders that the asset has been oversold.
Q6. Open two demo trades, long and short, with the help of a median indicator or combination that includes a median indicator (screenshot required)
As we have learnt from this lecture, to buy an asset on must consider a few thing and most importantly the trend and movement of the asset. So before we make our buy entry into the asset we have to make sure that there is going to be a bullish trend and we can determine this with the use of the median indicator which create a green cloud as the trend rises to show that the trend is going to be bullish. So then we can make our buy entry.
Screenshot fromTradingview
From the screenshot above, you can realize that i made my buy at exactly the trend started to show the green cloud, like i said which only mean that there is going to be and uptrend. So i made my buy entry there with my take profit $0.831 as and my stop loss $0.825 at . Below is a screenshot of my transaction.
Selling and asset is almost the same as buying it just with the things to consider a bit different from buying. In selling an asset, as we learnt in this lecture, you have to make sure that there is going to be a bearish or downtrend before selling in order to avoid making a loss. You can determine the trend by using the median indicator and waiting for the point where the purple cloud starts to appear in your chart, then you can sell without making a loss.
Screenshot fromTradingview
From the screenshot above, you can realize that once again i waited for the purple cloud to appear before i made my sell. and my stop loss was $0.1155 and my take profit was $0.1145. Below is a screenshot of my transaction.
Conclusion
The median indicator is trend-based technical tool used to identify trends, this indicator measures the movement and volatility of crypto assets by measuring the median value to whether it is above or below the EMA to determine the trend of the asset.
But in this lecture, we have learnt not to use only one indicator as the market can be influenced or manipulated to give false and wrong readings. This means that for correct and undoubted reading we should indulge in the use of two or more indicator to better read the market trends.
I once again send my regards to professor @abdu.navi03 and my appreciations for this lecture. I really enjoyed the lecture.
Thank you.