Technical analysis may appear somewhat subjective. Fortunately, with recent advances in charting software, it is now possible to complement chart analysis with the study of mathematical indicators, enhancing the objectivity in technical analysis.

Mathematical indicators that help describe price strength, direction, volatility and support/resistance are generated through calculations involving price and/or volume history data. You will want to understand mathematical indicators if you are learning how to trade cryptocurrency.

The price and/or volume data may be taken from any combination of the open, high, low or close over a time period. Mathematical indicators should be analyzed over a period of time, in conjunction with charting patterns and with the price itself.

When displayed graphically, mathematical indicators can help confirm and predict price action. It is a good idea to have a general understanding for how an indicator is calculated, but more critical is being able to interpret an indicator’s trading signals.

Common mathematical indicators used for crypto trading

Examples of popular mathematical indicators include:

  • Simple Moving Average (SMA)
  • Exponential Moving Average (EMA)
  • Moving Average Convergence Divergence (MACD)
  • Relative Strength Index (RSI)
  • Bollinger Bands
  • Fibonacci Retracements.

There are dozens of other mathematical indicators available in most trading or charting software packages, but a point of diminishing returns is reached once an optimal number of mathematical indicators have been applied.

Additional mathematical indicators overcrowd the chart display and contribute to information overload leading to paralysis during instances when you need to be nimble in decision making.

Most mathematical indicators can be divided into either leading or lagging indicators. Leading indicators are also known as momentum indicators, as they describe the amount of momentum behind price trends.


Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to our NEWSLETTER

Coins Shield

We build crypto products that are simple, elegant, and secure. Whether you are an individual or an institution, we want to help you buy, trade, and store your bitcoin and cryptocurrency. We are committed to earning and maintaining your trust. We believe that in order to do so, we must invest in our four pillars for the long-term. Product, Security, Licensing, and Compliance are the inputs that generate a trust output.

Crypto is about giving you greater choice, independence, and opportunity. We are here to help you on your journey.

Quick Links

© 2021 Coins Shield. All rights reserved.

Risk Warning

The Financial Products offered by the company include Contracts for Difference ('CFDs') and other complex financial products. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, CFDs may not be suitable for all investors because it is possible to lose all of your invested capital. You should never invest money that you cannot afford to lose. Before trading in the complex financial products offered, please ensure to understand the risks involved.

Refund Reason