15 Best Indicators for Crypto Trading – What they mean and how to use them

It is pretty challenging to make a precise prediction when trading cryptocurrency on the market. Mistakes are made every day. The good thing that comes from this is your learning lessons the attempt of trying to avoid as many as possible mistakes or the amount of lost money; there were developed some crypto trading indicators meant to help you notice what the market trends are and when it is opportune for you to buy or sell different assets.

In this article are presented 15 of the best indicators for crypto trading. This ranking is based on personal experience and advice from professional crypto traders. Notice that some hands may not work for you, so we strongly recommend you do some tests to find out what’s good for you and then build up strategies that will help you increase your profits.  

Without any further explanations, here are the best 15 trading indicators for crypto:

MYC Trading Indicator – crypto indicator

The MYC Trading Indicator is unique. It represents a combination of trend analysis and momentum oscillators to determine when a cryptocurrency will enter a bearish or bullish phase. This indicator can be used with BTC, ETH, LTC, TRX, BTC Cash, ETH Cash, and more.

The most important feature of the MYC is the trendline that helps you identify whether a long signal may be printed – when the price crosses the trendline upwards, or a short signal may be printed – when the price crosses downwards. Another special function of this crypto trading indicator is that it suggests a recommended entry and exit point to help traders focus on their actions.

Because this indicator is a private one, to get it, you’ll have to follow some steps: if you have a telegram account reach out to the admin by sending a message to `@MYCSupportBot,` and you’ll get permission to test the indicator for yourself. Another option is to join a free crypto group called MYC Signal, where you can watch the performance of the MYC Trading Indicator by receiving live trades.

Relative Strength Index (RSI)- crypto indicator

This indicator was released 40 years ago by a technical analyst named Welles Wilder. The purpose of the RSI is to show how far from its real value is an asset. It is one of the best indicators for crypto day trading because it allows the traders to benefit before the market corrects itself. 

The formula for calculating the RSI is quite tricky, but things will become easier once you start using it.

RSI = 100 – 100 / (1 + RS)

RS = Average of X periods closes up / Average of X periods closes down

X = usually it’s 14, but you can pick any number you like

So, the RSI shows values from 0 to 100. There are two thresholds that, if reached, communicate something about the asset: if the RSI drops below 30, it is considered to be oversold/undervalued, and the price will rise; if the RSI goes above 70 – the asset is overbought, and there will be a pullback.

Bollinger Bands – crypto indicator

The Bollinger Bands are an indicator created in the 1980s by a financial analyst named John Bollinger. It is an auxiliary indicator used to measure market volatility. It helps with long-term price movements and identify if a crypto’s price is close to the normal range.

To calculate this indicator, there are three lines: a bottom band, a top band, and the centerline (23-day simple moving average). Here are the formulas:

Upper band: 20-day SMA + (20-day standard deviation x2)

Middle line: 20-day SMA

Lower band: 20-day SMA – (20-day standard deviation x2)

Almost 85% of the movements are between the upper and lower bands. It is mainly used for day crypto trading because it is suitable for short-term trading.

On Balance Volume (OBV) – crypto indicator

The OBV indicator is meant to use the volume of an asset to determine if you should buy or sell an asset. OBV is based on the fact that the prices of the assets are moving according to some repetitive patterns that provide you with the information needed to make a decision.

There isn’t a specific formula for this indicator because it is a cumulative one, so:

  • If the price of an asset closes up – the volume for that day is added to the OBV’s total;
  • If the price closes down – the volume for that day is taken from the OBV’s total;
  • If the price is the same – no calculations are made.

Balance Volume is a useful indicator because it helps traders determine one cryptocurrency’s popularity. A higher OBV is associated with a more reliable and fairer currency.

Average True Range (ATR) – crypto indicator

The ATR indicator is a tool used to measure market volatility. It can be represented as a number or underlay showing movements over different periods. An existing rule consists in setting the measure at 14 periods.

Average True Range is helpful for traders because it provides information regarding where to place Stop-Loss or Take-Profits orders.

Moving Averages (MA) – crypto indicator

Moving Averages is a lagging indicator – the feedback is given after the movement has been made. It is trendy among crypto day traders and used to find different trends and predict price movements.

There are two types of MA: simple and exponential. You can choose the MA depending on your trading style: if you’re oriented on short-term trading – the shorter MA will bring you more benefits, and it’s indicated to follow an exponential MA; if you’re a long-term trader – a longer MA is more appropriate, and you should use a simple MA.

The MA is relatively easy to use. You must pay attention to the movements of the trendline. Here are some rules: if the short MA is bellowing the long MA – a bearish trading signal; if the fast MA is above the long MA – a bullish trading signal.

Moving Average Convergence/Divergence (MACD) – crypto indicator

MACD is one of the most popular indicators for crypto trading used to determine if the short-term momentum is moving in the same direction as the long-term one or if a trend change is approaching. It has four components: the MACD line, signal line, zero line, and histogram.

The formula used for MACD indicates trend-following momentum:

26 period EMA – 12 period EMA (at closing prices)

EMA stands for Exponential Moving Average

            If the MACD crosses above the signal line, there is a bullish trading signal; if the signal line crosses above the MACD line,, then there is a bearish trading signal.

SuperTrend – crypto indicator

This indicator is similar to MA, a simple indicator based on two parameters: period and multiplier. The default parameters when using SuperTrend are 10 for ATR and 3 for the multiplier. ATR is an essential element of this indicator because, with it, it’s possible to signal the degree of price volatility.

The formula for SuperTrend is:

Up = (high + low) / 2 + multiplier x ATR

Down = (high + low) / 2 – multiplier x ATR

            In this case, the ATR is calculated like this:

[(Prior ATR x 13) + Current TR] / 14

            To start using this indicator, you need to open the chart of a specific stock you want to track and set a 10 minutes timing while doing the intraday trading. After opening the chart, insert the super trend and keep the settings 10 and 3. Don’t forget to put your stop-loss while using this indicator.

Fibonacci Retracement – crypto indicator

This indicator is helpful for market discovery by predicting how far from the spot rates a correction will be. The name of this indicator comes from the Fibonacci sequence discovered by Leonardo Pisa. In the price action analysis, traders encounter this phenomenon of ‘phi’ or ‘golden ratio.’ After gaining some experience, you’ll notice that the price regularly reacts to these crucial ratios as 0.382 and 0.236.  

To use Bitcoin indicators like this, you must first identify a “swing high” and a “swing low” to notice resistance levels or potential support.

Stochastic Oscillator – crypto indicator

This is one of the best indicators for day trading crypto and is used for following the price’s speed. The stochastic Oscillator shows momentum by a comparison made between the closing price of BTC and its low-high range during a period.

The calculation formula is this one:

Slow %K = 100 [ Sum of the ( C – L14) for the %K slowing Period / Sum of the (H14 – L14) for the %K Slowing Period]

Slow %D = SMA of Slow %K

C – Latest Close

L14 – Lowest Low for the last 14 periods

H 14 – Highest High for the same 14 periods

%K Slowing Period is 3

            The range of this indicator is from 0 to 100. Here are the signs you should pay attention to: if the trend line goes above 80, it shows overbought conditions, and if it is below 20, there are oversold conditions.

Ichimoku Cloud (Ichimoku Kinko Hyo) – crypto indicator

Ichimoku Cloud is one of the most visual indicators of cryptocurrency trading. It is made of 5 lines that cross one another, creating a cloud. When the price is above the cloud, the trend is up, and if the price is below the cloud, the price is down. If they could be moving in one direction, the price would do the same.

Fear and Greed Index – crypto indicator

Fear and Greed Index is a compilation of seven distinct indicators used to evaluate stock market movements and the fairness of stocks.

The index gives a score from 0 to 100 for every indicator used: 100 means maximum greediness and 0 represents ultimate fear.

Fear and Greed is an excellent way to observe the market sentiment that will help emotional or reactionary traders make decisions quickly.

Accumulation/Distribution Line  – crypto indicator

A/D line sets the trend direction of an asset (stock or coin) based on the price and trading volume. It measures whether a coin is accumulated (the buying levels) or distributed (the selling levels).

In calculating the A/D Line, you will need two metrics: the Money Flow Multiplier (MFM) and the Money Flow Volume (MFV). Here are their formulas:

MFM = [( C – L ) – ( H – C)] / ( H – L)

MFV = Volume of specific period * MFM

C – Closing price

L – Lowest price

H – Highest price, all for the specific period

            The A/D Line has better results when combined with other technical aspects, even if it is one of the best indicators for day trading. To draw the A/D Line, you’ll have to add the Previous A/D Line to the Current Period’s MFC. Then, because the A/D Line runs total, the current value will be added to the MFC of the next day, resulting in a sequel of the A/D Line.

Average Directional Index – crypto indicator

The ADX is based on the direction of the asset. When the trend is upward, it will record a positive DI (+DI). A negative directional indicator (-DI) will be registered when it goes downward. With this indicator, you can measure the strength of a stock/coin.

To calculate the ADX, you must split the period into 14 or 17 bars, as you wish. Be careful, because shorter bars make the Average Directional Index too volatile and the longer bars more time-intensive. Keep in mind that they are not too reliable for day trading.

Aroon Indicator  – crypto indicator

Last but not least, this indicator is best for day trading. It has some similarities with the ADX and measures the estimated trends’ strength. The Aroon Indicator is made of two Aroon lines: the AroonUp Line and the AroonDown Line, measured on a 0 to 100 scale.

To calculate the value of the Aroon Indicator, you have to use this formula:

  • For the AroonUp Line (reflects the number of days since the price reached the 25-day high)

[( number of periods) – ( number of periods since highest high)] / (number of periods)] x 100

  • For the AroonDown Line (reflects the number of days since the price reached the 25-day low)

[( number of periods) – (number of periods since lowest low)] / (number of periods)] x 100

            Below you have a list of things you should pay attention to:

  • The asset is expected to grow higher if the AroonUp Line is between 70 – 100 and the AroonDown Line is between 0 – 30;
  • The asset will have low prices consistently if the AroonUp Line ranges between 0 – 30 and the AroonDown Line grows;
  • The asset will remain at a specific price point if the value of the two lines is equal.

Conclusion

            As we said in the beginning, this list is based on our experience, research, and professional cryptocurrency traders’ advice. What works for us may not work for you either; that’s why we gave you 15 indicators for crypto trading so you can test them and find the ones that are good for you. Only after that can you make strategies that will increase your profits. We hope you’ll find this helpful! Good luck with your tradings; now you are a little more informed!

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Vlad Faraonel

Vlad Faraonel is a crypto enthusiast since 2017. He shares a marketing background and professional activity.