No trader should ever enter a position without a plan or clear perspective on the market. Especially not when there is an abundance of charting software available, with the cryptocurrency industry standard being TradingView.
Because of its dominance and importance, platforms like PrimeXBT have integrated TradingView directly within their account dashboards as an attractive addition users can take advantage of. In addition to the feature improving any client’s chances for success, it is also a major convenience to be able to utilize such tools without ever having to leave the trading platform.
This guide first explains what PrimeXBT is all about, then will get into which technical indicators the platform offers through its TradingView setup that users should consider as part of the technical analysis and risk management strategies.
What Is PrimeXBT?
PrimeXBT is an award-winning margin trading platform. Users can make a deposit and set up a margin account in BTC, ETH, USDT, or USDC. A margin account lets investors and traders use borrowed capital to open and trade with positions that are much larger than what would otherwise be possible. Margin accounts typically allow traders to go short and go long with leverage to profit from both directions of the market. Because position sizing is much larger, it also means that profits are potentially larger and so is risk.
With risk even higher than with normal trading, you can see clearly why a focus on technical analysis is critical when margin trading. With this type of margin account explained, here are the different technical indicators a trader can use to build a sound and successful strategy on PrimeXBT.
Relative Strength Index
We are starting our list with some of the more commonly used indicators available today. First and foremost, this begins with the Relative Strength Index. The RSI is one of a handful of indicators created by J. Welles Wilder.
The idea behind the tool is to sell an asset when it becomes overbought or buy when it becomes oversold. An asset is oversold when it falls below 30 and is overbought above 70. Traders can tinker with these settings to their desire.
Developing a strategy using this method is usually fairly successful, but there are some conditions in which divergences can occur.
The MACD stands for moving average convergence divergence indicator and provides signals depending on how the moving averages – just like it sounds – convergence and diverge. When the two moving averages diverge greatly, it is a sign that the asset is overbought or oversold.
Depending on if the indicator has crossed bearish or bullish, and how strong the momentum is on the histogram can also provide signals. The MACD is often considered a lagging indicator due to how late crossovers appear. By the time they have confirmed, momentum has already turned. Understanding how to read early signals from the tool is the key to success.
The Bollinger Bands are a versatile technical analysis tool designed by John Bollinger which debuted in the 1980s. The Bollinger Bands measure volatility, and can provide a number of signals depending on how they expand, contract, or turn.
The bands themselves consist of an upper and lower band, each of which are a standard deviation of a 20-period moving average. If the bands widen, volatility is extreme and when they tighten, it is almost non-existent. A squeeze of such nature often is a sign that volatility will soon increase and a breakout is near.
The Ichimoku is a diverse indicator that offers an “at a glance” look at the market’s equilibrium. It has a variety of spans that act as support and resistance, and is one of the few indicators that includes time in addition to price as a factor.
The lagging span is plotted backwards to show resistance and support, while the cloud is forward plotted and provides similar information, in addition to potential data about trend changes and more. The thickness of the cloud measures volatility, and depending on how the tenkan-sen and kijun-sen are crossed, an asset can be bullish or bearish.
The Parabolic SAR is among the most straightforward of the tools listed here, with signals taken in the opposite direction if and when the SAR dots are touched. Touching one, is an indication that an asset’s trend has “stopped and reversed.”
It has a secondary benefit of letting traders move their stop loss levels up or down in profit below or above the dots. This way, when the position is stopped out, much profit is kept and it only occurs when a trend has finished.
Average Directional Index
The Average Directional Index is a trend strength measuring tool that often comes equipped with a Directional Movement Index behind it. The ADX says a trend is strong with a reading over 20. As readings get higher, the trend is stronger and stronger. The highest readings come with a risk of reversal.
The accompanying DMI also has a positive and a negative directional indicator. Depending on how these two are crossed, it says if bears or bulls are in control.
The Fisher Transform converts asset prices into a Gaussian normal distribution which can be used to spot reversals based on any extreme price movements. The tool provides a probability of reversal depending on the reading. The more extreme the reading, the less likely the asset will continue its extreme price movement.
On-Balance Volume is often called the smart money indicator, as it shows when bigger players are taking positions in an asset before the price begins to respond. The indicator is based on the idea that volume precedes price action.
The Stoch is a momentum indicator that looks at the relationship between an asset’s closing price and its price range. This unusual indicator can help to spot trend reversals, support and resistance, and much more.
The Williams Alligator is a tool that will help prevent the market from taking a bite back of any profits a trader has generated. It is based on three smoothed moving averages: five, eight, and thirteen periods. Each of the three moving averages acts as a different part of the Alligator’s mouth, such as the Jaw, Teeth, and Lips. When a market is trending, the mouth widens and the Alligator consumes price action. When markets trend sideways, the mouth closes and stops feeding.