Markets.com Logo
euEnglish
LoginSign Up

3 most effective indicators for Crypto trading

Nov 26, 2023
6 min read
Table of Contents
  • 1. 1. Using relative strength index in Crypto CFDs 
  • 2. 2. How MACD indicator works on Crypto CFDs
  • 3. 3. Using Bollinger bands on Crypto CFDs
  • 4. How to use indicators in crypto CFD trading
  • 5. Choose a trading platform
  • 6. Select your cryptocurrencies
  • 7. Add your chosen trading indicator
  • 8. Adjust the indicator settings
  • 9. Combine multiple indicators
  • 10. Learn to interpret indicator signals
  • 11. Monitor and adapt to your crypto CFD trades
  • 12. Take advantage of markets.com's crypto trading indicators 

3 most effective indicators for Crypto trading

 

Cryptocurrency trading is becoming increasingly popular, and more traders jump on board daily. With this surge in popularity comes a greater need for traders to understand the market and determine the best indicators for successful crypto CFD trading. 

So, let's see what are the top three indicators for successful crypto CFD trading.

1. Using relative strength index in Crypto CFDs 

Using relative strength index in Crypto

 

The Relative Strength Index (RSI) is an easy-to-use indicator for crypto CFD trading and other trading systems. It is efficient in catching loss of momentum in non-trending zones. This indicator measures the speed and change of price movements of cryptocurrencies. It also compares a cryptocurrency’ average gains and losses over a specific period. 

RSI indicator’s precise measurement can guide you in determining whether crypto is overbought or oversold and helps predict potential trend reversals. An RSI reading above 70 indicates that a cryptocurrency is overbought, meaning that prices are high, and a price retracement may be expected. 

On the other hand, an RSI reading below 30 indicates that an asset is oversold, meaning that prices are trading at a low level, and a price reversal may be expected. By paying close attention to the RSI reading and understanding what it indicates, you can make informed trading decisions and potentially increase your chances of success.

 

2. How MACD indicator works on Crypto CFDs

MACD trading indicator's lines

 

The Moving Average Convergence Divergence (MACD) is a widely used technical indicator in financial markets, especially in crypto CFD trading. It provides signals that can assist you in effectively timing when to buy and sell crypto orders. 

The trading signals are created through two critical aspects of the MACD: the crossover of the MACD line and the signal line and the positioning of the MACD line relative to the zero line.

When the MACD line crosses above the signal line, it generates a bullish signal. This occurrence suggests that the short-term momentum is starting to outpace the long-term speed, potentially indicating a favourable time to buy crypto CFDs. Traders often interpret this crossover as a sign that the crypto price may increase in the near future. 

Conversely, when the MACD line intersects below the signal line, it generates a bearish signal. This signals that the short-term momentum is weakening relative to the long-term momentum, possibly indicating a good time to sell the crypto you own.

 

3. Using Bollinger bands on Crypto CFDs

Bollinger Graph

 

Bollinger Bands indicators can quickly gauge cryptocurrencies’ volatility and potential price movements. This indicator comprises three key components: a moving average (usually a simple moving average), an upper Bollinger Band, and a lower Bollinger Band.

The moving average serves as the centerline of the Bollinger Bands. It represents the average price of the cryptocurrency over a specified period. This moving average provides a baseline that helps you identify the prevailing trend in the market.

The upper Bollinger Band is computed by adding two standard deviations to the moving average, while the lower Bollinger Band is calculated by subtracting two standard deviations from the moving average. 

The relationship between the two Bollinger Bands and the moving average visually represents expanding or contracting within the chart in response to the cryptocurrency’s price volatility. This will help you identify whether the cryptocurrency is experiencing periods of high or low price swings.

 

How to use indicators in crypto CFD trading

person using a laptop and calculator to trade crypto

 

Using trading indicators in crypto CFD trading can help you make more informed trading decisions by analysing price data and identifying potential entry and exit points. Here’s a guide on how to use trading indicators in crypto CFD trading:

Choose a trading platform

Start by selecting a reliable cryptocurrency CFD trading platform that offers a wide range of trading indicators and tools. Ensure the trading platform is regulated and provides a user-friendly interface.

One such platform is markets.com. This platform is fully regulated in five major markets, including Europe and the UK. It has more than a decade of experience helping beginners up to experienced professional traders.

Select your cryptocurrencies

You can research the cryptocurrencies you’re interested in trading. Cryptocurrencies are highly diverse, each with unique characteristics, use cases, and price behaviour. Some factors to consider are the technology behind the crypto coin, its adoption, and its overall market sentiment.

You might also like to read: What is cryptocurrency and how does it work?

Add your chosen trading indicator

Most CFD trading platforms have various technical indicators to add to your charts. You can use the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), Bollinger Bands, and more based on your trading strategy. 

Adjust the indicator settings

Customise the indicator settings according to your trading strategy and preferences. For example, you can change the period length for moving averages or the overbought/oversold levels for the RSI. You may set the period to 10 or 20, which is excellent for short-time traders who want to respond quickly to price changes. 

Combine multiple indicators

Many traders use a combination of indicators to confirm trading signals. For example, you might use the RSI and MACD to ensure an accurate buy or sell signal. Combining indicators can help reduce false alerts.

Learn to interpret indicator signals

Understand the signals generated by the indicator(s). Trading signals generally come in the form of buy (long) and sell (short) indications and are based on the calculations performed by the indicator. 

It’s important to note that the specific signals and their meanings may differ based on the type of indicator being used. Therefore, it’s recommended to familiarise yourself with the particular indicator you’re working with to ensure a comprehensive understanding of the signals being generated.

Monitor and adapt to your crypto CFD trades

Continuously monitor your trades and adapt to changing market conditions. If necessary, adjust your indicator settings or change your strategy based on the evolving market trends.

You can stay updated with market trends by reading various news and analysis on markets.com.

 

Take advantage of markets.com's crypto trading indicators 

In conclusion, the Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), and Bollinger Bands are the most commonly used indicators in crypto CFD trading.

Each indicator helps traders determine the market trend, identify potential price reversals, and set entry and exit points. When used correctly, indicators can provide valuable insight into the market and help traders make informed decisions. 

Hone your skills with the various trading resources available at markets.com. We offer educational content and trading tools to help you become a skilled crypto CFD trader. 

Our platform provides a selection of more than 20 cryptocurrencies frequently traded by experts. 

Become a member of markets.com and access a cutting-edge trading platform!

 

When considering "Crypto CFDs" for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss. Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.


Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. 

Danesh Ramuthi
Written by
Danesh Ramuthi
SHARE

Markets

  • Palladium - Cash

    chartpng

    --

    -2.23%
  • EUR/USD

    chartpng

    --

    -0.36%
  • Cotton

    chartpng

    --

    0.89%
  • AUD/USD

    chartpng

    --

    -0.17%
  • Santander

    chartpng

    --

    0.35%
  • Apple.svg

    Apple

    chartpng

    --

    0.31%
  • easyJet

    chartpng

    --

    0.21%
  • VIXX

    chartpng

    --

    3.66%
  • Silver

    chartpng

    --

    0.40%
Tags DirectoryView all
Table of Contents
  • 1. 1. Using relative strength index in Crypto CFDs 
  • 2. 2. How MACD indicator works on Crypto CFDs
  • 3. 3. Using Bollinger bands on Crypto CFDs
  • 4. How to use indicators in crypto CFD trading
  • 5. Choose a trading platform
  • 6. Select your cryptocurrencies
  • 7. Add your chosen trading indicator
  • 8. Adjust the indicator settings
  • 9. Combine multiple indicators
  • 10. Learn to interpret indicator signals
  • 11. Monitor and adapt to your crypto CFD trades
  • 12. Take advantage of markets.com's crypto trading indicators 

Related Articles

Trending Types of CFDs: XAU/USD CFD, Uber Stock CFD, XRP CFD

Trending Types of CFDs: Contracts for Difference (CFDs) have become a popular trading instrument for those looking to speculate on various asset classes without owning the underlying assets.

Frances Wang|6 days ago

CFD Trading for Beginners: Is Trading CFDs A Good Idea?

CFD Trading for Beginners: Contracts for Difference (CFDs) have gained immense popularity among traders and investors seeking to speculate on price movements without owning the underlying assets.

Ghko B|6 days ago

CFD Trading Basics: What Are the Advantages of CFD Trading?

CFD Trading Basics: Contracts for Difference (CFDs) have become a popular trading instrument among investors and traders looking to speculate on price movements in various financial markets.

Ghko B|6 days ago
Markets.com Logo
google playapp storeweb tradertradingView

Contact Us

support@markets.com+12845680155

Markets

  • Forex
  • Shares
  • Commodities
  • Indices
  • Crypto
  • ETFs
  • Bonds

Trading

  • Trading Tools
  • Platform
  • Web Platform
  • App
  • TradingView
  • MT4
  • MT5
  • CFD Trading
  • CFD Asset List
  • Trading Info
  • Trading Conditions
  • Trading Hours
  • Trading Calculators
  • Economic Calendar

Learn

  • News
  • Trading Basics
  • Glossary
  • Webinars
  • Traders' Clinic
  • Education Centre

About

  • Why markets.com
  • Global Offering
  • Our Group
  • Careers
  • FAQs
  • Legal Pack
  • Safety Online
  • Complaints
  • Contact Support
  • Help Centre
  • Sitemap
  • Cookie Disclosure
  • Awards and Media

Promo

  • Gold Festival
  • Crypto Trading
  • marketsClub
  • Welcome Bonus
  • Loyal Bonus
  • Referral Bonus

Partnership

  • Affiliation
  • IB

Follow us on

  • Facebook
  • Instagram
  • Twitter
  • Youtube
  • Linkedin
  • Threads
  • Tiktok

Listed on

  • 2023 Best Trading Platform Middle East - International Business Magazine
  • 2023 Best Trading Conditions Broker - Forexing.com
  • 2023 Most Trusted Forex Broker - Forexing.com
  • 2023 Most Transparent Broker - AllForexBonus.com
  • 2024 Best Broker for Beginners, United Kingdom - Global Brands Magazine
  • 2024 Best MT4 & MT5 Trading Platform Europe - Brands Review Magazine
  • 2024 Top Research and Education Resources Asia - Global Business and Finance Magazine
  • 2024 Leading CFD Broker Africa - Brands Review Magazine
  • 2024 Best Broker For Beginners LATAM - Global Business and Finance Magazine
  • 2024 Best Mobile Trading App MENA - Brands Review Magazine
  • 2024 Best Outstanding Value Brokerage MENA - Global Business and Finance Magazine
  • 2024 Best Broker for Customer Service MENA - Global Business and Finance Magazine
LegalLegal PackCookie DisclosureSafety Online

Payment
Methods

mastercardvisanetellerskrillwire transferzotapay
The www.markets.com/za/ site is operated by Markets South Africa (Pty) Ltd which is a regulated by the FSCA under license no. 46860 and licensed to operate as an Over The Counter Derivatives Provider (ODP) in terms of the Financial Markets Act no.19 of 2012. Markets South Africa (Pty) Ltd is located at BOUNDARY PLACE 18 RIVONIA ROAD, ILLOVO SANDTON, JOHANNESBURG, GAUTENG, 2196, South Africa. 

High Risk Investment Warning: Trading Foreign Exchange (Forex) and Contracts For Difference (CFDs) is highly speculative, carries a high level of risk and is not appropriate for every investor. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please read the full  Risk Disclosure Statement which gives you a more detailed explanation of the risks involved.

For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data.

Markets.com operates through the following subsidiaries:

Safecap Investments Limited, which is regulated by the Cyprus Securities and Exchange Commission (“CySEC”) under license no. 092/08. Safecap is incorporated in the Republic of Cyprus under company number ΗΕ186196.

Markets International Limited is registered  in the Saint Vincent and The Grenadines (“SVG”) under the revised Laws of Saint Vincent and The Grenadines 2009, with registration number  27030 BC 2023.

Close
Close

set cookie

set cookie

We use cookies to do things like offer live chat support and show you content we think you’ll be interested in. If you’re happy with the use of cookies by markets.com, click accept.