A trading tool that optimizes the trading process, this indicator is well worth your time. It allows you to determine entry points and trend direction using KDJ.
In terms of basic technical analysis, the KDJ resembles both the Stochastic Oscillator and the Alligator. Additionally, it provides insight into the direction/strength of the trend and helps determine the most appropriate entry points.
Just like any indicator of trend-following, the KDJ indicator is likely to provide many false signals during flat markets. It is for this reason that traders expect it to be used for longer periods of time.
What is its purpose?
The KDJ is a three-line indicator (thus, the name KDJ) and a two-level indicator. When you use a stochastic oscillator, you can see lines K and D. Line J, on the other hand, shows how the D component diverges from the K value. It is here that you will be able to identify new trading opportunities.
Stochastic Oscillators point to overbought and oversold conditions when trend reversals are likely. This level is set by default at 20-30% and 80-90%, respectively.80%. You can increase the sensitivity and reduce false alarms on both levels.
What is the setup process?
To set the indicator, follow these four steps:
- Click on ‘Indicators’ (the bottom left side of the screen);
- Click on ‘Trend’;
- Choose KDJ from among the available choices;
- Apply the settings without making any changes.
The indicator is now ready for use!
What are the steps to trading?
How do you want your signals to look? To earn money from KDJ trading, you need signal types. Selling the asset may make sense if the blue line exceeds the yellow line, the yellow line exceeds the purple line, and all three lines converge above the overbought area. When the lines crossover, i.e. when the yellow line crosses the purple line, you can also consider purchasing the asset.
Several things to keep in mind
As a complement to other indicators, KDJ can yield optimal results, respectively with ADS and ATR. A trend reversal can always be predicted by the former and can lead to the latter. Since KDJ does not work on flat markets, it can be used to predict market volatility.
Indicators cannot always provide 100% accurate signals. Every now and then, we all lose a deal. Whatever indicator you use, remember standard capital allocation and risk management guidelines.
Multipliers for cryptocurrencies
Another handy feature is cryptocurrency multipliers.
Leveraged trades are cryptocurrency multiples. The underlying price remains unchanged and remains an important factor in profit/loss. Any deal has the potential for profit/loss multiplied by the multiplier. As you can imagine, it multiplied the Bitcoin price by 100 when the Bitcoin X 100 multiplier was used before. The success of this feature led IQ to expand the range of multipliers available – to other cryptocurrencies such as Ethereum (ETH), TRON, IOTA, and Ripple, and in different quantities (X 20, X 50, and X 100) on Bitcoin.
Especially if your risk/reward ratio is high, this feature can be extremely useful. Aside from the multipliers feature, they also have the Open Trade Network (OTN) – a blockchain-based cryptocurrency exchange based on the Ethereum blockchain platform. OTN coins (or tokens) are specialized cryptocurrency coins that have been in operation since 2018. IQ and its users have benefited from the trustworthy and regulated OTN blockchain innovation. Users are incented to use them by receiving OTN tokens. OTN tokens can be traded on the market. In the brokerage industry, this has shifted the market to the IQ option’s benefit.