the best crypto trading indicators

A trading indicator is a technical tool that utilises graphs and mathematical formulas to indicate a market's direction. Crypto traders or investors use an indicator in tandem with a trading chart to analyse market conditions. The basic idea is to study past market movements and then use them to anticipate future price trends and patterns.

Although indicators should point you to where the market is headed, it is important to mention that they do not predict the prices of Bitcoin or other crypto assets in absolute certainty. The overall goal is to help you identify trading opportunities in order to maximise profit while minimising loss.

Let us now consider the two common categories of indicators and their functionalities. After this, we'll walk you through the essential things you need to know about indicators.

Types of trading indicators
Although there are different trading indicators, they generally fall under two distinct categories: Leading and Lagging.

Leading indicators vs. lagging indicators
Leading indicators tend to focus on predicting the future outcome of price action. Consider it like looking through your car's windshield to see the road ahead of you. From your view, it is possible to anticipate what you should do based on what you can see ahead. Similarly, a leading indicator can provide a signal ahead of time before the actual price action happens and can register the momentum of the price action when it slows down or speeds up.

On the other hand, lagging indicators pay more attention to what price action used to be like in the past. Think of it like looking at the rearview mirror, which you can use to look at the road you've travelled. Lagging indicators provide the signals you need to confirm the behaviour of the price action.