An Overview of the KDJ Indicator for Trading

KDJ Indicator

You should take the time to learn how to use this indicator, a trading tool that optimizes trading processes. With KDJ you can get an idea of where to enter a trade and where the trend will go.

KDJ is analogous to both the Stochastic Oscillator and the Alligator from the perspective of basic technical analysis.

Furthermore, it helps determine the most appropriate entry points by providing insight into the strength and direction of the trend.

It is especially likely to provide false signals when the market is flat, as is the case with any trend-following indicator. Therefore, traders expect their products to last for a long time.

What does it aim to achieve?

KDJ Indicator has 3 lines (hence its name) and 2 levels. Lines K and D can be seen on a stochastic oscillator. In contrast, line J shows how the D component differs from the K component. In this area, you can identify new opportunities for trading.

A Stochastic Oscillator indicates when trends are likely to reverse when overbought or oversold. By default, this is set to 20-30% and 80-90%, respectively. It is possible to reduce false alarms by increasing the sensitivity.

What is the setup process?

The following steps will help you set the indicator:

  • Go to the bottom-left of the screen and select ‘Indicators’;
  • On the Trend page, click;
  • From the list of options, choose KDJ;
  • Don’t make any changes to the settings.

You can now use the indicator!

How does trading work?

What kind of signals would you like? You need signal types if you want to profit from KDJ trading. 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

With ADS and ATR, KDJ can produce optimal results as a complement to other indicators. One can always predict a trend reversal by using the latter and lead to the former. KDJ is used to predict market volatility since it doesn’t work on flat markets.

Signals generated by indicators are not always 100% accurate. We all lose deals from time to time. Remember to follow guidelines for risk management and capital allocation.

Indicators for cryptocurrency multipliers

Cryptocurrency multipliers are another useful feature. Lending is a cryptocurrency multiple.
Profits/losses are determined by the underlying price which remains unchanged.

The multiplier determines whether a deal has a potential profit or loss. If the Bitcoin X 100 multiplier had been used before, it would have multiplied the bitcoin price by 100.

IQ expanded its range of multipliers available for Bitcoin in order to include other cryptocurrencies such as Ethereum (ETH), TRON, IOTA, and Ripple, as well as different quantities (x20, x50, and x100).

This feature is particularly valuable if your risk to reward ratio is high. As well as the multipliers feature, there is the Open Trade Network (OTN) – a blockchain-based cryptocurrency exchange based on Ethereum.

A token (OTN coin) is a specialized cryptocurrency coin that has been operating since 2018. With the trustworthy and regulated OTN blockchain innovation, IQ and their users have benefited.

The OTN tokens are used as incentives to encourage users to use them. Users can trade these tokens for real money. Iqoption has benefited from this shift in the brokerage industry.