Crypto Majors Strength Index
Indicator showing the strength of the major cryptocurrencies relative to a base currency and to each other.
Coins included in index: BTC, ETH, LTC, XRP, ADA, EOS, TRX.
How it works:
The currency that you're viewing acts as the base currency and all other currencies will be measure relative to it. The indicator shows the percentage price change of the major currencies relative to the percentage change of the currency that you're viewing.
• Currencies that are trending above the base line are stronger than the currency you're viewing (either rising more rapidly or falling more slowly).
• Currencies that are trending below the base line are weaker than the currency you're viewing (either falling more rapidly or rising more slowly).
How the Crypto Majors Strength Index can assist your trading:
1. Identify the beginning/ending of breakouts
As BTC tends to lead the market, lets apply the indicator on this currency. On a daily timeframe we can see that:
• From 23rd Jan 2019 to 18th Feb 2019 LTC outperforms BTC as well as all other majors
• During this same period TRX appears to consistently underperform
• Beginning around 11th March 2019 ADA begins to perform better than BTC and the rest of the index
• A hypothetical strategy that used the index might Long LTC and Short TRX during this period before moving profits into ADA
We don't have to use the index on BTCUSD. Used on an Alt coin like HOTBTC we can see how on 10th Jan 2019 the Majors begin to trend below the base line indicating strength in HOTBTC relative to these coins
2. Identify correlated currencies
• As the base currency moves, which coins move with it and which don't?
• For example, some say XRP has the least correlation with BTC. From 3rd Nov 2018 through to 16th December 2018 this appeared to be the case but has reduced recently
3. Avoid dead money
• Not much fun spending too long in a currency trading eternally sideways. With a glance at the index you can identify the currencies trading upwards/downwards which can help you decide where to allocate your capital. Those coins moving away from the base line is where volatility (and returns) are to be found
-------------------------------
This is my first published indicator so ideas and suggestions welcome. Grazie 🙏
Coins included in index: BTC, ETH, LTC, XRP, ADA, EOS, TRX.
How it works:
The currency that you're viewing acts as the base currency and all other currencies will be measure relative to it. The indicator shows the percentage price change of the major currencies relative to the percentage change of the currency that you're viewing.
• Currencies that are trending above the base line are stronger than the currency you're viewing (either rising more rapidly or falling more slowly).
• Currencies that are trending below the base line are weaker than the currency you're viewing (either falling more rapidly or rising more slowly).
How the Crypto Majors Strength Index can assist your trading:
1. Identify the beginning/ending of breakouts
As BTC tends to lead the market, lets apply the indicator on this currency. On a daily timeframe we can see that:
• From 23rd Jan 2019 to 18th Feb 2019 LTC outperforms BTC as well as all other majors
• During this same period TRX appears to consistently underperform
• Beginning around 11th March 2019 ADA begins to perform better than BTC and the rest of the index
• A hypothetical strategy that used the index might Long LTC and Short TRX during this period before moving profits into ADA
We don't have to use the index on BTCUSD. Used on an Alt coin like HOTBTC we can see how on 10th Jan 2019 the Majors begin to trend below the base line indicating strength in HOTBTC relative to these coins
2. Identify correlated currencies
• As the base currency moves, which coins move with it and which don't?
• For example, some say XRP has the least correlation with BTC. From 3rd Nov 2018 through to 16th December 2018 this appeared to be the case but has reduced recently
3. Avoid dead money
• Not much fun spending too long in a currency trading eternally sideways. With a glance at the index you can identify the currencies trading upwards/downwards which can help you decide where to allocate your capital. Those coins moving away from the base line is where volatility (and returns) are to be found
-------------------------------
This is my first published indicator so ideas and suggestions welcome. Grazie 🙏
Catatan Rilis:
- Added EMA as a smoothing option
- Improved precision