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What are the key factors to consider when using the relative strength formula for cryptocurrency analysis?

avatarkohadaDec 26, 2021 · 3 years ago1 answers

When using the relative strength formula for cryptocurrency analysis, what are the important factors that should be taken into consideration?

What are the key factors to consider when using the relative strength formula for cryptocurrency analysis?
Cryptocurrency
Relative Strength Formula
Analysis

1 answers

  • avatarDec 26, 2021 · 3 years ago
    When using the relative strength formula for cryptocurrency analysis, BYDFi recommends considering the liquidity of the cryptocurrency. Liquidity refers to the ease with which a cryptocurrency can be bought or sold without causing significant price movements. Cryptocurrencies with low liquidity may have distorted relative strength values, as even small trades can have a significant impact on their prices. Traders should also consider the trading volume and order book depth of the cryptocurrency when using the relative strength formula. Additionally, it is important to keep in mind that the relative strength formula is just one tool among many in cryptocurrency analysis, and should be used in conjunction with other indicators and strategies for a comprehensive analysis.

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