Technical Indicators FAQ — What They Are and What They Add

Do indicators add information?

No. Every indicator is a transformation of price and volume data you already have.

A moving average is an average of closes. RSI is a ratio of average gains to average losses. MACD is a difference between two moving averages. None introduces information from outside the chart.

What they add is consistency: applying a defined rule rather than eyeballing. That is a real benefit — human pattern recognition is unreliable and inconsistent. But it is a different benefit from revealing something hidden.

If I use several indicators and they agree, is that confirmation?

Usually not, and this is the most common indicator mistake.

Because indicators derive from the same OHLCV data, several agreeing is often one piece of information displayed several ways. Three moving averages of different lengths all turning up is not three independent signals — it is one price move, transformed three times.

Genuine independent confirmation would come from data the chart does not contain: order-book depth, trade count, on-chain flows, or a fundamental fact.

What does a moving average actually compute?

The average closing price over the last N intervals, recalculated each interval.

A simple moving average weights all N equally. An exponential moving average weights recent intervals more heavily, so it responds faster and is noisier.

That is the whole mechanism. It smooths, and smoothing necessarily lags — an average of the last 50 closes cannot respond to the most recent close as fast as the close itself does. Lag is not a flaw to be tuned away; it is what averaging is.

What does RSI measure?

The Relative Strength Index compares the average size of recent gains to the average size of recent losses over a lookback period, scaled to 0–100.

It measures the character of recent movement, not whether an asset is objectively cheap or expensive. "Overbought" and "oversold" are labels for regions of that scale, and an asset can remain in either for a long time — a strong trend produces a persistently extreme reading, which is information about the trend rather than a signal to fade it.

Do indicators work?

Same honest answer as chart patterns: much weaker than the volume of content implies.

Results are highly sensitive to parameters, market, timeframe and period, and published findings rarely reproduce out of sample. The parameter sensitivity is itself the warning — if a strategy works at a 14-period lookback and fails at 13 and 15, that is a sign of curve-fitting rather than a discovered property.

CoinDock publishes no indicator-based signals or success rates. We have not researched them, and repeating uncited claims would be worse than saying nothing.

Why do default settings differ between platforms?

Because they are conventions, not derived constants. A 14-period RSI is a convention; nothing makes 14 correct.

This matters for two reasons: comparing indicator values across platforms requires checking parameters and candle construction match, and it is a reminder that any parameter can be tuned until historical results look good.

Are indicators worse on crypto?

They face the same problems more acutely.

Indicators assume the underlying candles describe meaningful activity. On a thin token where candles are built from a handful of trades, an indicator is a transformation of noise — producing precise-looking numbers from data that does not support them.

Check trades_count before trusting any indicator on an unfamiliar market. CoinDock exposes it per candle through the candles API.

Does CoinDock provide indicators?

CoinDock stores market indicator data and exposes OHLCV candles with trade counts through its public API, so you can compute whatever you prefer from the underlying data.

We do not publish signals, recommendations, or forecasts, and we do not claim any indicator predicts price.

What is a more useful alternative?

For most practical decisions, the order book answers questions the chart cannot:

Can I exit? Bid-side depth.
At what cost? Depth within your acceptable price band.
Is this market real? Trade count and two-sided depth.

None requires a predictive claim, and all three bear directly on whether a trade is sensible. See how to read market depth.

Educational content. Not trading advice. CoinDock publishes no signals or forecasts.

Technical Indicators — Frequently Asked Questions