RSI and MA Strategy with Trailing Stop Loss and Take Profit

This strategy aims to enter the trade when the coin is experiencing an upwards trend with momentum behind it.

This strategy utilises common indicators like RSI and moving averages in order to enter and exit trades. The Relative Strength Index (RSI) is a momentum indicator that has a value between 0 and 100, where a value greater than 70 is considered overbought and a value less than 30 is oversold. If the RSI value is above or below these values, then it can signal a possible trend reversal.

The second indicator used in this strategy is the Simple Moving Average (SMA). A SMA is an arithmetic moving average calculated by adding recent prices and then dividing that figure by the number of time periods in the calculation average. For example, one could add the closing price of a coin for a number of time periods and then divide this total by that same number of periods. Short-term averages respond quickly to changes in the price of the underlying coin, while long-term averages are slower to react.

Entry

As shown above, there are three conditions that must be met in order for the strategy to enter a trade. The first checks if the RSI is greater than 50, which means that the coin is approaching the ‘overbought’ region on the RSI scale. This is the first indication that the coin has entered an uptrend.

The second condition assesses whether the SMA9 is greater than the SMA50, further showing that the coin is entering on a short-term uptrend.

Finally, the last condition of the rule determines if the RSI of the coin has increased by 5. Any coin with an RSI greater than 50 can be considered bullish. So, an increase by 5 when the RSI is greater than 50 demonstrates that the coin has strong momentum behind it and it is approaching the ‘overbought region’.

These three conditions being met signifies that the coin is in an uptrend with strong momentum behind it.

Lastly, there is a condition to not buy stable coins to have better trades executed, since stable coins are not suited for this strategy.

Exit

The strategy exits its position when only 2 conditions have been met.

As shown above, there is a trailing stop loss and take profit of 5% in order to manage risks of the trade.

Backtesting Results

This strategy was backtested on TradingView which can be found on the Coinrule TradingView account (Trader Coinrule — Trading Ideas & Charts — TradingView). The strategy can be tested on historical data, selecting the coin of your choice, and adjusting the parameters such as percentage of coin purchased from portfolio to better fit your needs. On TradingView, the strategy works well on ETHUSDT on the 1-hour timeframe, and SOLUSDT pair on the 2-hour timeframe, and MATICUSDT on the 1-hour and 3-hour timeframes. Shown below are the backtesting results taken from TradingView for ETHUSDT on the 1-hour timeframe:

Short Term RSI and SMA Percentage Change

This strategy aims to enter the trade when the coin is experiencing an upwards trend with momentum behind it.

This strategy utilises common indicators like RSI and moving averages in order to enter and exit trades. The Relative Strength Index (RSI) is a momentum indicator that has a value between 0 and 100, where a value greater than 70 is considered overbought and a value less than 30 is oversold. If the RSI value is above or below these values, then it can signal a possible trend reversal.

The second indicator used in this strategy is the Simple Moving Average (SMA). The SMA used is an arithmetic moving average calculated by adding recent prices and then dividing that figure by the number of time periods in the calculation average. For example, one could add the closing price of a coin for a number of time periods and then divide this total by that same number of periods. Short-term averages respond quickly to changes in the price of the underlying coin, while long-term averages are slower to react.

Entry

This strategy focuses on buying the coin when it is in an uptrend with momentum behind it.

As shown above, there are three conditions that must be met in order for the strategy to enter a trade. The first checks if the RSI is greater than 50, which means that the coin is approaching the ‘overbought’ region on the RSI scale. This is the first indication that the coin has entered an uptrend.

The second condition assesses whether the SMA9 is greater than the SMA100, further showing that the coin is entering on an uptrend.

Finally, the last condition of the rule determines if the SMA of the coin has increased by 6% within the timeframe. When met, it signifies a short-term increase in prices of the coin which can mean a breakout in price.

These three conditions being met signifies that the coin is in an uptrend with strong momentum behind it.

Exit

The strategy exits its position when 2 conditions have been met.

The strategy includes a simple trailing stop loss and take profit which both act at 5%. This is simple, yet effective as the backtesting results show.

Backtesting Results

This strategy was backtested on TradingView which can be found on the Coinrule TradingView account (Trader Coinrule — Trading Ideas & Charts — TradingView). The strategy can be tested on historical data, and adjusting the parameters such as percentage of coin purchased from portfolio to better fit your needs. On TradingView, the strategy works well on MATICUSDT on the 1-hour, 15/45-minute timeframe, and AVAXUSDT pair on the 1-hour and 45-minute timeframe, and ETHUSDT on the 4-hour timeframe. Shown below are the backtesting results taken from TradingView for MATICUSDT on the 15-minute timeframe:

Catching The Bottom

Catching the bottom strategy aims to identify when the bottom of a dip has been reached by using RSI and Moving Averages.

This strategy utilizes common indicators like the RSI and Moving Averages in order to enter and exit trades. The Relative Strength Index (RSI) is a momentum indicator that has a value between 0 and 100, where a value greater than 70 is considered overbought and a value less than 30 is oversold. If the RSI value is above or below these values, then it can signal a possible trend reversal.

This strategy uses the concept of buying the dip, similar to other strategies, in order to better enter trades to catch the gain that follows.

Entry

As shown above, three conditions must be met for the strategy to enter a trade. The first condition checks if the RSI is below 40, which means that the coin is approaching the ‘oversold’ region on the RSI scale. This is the first indication that the dip has potentially met the bottom.

The second condition assesses whether the RSI of the coin has decreased by three. If met, it shows that the RSI has closer to, or has further surpassed, the value of 30 which is considered ‘oversold’. This is a good indication that the dip is approximately reaching the bottom.

Finally, the last condition is met when the MA50 crosses below the MA100, showing that the coin is entering on a short-term downtrend.

Lastly, there is a condition to not buy stable coins to have better trades executed, since stable coins are not suited for this strategy.

These three conditions being met signifies that the coin is at, or near, the bottom of its dip which is an ideal time for buying into the market.

Exit

The strategy exits its position when 2 conditions have been met. As you can see, the first condition is when the RSI is greater than 65. This signals that the coin is approaching ‘overbought’ on the RSI scale, where anything greater than 70 is considered ‘overbought’.

The second condition is met when MA9 is crossing above MA50, suggesting that the coin is in the middle of a short-term gain after its dip.

Combining both of these conditions means the strategy closes the position at what should be near or at the top of the gain after a short-term dip.

A stop loss can be implemented in order to manage risk for this strategy. Utilizing a stop loss and take profit of 5% also provides considerable returns.

Backtesting Results

This strategy was backtested on TradingView which can be found on the Coinrule TradingView account (Trader Coinrule — Trading Ideas & Charts — TradingView). The strategy can be tested on historical data, selecting the coin of your choice, and adjusting the parameters such as the percentage of coins purchased from the portfolio to better fit your needs. On TradingView, the strategy works well on SOLUSDT in the 15-minute timeframe, AVAXUSDT pair in the 5-minute timeframe, and XRPUSDT in the 15-minute timeframe. Shown below are the backtesting results taken from TradingView for MATICUSDT on the 2-hour timeframe:

Grid Trading Strategy

Whether cryptocurrencies trade in a Bull or Bear market, most of the time, they move with no clear direction. A Grid Trading Strategy helps take advantage of such a setup adding value to your portfolio with relatively low risk.

Read more about how to set up a Grid Trading Strategy with Coinrule. 

The strategy is more effective when the trading pair trades within a clear range. Here are some examples of trading pairs you can use to run a Grid Trading Strategy. 

Last update: 20/12/2021

BTCUSD

Funds needed to run the strategy:

– Bitcoin
– Stable coin or fiat currency

DOGEUSD

Funds needed to run the strategy:

– Dogecoin
– Stable coin or fiat currency

ALGOUSD

Funds needed to run the strategy:

– Algorand
– Stable coin or fiat currency

LTCBTC

Funds needed to run the strategy:

– Litecoin
– Bitcoin

BCHBTC

Funds needed to run the strategy:

– BitcoinCash
– Bitcoin

How To Build The Strategy

This strategy is available as the template “Grid Trading in Range”. You can also build it manually by referring to the draft below.

DISCLAIMER

I am not an analyst or investment advisor. Everything that I provide here site is purely for guidance, informational and educational purposes. All information contained in my post should be independently verified and confirmed. I can’t be found accountable for any loss or damage whatsoever caused in reliance upon such information. Please be aware of the risks involved with trading cryptocurrencies. This post is for educational purposes only.

Protect With The Gold Standard Of Crypto

The crypto market has been weakening for a few weeks, and altcoins have been underperforming. Bitcoin dominance appears to have bounced back and is now consolidating. A short-term reversal of the altcoin boom was very likely after the excitement of the last few months. Therefore, now that it appears that the raging bull market is subsiding/over, selling altcoins in exchange for Bitcoin and then re-buying them at lower prices is a profitable strategy to hedge against the risk of significant market drops. We are suggesting buying the gold standard on Bitcoin Dominance.

A quick look at Bitcoin Dominance

Consolidation is a valuable indicator and, in a longer-term, can be used to anticipate strong trends/price moves. For example, over the past few weeks, Bitcoin Dominance has bounced back from 40% to 45% and has been consolidating upwards. So, when the value bounced off historical support levels and moved further back up, the market began giving reverse signals on the altcoin boom.

During these past few weeks, altcoins have been underperforming Bitcoin significantly, resulting in this recovery of Bitcoin Dominance. The capitalization of Bitcoin compared to the whole crypto market has not been this low since May 2018. Once we look at the last 4 years of this chart, we see that altcoins tend to outperform Bitcoin during raging bull markets, but then Bitcoin tends to claw back its dominance and market share over the subsequent months.

Basically, what we are seeing here and over time is that as the crypto market quiets down, traders book profit on their altcoin positions and return to safety on Bitcoin, the gold standard of the crypto market. This is especially true for those who want to maintain some exposure to the crypto market without the gut-wrenching drawdowns that many alts are prone to experiencing.

So how to take advantage of this setup?

Instead of panic selling in a hurry, you can plan an automated strategy to offload your altcoins one at a time and then re-buy them if they fall far enough. In this case, the strategy periodically sells part of your worst-performing coin and converts it into Bitcoin, and then buys it back when it has fallen even further. This way you keep gaining on the alts that are doing well, while simultaneously making extra profits on underperformers. These are substantial profits that you would not have made otherwise.

Of course, if you prefer a more conservative approach, you could also choose to select a fiat or a stablecoin wallet to further trim your portfolio’s risk.

This strategy calculates the worst performing coin in your wallet according to a 24-hr rolling basis logic. Coinrule uses data from Coingecko for this indicator. 

You can adjust the value/percentage of the worst-performing coin to sell in each order and the frequency of the trades according to your preferences and expectations.

This is a simple yet effective approach that allows you to reduce the risk of your portfolio and generate extra gains on falling altcoins. To emphasize, you will gradually gain some extra BTC during such times of altcoin volatility and overall market consolidation.

Other trading strategies like Maximized RSI Strategy and Moving Average Scalper may also come in handy as new signs of market strength develop.

Bearish RSI Crossing Scalper

This strategy uses the RSI together with candlestick confirmation to scalp trades during uncertain times.

“Sell when the RSI is overbought and buy when the RSI is oversold.” This is the basic strategy you learn when using the RSI indicator. Yet, there are times when this straightforward rule is not efficient.

Oscillator indicators such as the RSI struggle to provide valuable signals during periods of uncertainty. If the market is trending higher, the RSI can stay in overbought conditions for a while, forcing the trader to get stuck in a position in loss.

The purpose of this strategy is to seize the moment when the RSI crosses below the threshold of 65, improving the chances of catching a short-term price drop. In this way, traders can exploit the usual RSI signals and maximize the probability of entering a winning trade even during uncertain market conditions.

Sell Condition

Firstly, the bot scans the market looking for coins with an RSI greater than 65. Then, the strategy requires waiting for 5 minutes (a fixed period), and it places the sell order if the RSI is now lower than 65.

Additionally, the price decrease by 0.1% (or a small, fixed percentage) provides further confirmation that the price is trending lower.

Buy Condition

This strategy comes with a trailing stop loss/take profit.

Since the rule has particular use in undetermined market conditions, the bot keeps open profitable trades, allowing them to close dynamically by hitting the trailing stop loss/take profit.

This allows maximising gains when the bot has found a good entry price for its short. It rides the downward trend while it can and closes out the position when it looks like it’s about to reverse.

How it Works

This trading system tends to open and close trades very quickly, often in a matter of minutes.

How to Build the Bearish RSI Crossing Scalper with Coinrule

The strategy can also add value to your portfolio in uncertain times when the market does not trade with a clear direction. 

It can help especially in downtrending markets with the coins you have in your wallet. By selling coins that you already own, it actually decreases your overall exposure to the market and adds some extra value.

On the other hand, if you are shorting through futures, this strategy allows you to seek extra profit without having to open fresh long positions in downtrending markets.

Short with the Trend MA 9/MA 50

The rule aims to build a “sell the rallies” approach by combining it with short- and medium-term moving averages. The deployed MA50 identifies bearish trends and ensures the strategy only trades during these periods. This strategy allows you to add value during times of downtrends by trading in and out of existing holdings or by reducing your exposure through shorting in the futures markets.

Multi Time Frame Crossing Reversal

Sell Condition

The strategy sells the coin when it meets the criteria below:

• MA9 crossing below MA50 in a timeframe of 30 mins

Buy Condition

The algorithm then sells the coin on either of the 2 following conditions:

Stop Loss: Coin has price increase by 2% from price at which you sold

Take Profit: Coin has MA50 greater than price AND price crossing above MA9 on 30 mins

The strategy has a 3% stop loss. With such tight stop-losses, depending on your ability and willingness to take risk, you can consider using leverage (link article here) to increase your gains.

How it Works

First, MA9 crossing below MA50, signifying a short-term downward move, identifies a current price trend. If this cross below condition is not met, the strategy will not trade. 

If the price crossing above MA 9 and price lower than MA 50 conditions are satisfied, buy to close out the position. Otherwise, there’s a stop-loss of 3% from the entry price.

How to Build the Strategy with Coinrule (Strategy screenshot)

Strategy Performance (ETHUSDT – 30% price drop vs 10% gain)

Over the period, the strategy beat the buy and hold return by about 40%. and achieved an absolute profit of 10%. If you were holding the coin, this was a low-risk way to add value to your account balances. If you were shorting, this was a great way to make extra profits while reducing your overall exposure to the market.

Bullish RSI Crossing Scalper

This strategy uses the RSI together with candlestick confirmation to scalp trades during uncertain times.

“Buy when the RSI is oversold and sell when the RSI is overbought.” This is the basic strategy you learn when using the RSI indicator. Yet, there are times when this straightforward rule is not efficient.

Oscillator indicators such as the RSI struggle to provide valuable signals during periods of uncertainty. If the market is trending lower, the RSI can stay in oversold conditions for a while, forcing the trader to get stuck in a position in loss.

The purpose of this strategy is to seize the moment when the RSI crosses the threshold of 30, improving the chances of catching a short-term price rebound. In this way, traders can exploit the usual RSI signals and maximize the probability of entering a winning trade even during uncertain market conditions.

Buy Condition

Firstly, the bot scans the market looking for coins with an RSi lower than 30. Then, the strategy requires waiting for 5 minutes (a fixed period), and it places the buy order if the RSI is greater than 30.

Additionally, the price increase by 0.1% (or a small, fixed percentage) provides further confirmation that the price is trending higher.

Sell Condition

This strategy comes with a trailing stop loss and a conservative take profit.

Since the rule has particular use in undetermined market conditions, the bot closes the trade when the RSI is greater than 50. That is intended to take profit more frequently compared to higher RSI levels in uncertain times.

Alternatively, the strategy also includes a dynamic stop loss which closes the trade when the price decreases by 0.6% within a single candle. A relatively large down candlestick may signal a trend reversal, so it’s savvy to exit the trade as quickly as possible to trim losses.

How it Works

This trading system tends to open and close trades very quickly, often in a matter of minutes.

How to Build the Bullish RSI Crossing Scalper with Coinrule

The strategy can also add value to your portfolio in uncertain times when the market does not trade with a clear bullish trend.

Accumulate The Best Crypto

Following an intense market sell-off, cryptocurrencies have been rebounding strongly recently. Bitcoin Dominance hit a short-term resistance and, as expected, started to pull back lower. That allowed Altcoins to experience a broad relief rally. Offloading part of the allocation in Altcoins during the market drop added value to the portfolio last week. Now it could be time to buy back and accumulate the best crypto that can have more upside potentials.

Altcoins are back

Altcoins have been on a wild ride since the start of the year, reflecting in the Bitcoin Dominance collapsing to values not seen since 2018. As Bitcoin seems to have found its short-term bottom, investors and traders have started to buy back the coins sold during the market crash. Thus, this is an opportunity to accumulate the best crypto with higher upside potential.

How much upside potential do Altcoins have? They could reach back the pre-dump levels making new all-time highs. But as market conditions are still very volatile and the crash severely affected many traders, it’s safe to assume that the market will present new shakeouts to stress test market participants. 

Looking at the total market capitalization of Altcoins, excluding Bitcoin, the upside potential was around 40% before hitting the first significant resistance. Thus, at the moment of writing, there is, on average, still 20% of the potential uptrend to reach.

So how to take advantage of this setup?

Instead of rushing into FOMO buying, you can build an automated strategy to accumulate the best-performing coins in your portfolio. Once, that coin has a price increase of 20% from the entry price, the bot sells closes part of the trade. This approach allows you to take profit from the relief rally after the strong crypto sell-off.

This bot accumulates the best crypto coins in your wallet according to 24-hr rolling price performance. Coinrule uses data from Coingecko for this indicator. 

By adjusting the percentage of coins to sell in each order, you will increase or decrease the amount of coins to accumulate with this strategy. 

This is a simple yet effective approach that allows you to gradually increase the exposure to coins with high potentials. The advantage of this strategy is that it’s going to accumulate only the best crypto you already own in your portfolio, preventing you from buying undesired coins.

In parallel, other trend-following strategies that could work well in current market conditions are Multi Moving Average Crossing, and Ride The Trend.