Cryptocurrencies can experience sudden and sharp uptrends, and the Relative Strength Index (RSI) is a useful tool to find them. Coinrule’s Trend Following bot can automate your trades to help you buy the coins on a strong uptrend as their price could increase further.
RSI is a technical indicator that measures the magnitude of a coin’s price moves. High values indicate that the price is going up quickly. Lower values, on the contrary, signal that the price is dropping.
In theory, an RSI above 70 means that the coin’s price has already increased significantly and, thus, it could be a good time for selling. On the other hand, the RSI of cryptocurrencies may remain at high values for an extended period.
Essentially, where the RSI of Waves has stayed above 60 and often above 70 for almost one month, buying and selling on the way up could potentially provide excellent opportunities.
Pro-tip: you can run this rule in every market condition. In a market downtrend, rarely will the RSI be at high values, so the automated strategy will wait for more convenient market conditions before opening new trades.
Coinrule – the mechanism behind it
Coinrule is a smart trading bot for cryptocurrency platforms. It gives you the ability to take complete control of your cryptocurrency trading while also competing against hedge funds that use automated bots. The Coinrule trading bot tool was developed to accommodate all different kinds of transactions, and it comes with a comprehensive set of features meant to facilitate varied trading strategies.
They have trading bots that look for the best coin of the day, Bollinger bands, catch the falling knife, buy the best coin, buy dips, catch the falling knife, contrarian, flash crash, golden cross trading, grid trading, MACD/DMI, rebalance, RSI, scalping, and many more strategies.
In addition to this, the platform has a backtesting tool that assists users in testing their assumptions based on historical market conditions. Even while it is impossible to anticipate the market with absolute certainty based on what has happened in the past, the sandbox environment may help you get a deeper understanding of the behavior of traders and make more informed judgments about what will happen in the future.
Avoid Pump-and Dumps
Coinrule’s simple If-This-Then-That approach makes it easy to build trend following bots to buy coins on solid uptrends, avoiding short-term pump-and-dumps, where the risk of buying the top is very high.
Let’s look at an example of how this bot would be built on Coinrule. The rule would buy any coin with the RSI indicator greater than 70 within a 4-hour timeframe using the portfolio’s USDT wallet.
The 4-hour timeframe was chosen as it had the highest success and profitability when backtested. The use of “any coin” will lead to more coins being traded. However, specified coins can also be chosen.
In any case, the bot will then scan the market and buy any coin meeting this condition.
Close your Trades
The take profit for the rule will be a 6% increase in price from the price the coin was bought. The rule’s stop loss will be if the RSI value drops below 55, indicating a possible weakening of the trend.
Essentially this rule will automatically buy any coin when the RSI is over 70 and sell the coin if the price increases 6% from the entry price.
Let’s look at an example on the Ethereum daily chart to examine how this rule would perform:
When the RSI is over 70, the buy conditions are met, and the bot would enter ETH at a price of around $3175. As the chart displays, there was a 6% increase before the RSI went lower than 55, which is the sell condition.
Thus, the bot would have exited the position at around $3,366 for a return of 6% profit on the trade.
You can take advantage of these opportunities on Ethereum today by automating your trades with Coinrule’s Ethereum trading bots.
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