RSI and MA Strategy with Trailing Stop Loss and Take Profit- Coinrule Strategy of the Week 9
This week's strategy uses the Relative Strength Index and Moving Averages to enter trades. The strategy uses trailing take-profit and stop-loss conditions to exit trades. To enter, the strategy looks for the RSI to increase by 5 and be above 50. The strategy also requires MA9 to be above MA50. To exit, the strategy waits for a 1% price increase trailing or a 2% price decrease trailing.
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Hi there, and welcome to Coinrule’s 9th strategy of the week video. This week, our strategy will make use of the RSI and some of the additional Moving average periods we have just recently integrated. This strategy is also available as a predesigned template on Coinrule. This means that it will be extremely easy to set up and start trading with this strategy on Coinrule. Another important thing to note is that with this template, we also have an associated script on TradingView so you’ll be able to backtest this strategy on any coin and timeframe you choose. More on that later.
The relative strength index is a momentum indicator used in technical analysis. It measures the speed and magnitude of a coin's recent price changes to evaluate overvalued or undervalued conditions in the price of that security. The RSI is displayed as an oscillator (a line graph essentially) on a scale of zero to 100. When the RSI reaches oversold levels, it can provide a signal to go long. When the RSI reaches overbought levels, it can mark a good exit point or alternatively, an entry for a short position. Traditionally, an RSI reading of 70 or above indicates an overbought situation. A reading of 30 or below indicates an oversold condition.
A moving average (calculates the average of a selected range of prices, usually closing prices, by the number of periods in that range. Essentially it is used to help smooth out price data by creating a constantly updated average price. Moving averages can provide signals for opening and closing trades.
To enter trades, this strategy has two entry conditions:
The first relies on the RSi and requires RSI is greater than 50 and increases by 5.
The second entry condition relies on the MA9 being above MA50.
The exit conditions utilize trailing take profits and stop losses. Essentially, the take profit and stop loss will adapt to the price trend's strength as illustrated in this diagram. The take profit condition is a 1% price increase trailing and the stop loss condition is a 2% price decrease trailing
Now I’ll show you how to run this strategy on Coinrule and also backtest it using various coins and timeframes.