Bollinger Band Below Price with RSI- Coinrule Strategy of the Week 7
This week, our strategy will utilise Bollinger Bands. This is another of the new technical indicators we have just integrated here at Coinrule. This strategy will make use of one of the predesigned Bollinger Bands templates on Coinrule. This means that it will be extremely easy to set up and start trading with this strategy.
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00:11
This week, our strategy will utilize another one of the new technical indicators that we have just integrated on Coinrule, Bollinger bands. This strategy will make use of one of the pre-designed Bollinger band templates on Coinrule. Bollinger Bands are among the most famous and widely used technical analysis indicators. They were created by John Bollinger in the early 1980s. A Bollinger band is a technical analysis tool, defined by a set of trend lines traditionally plotted two standard deviations positively or negatively away from a simple moving average of an asset’s price. The SMA, which is the middle line that you see above me here, then serves as a base for the upper and lower bands, which are used as a way to measure volatility by observing the relationship between the bands and price. When the bands are converging, and the gap between them is small. This indicates volatility is low, and that a breakout could be imminent. To determine the breakout direction is somewhat more challenging. This is why John Bollinger suggests using a combination of other indicators,such as RSI, in conjunction with his bands to try and identify the breakout direction.
01:26
The first is that the lower Bollinger band is below price. In the example shown here, the tightening of the bands provided an indication that breakout could be imminent. When the price broke the lower band would have been a great buying opportunity as there is a massive upward breakout following the signal.
01:47
The second entry condition relies on RSI this condition simply requires the RSI to be lower than 50. This essentially means that the asset is more likely to be oversold and overbought, meaning that the breakout direction is more likely to be upwards, you can adjust the RSI condition to be something more in line with your preferences for the default value in the cardinal template will be below 50.
02:09
To exit we have two very simple take profit and stop loss conditions that you can set in line with your own preferences. Essentially, the strategy will sell pre-designated profit levels above the entry price. This is a take profit condition. And it will also sell the price depreciate by a certain percentage from the entry price, the stop loss condition essentially, now I'll show you how to set up the strategy on Coinrule. Okay, so here we are on Coinrule. It's really very easy to operate the strategy as I said earlier, so first come to create a new rule. It's like your exchange first. I'm just gonna select the demo machine for the purposes of this video, come to templates from the Bollinger bands at the end here, click on it and find the strategy here. So, Bollinger bands with RSI, select this.
02:54
And you'll see that the strategy is automatically added. So, you'll remember I said earlier that you can customize RSI value that you want the strategy to use. If you want to do that, you can just change it in this box here, but I'm just going to leave it as 50 because that's the default value that we have in the strategy, you're also going to have to select the timeframe that you want the strategy to operate. And I'm gonna select the four-hour because, in my experience, this works well. But feel free to experiment with some other timeframes on our demo exchange. And that coin also has RSI lower than 50, I then want to buy 100 US dollars of that coin with my USDT wallet as a limit order. Then if that coin has a price increase by, I'm going to say 7% of the price of which I bought. So, this is your take profit condition, then I want to sell 100% of the amount bought of that coin to my USDT wallet as a limit order.
03:50
And then if that coin’s price decrease by I'm gonna say 3% from the price at which you bought this is your stop loss condition, then I want to sell 100% of the amount bought of that coin to my USDT wallet as a limit order. So, remember, this is just your stop-loss condition. And this is your take profit condition. These numbers are just ones I've just chosen off the top of my head but feel free to experiment with whatever ones you want. It just depends on your risk preferences of what really works for you.
04:20
And then scroll down under execute. So, I'm gonna execute the strategy 100 times I'm just gonna leave it as a default name, which is Bollinger bands below price with RSI.