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 Introduction To Technical Indicators On Coinrule

An automated trading strategy takes decisions based on indicators and triggers that signal when it's the best time to buy or sell a coin.

Technical indicators are heuristic or pattern-based signals produced by the price, volume, and/or open interest of a security or contract used by traders who follow technical analysis.

By analyzing historical data, technical analysts use indicators to predict future price movements. Examples of common technical and effective technical indicators include the 

Technical indicators are mathematical ideals and methodologies applied to asset prices that provide meaningful information regarding the trend. 

These are valuable information that can make a trading system very profitable. 

Examples of very common and effective technical indicators traders use are the 

It is important to know that technical indicators are not the same as trading strategies, they are tools used in creating trading strategies. 

Apart from the subjective interpretation of signals generated by indicators, their mathematical formula or the setup can be adjusted by an experienced trader to provide profitable results.

A common trading tip is to calculate indicators starting from the asset's closing price in a specific period (according to the selected time frame). Then, the trader considers only signals generated by "closing prices."

Using closed prices avoids false signals and ensures that your rule executes upon a confirmation. This prevents your rule from executing on every single volatile move which can be caused by outliers, such as, a relatively large market order causing price and intra-timeframe indicator values to 

If your rule is set to sell if the RSI reaches 70 on the 1-hour timeframe, the bot needs a value greater than 70 and confirmed by the closing a candle to trigger the order. 

Once the candle closes, and the RSI is confirmed, that is valid until a new candle closes. As an example, selecting a time frame of 1-hour results in each sequential RSI value to be valid for 1 hour.

The system does not consider values of RSI calculated from real-time trades. That would result in different indicator values very frequently, potentially causing over-reaction to every price move.

Over-reacting to a price move is typical error traders do with manual trading. Respecting the strict rule of relying on confirmations is one of the main advantages of running an automated trading strategy, excluding emotions from the decision-making process.

To learn more about how technical indicators are used on Coinrule, kindly visit our Technical FAQ page 

https://atlas-kb.com/atlas-sbw870763c/categories/980014-technical-faq

An introduction to technical indicators and how Coinrule calculates the values

Technical Indicators

A moving average (MA) is a technical indicator commonly used in 

. The reason for calculating the moving average is to help smooth out the price data by creating a constantly updated 

By calculating the moving average, the impacts of random, short-term fluctuations on the price of a stock over a specified time frame are mitigated. 

Moving averages are calculated to identify the trend direction of a coin or to determine its support and resistance levels. It is a trend-following or 

, indicator because it is based on past prices. An upward trend in a moving average might signify an upswing in the price or momentum of a security, while a downward trend would be seen as a sign of decline.

Generally, technical analysts will use moving averages to detect whether a change in momentum is occurring for a security, such as if there is a sudden downward move in a security’s price. Other times, they will use moving averages to confirm their suspicions that a change might be underway.

. You can now build MA3, MA9, MA27, MA32, MA50, MA63, MA75, MA100 and MA200 into your strategies, giving you a greater degree of customizability for your rules.

Below is an example strategy using MA while trading on Coinrule:

Check out some of our MA templates to get started with building this indicator into your strategies:​

A guide explaining the Moving Average indicator on Coinrule!

How To Use Moving Average (MA)

  How To Use Relative Strength Index (RSI)

What is the Relative Strength Index (RSI)?

 used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to evaluate 

 conditions in the price of that security.

The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100. The RSI can do more than point to 

. It can also indicate securities that may be primed for a trend 

 in price. It can signal when to buy and sell. Traditionally, an RSI reading of 70 or above indicates an overbought situation. A reading of 30 or below indicates an oversold condition.

How the Relative Strength Index (RSI) Works

As a momentum indicator, the RSI compares a security's strength on days when prices go up to its strength on days when prices go down. Relating the result of this comparison to price action can give traders an idea of how a security may perform. The RSI, used in conjunction with other technical indicators, can help traders make better-informed trading decisions.

Generally, when the RSI indicator crosses 30 on the RSI chart, it is a bullish sign and when it crosses 70, it is a bearish sign. Put another way, one can interpret that RSI values of 70 or above indicate that a security is becoming 

 or overvalued. It may be primed for a trend 

. An RSI reading of 30 or below indicates an oversold or undervalued condition.

The standard number of periods used to calculate the initial RSI value is 14.

The RSI provides technical traders with signals about bullish and bearish price momentum, and it is often plotted beneath the graph of an asset’s price.

An asset is usually considered overbought when the RSI is above 70 and oversold when it is below 30.

The RSI line crossing below the overbought line or above oversold line is often seen by traders as a signal to buy or sell.

Below is an example strategy using RSI while trading on Coinrule:

Check out some of our RSI templates to get started with building this indicator into your strategies:​

A guide explaining the RSI indicator on Coinrule!

How To Use Relative Strength Index (RSI)

Bollinger Bands are among the most famous and widely used technical analysis indicators. They were created by John Bollinger in the early 1980’s. A Bollinger Band is a technical analysis tool defined by a set of 

 traditionally plotted two standard deviations (positively and negatively) away from a simple moving average (SMA) of an asset’s price. The SMA (the middle line) 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, it indicates that volatility is low and that a breakout could be imminent.

Determining the breakout direction is somewhat more challenging. John Bollinger suggests using a combination of other indicators, such as the RSI, in conjunction with his Bands to try and identify the breakout direction.

Additionally, if there is a positive divergence, that is if the indicators are heading upwards while the price is heading down (or staying relatively stable), it is a bullish signal and hence an upwards breakout is more likely. Conversely, if the price is moving higher but the two bands are displaying negative divergence, a downside breakout is the more likely scenario. Other important signals can come when the price breaks the Upper and Lower Bands. When the price breaks the Lower Band, it can act as a buy signal and the opposite is true when the price breaks the upper band. Let’s take a look at an example:

In the above example, the tightening of the Bands provided an indication that a breakout could be imminent. When the price broke the lower band, it would have been a great buying opportunity as there was a massive upwards breakout following this signal. 

 strategy which can be found in our Template Library:

Check out some of our Bollinger Bands templates to get started with building this indicator into your strategies. 

A guide explaining the new Bollinger Bands indicator on Coinrule!

How To Use Bollinger Bands (BB)

Learn How To Use Exponential Moving Average (EMA)

As part of our new technical indicator offerings, we have now integrated support for 

4 Exponential Moving Average (EMA) periods

. You can now build EMA8, EMA12, EMA26 and EMA55 into your strategies, giving you a greater degree of customizability for your rules.

EMAs are a type of moving average that places a greater weight and significance on the most recent data points. The 

 is also referred to as the exponentially 

. They react more significantly to recent price changes than a 

, which applies an equal weight to all observations in the period. Similar to Moving Average crossings, EMA crossings can provide important signals for traders. For example, if a fast period Exponential Moving Average (e.g. EMA8) crosses above a slower period Average (e.g. MA55) it can act as a buy signal for a trader:

Intuitively, when the fast period EMA crosses below the slower period EMA, it can act as a signal to close a position or open a short position.

Formula used to calculate EMA on Coinrule

EMA = (price - emaData[idx]) *k + emaData[idx]

k = smoothing divided by (length of the candle + 1)

EMA[idx] is the candles data feed we get from the exchange

Pre-built Templates using EMA can be found in our Template Library by seraching 'EMA' here:

Short Selling EMA Cross with Trailing Stop Loss' 

strategy. This short selling strategy works best in periods of downtrends and bearish market conditions. This strategy comes with a trailing stop loss which allows the strategy to capitalise on strong gains and helps protect your profits.

We hope you enjoy the new indicator. Happy trading!

How To Use Exponential Moving Average (EMA)

We have have now integrated support for the MFI (Money Flow Index) indicator, giving you even more customizability for your strategies! 

The MFI is a technical oscillator that uses a combination of price and volume data in order to identify overbought or oversold coins. Similar to the 

, the MFI oscillates between 0 and 100. However, with the MFI, coins are considered overbought when the MFI is 80 and oversold when the MFI is under 20. However, thresholds of 90 and 10 are also commonly used. When the MFI reaches these key thresholds, an asset could be primed for a trend reversal. Another important thing to look for are divergences between the indicator and price. If the MFI is rising while the price is falling or flat, it could be an indication that the price is about to appreciate. Similarly, if the MFI is falling while the price is rising or flat, it could be an indication that we are primed for a trend reversal. The MFI is often used in conjunction with the Relative Strength Index (RSI) to increase the reliability of signals. Let’s take a look at an example:

In the above example, the MFI dropping below 20 was an indication that a reversal was imminent. Once the MFI fell below 20, the reversal began and the price began to appreciate.

Note: MFI on Coinrule is calculated using length 14

Below is an example strategy using MFI while trading on Coinrule:

Other prebuilt strategies using MFI can be found in our Template Library:​

A guide explaining the MFI indicator on Coinrule!

How To Use Money Flow Index (MFI)

Learn How To Use Moving Average Convergence Divergence (MACD)

We have have now integrated support for the MACD (Moving Average Convergence Divergence) indicator, giving you even more customizability for your strategies!

The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of an assets price. The MACD is calculated by subtracting the 26-period exponential moving average (EMA) from the 12-period EMA.

The result of that calculation is the MACD line. A nine-day EMA of the MACD called the “signal line,” is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals. 

 Traders may buy the asset when the MACD crosses above its signal line and sell—or short—the asset when the MACD crosses below the signal line. MACD indicators can be interpreted in several ways, but the more common methods are crossovers, divergences, and rapid rises/falls. As the below example illustrates, the MACD can serve as an extremely useful signal of when to enter and exit trades. 

Below is an example strategy using MACD while trading on Coinrule and other sample prebuilt strategies using MACD can be found in our Template Library: 

A guide explaining the new MACD indicator on Coinrule!

How To Use Moving Average Convergence Divergence (MACD)

 Learn How To Use Open High Low Close (OHLC)

As part of Coinrule’s new product updates, we have now launched support for 

, giving you even more customizability for your strategies!

Candlestick charts are used by traders to determine possible price movement based on past patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. Many algorithms are based on the same price information shown in candlestick charts.

Trading is often dictated by emotion, which can be read in candlestick charts.

The image below shows Open price, High price, Low price and Close price:

Open High Low Close allows you to customize your strategies in a variety of additional ways. You can set actions to trigger when either the open, high, or low price of the current candle crosses above or below, or is less than or greater than, the current price or a variety of technical indicators including MAs, EMAs, the MACD, and more. 

Alternatively, you can use the closing price of the previous candle of the timeframe you specified. You can also set rules to trigger if the price increases or decreases by a pre-specified amount from either the open, high, or low price of the current candle, or when close is selected, the closing price of the previous candle:

A guide explaining the new OHLC indicator on Coinrule!

How To Use Open High Low Close (OHLC)

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