Buy low and sell high is every trader's mantra. While this approach looks straightforward in theory, it's sometimes challenging to put into practice. That requires cold-blood and stress-management to buy when the price drops. But that is not enough. You will also need resolution in selling when the price is rising.
RSI is a useful tool to implement long-term and effective trading strategies. Nevertheless, catching the right time to buy the dip may be tricky. This automated trading strategy is the maximized version of a standard RSI trading system.
How it works
The strategy buys when the RSI is lower than 35, and at the same time, the price is below the MA100. In this way, the bot won't buy the dip too early, increasing the profitability of the strategy.
The position closes when the RSI value is above 65. Depending on the coins' volatility that the strategy will trade, it's possible to adjust the RSI exit value to chase larger profits. In times of Bull Market, the RSI could also be above 70.
The setup is optimized on a 15-minutes time frame and trading cryptocurrencies versus USD or stable coins.
The following are the results of two backtests on the same coin over the same period. In both cases, the strategy buys with values of RSI lower than 35.
In one case, the strategy buys when the price is above the Moving Average 100.
In the other case, the buy signal comes with a price below the Moving Average 100.
The results show that excluding trading when the price is above the Moving Average 100 allows the strategy to trade only when it's more profitable.
Build the strategy on Coinrule
Pro tip: The 1Day time frame has proven to return the best results on average. The strategy can work well also in the 15-min time frame.
This strategy made 60% net profit on BNB/USDT on the 1Day timeframe from January 2022 - December 2022.
Backtest the strategy on Tradingview
You can backtest this strategy using this trading script published on Tradingview. You can test the results on historical data, selecting the coin of your choice, and adjusting the parameters to fit even better your needs.