Not all dips are the same.
When the asset is trending in a steep downtrend, buying the dips may remain stuck with a position in loss for a while. This strategy helps you catch the dips on assets that are not signalling signs of weakness yet. That allows the strategy to increase the percentage of profitability of trades.
In the example below, you can see how the strategy works in practice.
The chart shows the same trading pair, KEEPUSDT, on three different time frames. From top to bottom, the 4-hr, the 1-hr and the 5-min.
The base condition for this strategy to run is to scan for coins trading sideways or on the uptrend to avoid trying to catch falling knives. The rule then executes on short-term dips.
The resulting trades open and close relatively quickly, with an average lower than one day. That is one of the advantages of this strategy, as it is less affected by changing market conditions.
The strategy opens the trade when the same time
the RSI is greater than 50 on the 4-hr time frame
the RSI is greater than 50 on the 1-hr time frame
the RSI is lower than 30 on the 5-min time frame
The trade is closed on a rebound that pushes the RSI above 65 on the 5 min time frame.
Build the strategy on Coinrule
You can find the strategy in our template library or you can create it step-by-step from scratch using this setup.
To adjust precisely the strategy to your needs, you can run a less aggressive version using the THEN operator, instead. That will open only one trade at a time.
This strategy is an optimised version of the classic Catch The Price Swing strategy.
Pro tip: The 45-min time frame has proven to return the best results on average. The strategy can work well also in the 5-min time frame.
This strategy made 81.82% net profit on BNB/USDT on the 45-min timeframe from January 2022 - November 2022.