When learning about technical analysis or developing trading strategies, RSI is a popular tool that can improve approaches while trading.
This method comes in handy for identifying trade opportunities across the crypto markets. Crypto traders use the RSI indicator to evaluate market movement and buy or sell signals.
The most used settings vary between the 14-period average and RSI oscillates between 70 and 30 values for its indicators.
Yet, just like other technical analysis tools, this indicator can be used in any time frame suitable to your trading objective.
But before going any further, first, let’s learn what RSI is.
RSI – benefits and usage
The Relative Strength Index (RSI) is a technical trading indicator that is widely used for measuring price movement speed and change.
The index helps identify whether a coin is oversold (a suitable entrance opportunity) or overbought (an exit/entry point for a short position).
RSI fluctuates between 0 and 100 and is usually considered overbought at 70 and oversold at 30.
Essentially, an overbought coin is regarded as more expensive than it should be, and an oversold coin is considered cheaper than it should be.
When the RSI of a coin reaches these two key levels, it indicates that it could be primed for a trend reversal.
How to use RSI bots
Finding the correct time to buy the dip can be difficult. RSI bots can automate your trades to help you time your entry to minimize further downside when buying the dip.
Using trading bots makes it possible to take advantage of these overbought and oversold conditions. Let’s look at an example of a simple automated RSI bot:
- IF any coin has an RSI lower than 30 in a timeframe of 1 day, buy 100 USD of that coin with my USDT wallet as a limit order;
AND THEN
- IF that coin has an RSI greater than 70 in a timeframe of 1 day, sell 100% of the amount bought of that coin to my USDT wallet as a limit order.
Essentially, this rule will automatically buy any coin that has an RSI lower than 30 on the daily timeframe and sells 100% of the amount bought of that coin when the RSI is greater than 70.
This is a very simple rule and can be taken much further by using a range of other technical indicators, such as moving averages.
Platforms that use RSI bots
1. Coinrule
Coinrule is one of the tools that use this kind of method. This tool is a smart trading bot for cryptocurrency platforms, allowing users to take full control of their crypto trading while fighting back hedge funds with automated bots.
With over 180 pre-built trading templates to pick from, the Coinrule offers a broad range of options for traders who are unclear on how to get started.
In addition, the tool provides real-time customer service and enables users to assess rule performance using historical data.
Coinrule also allows you to test your strategy using comprehensive backtesting data, and you can trade 24/7.
2. TradeSanta
TradeSanta is a cloud-based crypto trading software suited for both beginners and professional traders. The platform works 24/7 and can be hooked to many crypto exchanges like any other crypto platform with trading bots.
The trading software features can be used for long and short trades. You can set them up to buy low and sell high or vice versa and leave them to manage the trades based on the conditions you’ve specified.
TradeSanta uses multiple indicators, including Bollinger Band, MACD, and RSI.
3. CryptoHooper
CryptoHopper is a cloud-based crypto trading bot that uses an algorithmic programmed trading method and enables users to execute smart trades using external signals.
Traders can connect anytime and use it with 9 different cryptocurrency exchanges. With it, they can leverage free and paid signals from different sources. It works 24/7 and trades multiple cryptos, having as indicators Stoch, RSI, Bollinger Band, and many others.
Conclusion
Using RSI indicators can be handy, as it’s an effective tool for mapping out high probability entry points, especially for day traders.
The RSI bots further make things easier for you as it does not require your constant supervision or having to manually manage your trades.
And that’s the beauty of crypto trading bots. They’re the best option for traders that don’t want to spend all their time in front of complicated interfaces, as automation can make the best decisions to earn from market volatility.
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