Hi there, and welcome to Coinrule’s 12th strategy of the week video. This week’s strategy will utilize exponential moving averages or EMAS, and the Relative Strength Index, or RSI to enter trades. The strategy will not require TradingView signals and is available as a template on Coinrule. This means it will be extremely easy to set up and start running. We do also have the associated script for the strategy available on TradingView. So, if you want to backtest the strategy, you can do that. More on that later.
EMAs are a type of moving average that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. An exponentially weighted moving average essentially reacts more significantly to recent price changes than a simple moving average, which applies an equal weight to all observations in the period. RSI or relative strength index is a move momentum indicator used in technical analysis. It measures the speed and magnitude of a coin’s recent price changes to evaluate overvalued or undervalued conditions in the price of that coin. The RSI is displayed as an oscillator a line graph essentially on a scale of 0 to 100. When the RSI reaches oversold levels, it can provide a good signal to go long. When RSI reaches overbought levels, it can mark a good exit point or alternatively an entry for a short position. Traditionally, an RSI reading of 70 or above indicates an overbought situation or a reading of 30 or below indicates an oversold condition. To enter trades the strategy looks for all of the following conditions to be met. The first is the EMA8 has to cross above EMA55. Just like this example here. Remember, a fast period EMA crossing above a slow period EMA is a bicycle and vice versa. At the same time, this happens we will also require the RSI to be below 70 And to have increased by 5.
To exit trades, the strategy looks for either one of the following conditions to be met. First is EMA5 crosses above EMA8. Or if the price increases by 7% from entry. Whichever one of these occurs first, will close the position. Okay, first, I’ll show you how to backtest the strategy on TradingView and first, we have to find the script on our profile. This is it here, I added the direct link to this in the description.
And scroll down you’ll get a description of the entry and exit conditions. You also get some backtesting data for this specific coin here, which is AVA USDT on the two-hour timeframe. And scroll down. Click Add to favorite indicators here. And then come to the chart that you wish to test on and click indicators here and then type EMA crossings, here you the RSI. Click it and will be added to the chart, you’ll see you’ll get some backtesting data here. If you change the pairing up here or the timeframe, the backtesting results will automatically change.
So, let’s see we’ll see how it performs in the 30 minutes instead of the two-hour you can see performs better. And so, this will give us an inclination they might work better on shorter timeframes rather than longer timeframes. But that’s not necessarily true. But I’m just trying to draw some inference from this data here.
So, we can see here that in 80 trades here, we made 20.24% net profit with profitable 32.5% of the time with a max drawdown of 13.4%. So, I suggest playing around with the range of timeframes and pairings to find one that really works well for your own strategy. But if you’re happy with this performance, just come to Coinrule. First, select the exchange you wanted to run on. Come to templates. Up here, click search and click EMA crossings.
With RSI, click here, and select it. And you can see that the strategy is already pre-loaded for you. So, you just have to select a few things you have to select what timeframe you wanted to run on all and also what coin as well you want it to run on. So, if you want to use this, the backtesting data here to find a specific coin in pairing that works really well. You can use that. I’m actually just going to use any coin scanner to let this strategy run across all coins in the market. This is the advantage of not using TradingView signals as we’re able to use this with any coin scanner.
So, let’s see if any coin is EMA8 crossing above EMA55 in a timeframe of 30 minutes. And then, “and that coin” is RSI lower than 70 in the timeframe of 30 minutes, ‘and that coin’ is already increased by 5 within 30 minutes. Just remember these are the entry conditions here and I want to buy $1,000 of that coin with my USDT wallet as a limit order. And then if that coin is EMA55 crossing above EMA8 in a timeframe of 30 minutes or that coin is price increased by 7%. From the price of which I bought; these are the exit conditions. Remember that I want to sell 100% of the amount I bought of that coin to my USDT wallet as a limit order. I want to start immediately and execute 100 times in total. And we’ll call the strategy EMA Crossings with RSI. If you’re happy with this, click launch, we’ve got a little snapshot here of the rule. And then click Launch.
There we go. The strategy is now live. It’s a nice simple one to get up and running. Thank you very much for listening to the strategy of the Week Video. Really excited to see what you create. Please reach out if you’ve got any questions. Thanks a lot.
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