Quick glance: In our last tutorial analysis, we discussed RSI Divergences. In this tutorial, we discuss the difference between a fast and slow moving RSI and how to effectively use this in crypto-trading.
First let us understand what is meant by "lookback" period?
Lookback is the period under consideration. For example, typically RSI is calculated on a 14-period consideration.
2-period lookback is highly volatile and a 20-period lookback RSI would be smoother than a 14-lookback RSI.
2-RSI is a fast moving RSI and 20-RSI is a slow moving RSI.
Lookback period and timeframe are totally different. In both these charts, we have used a 1-day timeframe.
How to use fast and slow moving RSI in trading cryptos
Using fast and slow moving RSI we can place aggressive low risk trades. The key to achieving this is by determining the predominant market trend. In both the charts, we have used the 200 day - SMA to determine the trend. Price of the underlying > 200day SMA == Predominantly Bullish trend Price of the underlying < 200day SMA == Predominantly Bearish trend
Buy when: *Price > 200-SMA *2-RSI < 5
Sell when: *Price < 200-SMA *2-RSI > 95
Please note: One of the most best ways to catch the trades on fast moving RSI could be using algo-trading. It would ensure that accurate signals are not missed! ------------------------------------------------------------------------------------------------------------------------------------------------------------------- Any feedback and suggestions would help in further improving the analysis! If you find the analysis useful, please like and share our ideas with the community. Keep supporting :) - Mudrex
Many thanks for your sharing. However, I notice that if we look back a bit further from your example, there are many time the signal met by RSI but the result is not that impressive as that. How do you filter the high quality signal for a trade?
Keep up with the good work, man!!!
Mudrex
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@Tradingleveling, that's a very good observation! I always believe that one indicator or one pattern can never give the best results all the time. overall goal is to build wealth with minimal risk, and that should be the only ideal approach :)
BillAnt
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I will have to investigate Mudrex.com a bit, because manual trading is getting a bit old and too time consuming.
What kind of win/lose % can be achieved using bot-trading on average?
Mudrex
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@BillAnt, varies from strategy to strategy, and on one's risk appetite. There are plenty of options. cheers:)
BillAnt
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@Mudrex, Gulp! No appetite for much risk taking, in fact hate losing. lol
Mudrex
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@BillAnt, And that's the first rule of trading: never lose money! That's why I mentioned the availability of different options. algos can be set to take trades with minimal risk, and capturing the full potential of a trend.
here is another great strategy that can be best suited for also-trading in cryptos. feel free to check this out on Tradingview:
YMGroup
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Logical chart !
Mudrex
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@YMGroup, just trying to create good content for the community. thanks man :)
those likes/comments/feedback motivate me to keep doing these analyses