How does the RSI stick work?
RSI is a very popular technical indicator. Traders prefer to use it to determine whether a market is overbought or oversold. These RSI levels are also used in automated trading, for example with RSI bots.
What is RSI?
The RSI indicator was developed in the nineteen seventies. In a short period of time, this indicator has become very popular as it can effectively show if a market is overbought or oversold.
Let's see what are the main characteristics of the RSI!
The RSI index can show the momentum of the market on a scale between 0 and 100.
The calculation is based on the last fourteen periods. A period is defined by a candle.
The indicator, as already mentioned, is an indicator of oversold and overbought.
In general, a value above seventy indicates overbought, while a number below thirty indicates oversold.
Convergence and divergence are the strongest indicators of the index.
What is convergence and divergence?
They show the movement of the market price and the RSI oscillator relative to each other. When the price and the RSI move in similar directions, they are said to be converging, when they move in opposite directions, they are said to be diverging.
Automating the RSI strategy
If we want to trade automatically, we can easily delegate the repetitive tasks of our strategy to trading robots.
The RSI bots will check the RSI level of the crypto market and then, according to the rules we specify, they can set up transactions for us. If the prices show the RSI values we have set, they will place buys or sells for us.
What are the benefits of automated trading?
Those of you who have been trading cryptocurrencies for a long time know exactly how tedious it can be to do all the tedious, manual processes yourself. Fortunately, if you don't want to deal with these tasks, you can now turn to automation for help. Trading robots can evaluate data and open or close positions in seconds, at any time of the day, according to the strategy we have set.
How to trade with the RSI bot?
With such a trading software, we can specify the percentages at which we want to start buying and the percentages at which we want to sell. Moreover, we can set up more than just one trade. Thanks to this, we can increase our profits until the market reaches the set selling level.
In addition, we can also specify that if the sell price is lower than the buy price, the bot should not execute the trade. This control is performed by a control system that analyses the buy positions against the sell prices in each case, and only allows those trades to be executed that will generate a profit for us and not a loss.
With our remaining position, we have two options. One is to hold them until market trends change to the point where we are able to make a profit on them. The other option is to enter a fixed profit percentage in the system. In this case, the trading robot will automatically sell our assets when the market reaches the right price level.
Remember, automated trading robots never get tired! They can automatically manage our investments around the clock. We just need to focus on making the right settings and monitoring the results.