What is RSI and how can you use it in Gunbot?
RSI stands for Relative Strenght Index and this technical indicator can be used to see if there are more buyers or sellers on the market. It will allow you to easily see if it is expected that the price direction is likely to change. The RSI has a value between 0 and 100 and is being calculated over a X amount of candles, 10 is the most common use value however.
RSI has 3 main areas
To make it easy for you to spot when the price trend is likely to change the RSI chart is devided in 3 areas. There is no set rule for how to devide the areas but there is a ‘standard’ that is most commonly used.
- 0 – 31: Oversold
- 31 – 70: Neutral
- 71 – 100: Overbought
The lower area we call oversold. This means that if the RSI is between 0 and 31, the coin is being sold a lot and it is to be expected that the price is going up. The center area is the neutral zone, if the RSI is between 31 and 70 then the price trend is either going up or down or sideways, but no reversal is to be expected soon. The upper area is called overbought and when the RSI is between 71 and 100 there are a lot of buyers and it is to be expected that the price will go down.
So when RSI is lower than 30 it is a good time to buy, when it is higher than 70 it is a good time to sell.
How do you use RSI within Gunbot?
Within Gunbot you can use RSI only as a confirming indicator, meaning that it is only used as extra confirmation on top of the normal buy and sell strategies.
Example: Your buy strategy thinks it is a good price to buy, Gunbot then checks if the RSI is 30 or lower (you may set this value to whatever you want). If it is, then Gunbot will indeed make a buy order, but if it is higher than 30 then Gunbot will keep monitoring the RSI until it drops below 30 so it can buy. If it drops below 30 and your regular buy strategy thinks it is not a good moment to buy anymore, Gunbot will NOT buy. Both the normal strategy as the RSI conditions will have to be good.
If you want to start using RSI as a confirmation on buy orders, go to Settings > Strategy configurator and select the strategy you want to use it on.
As you can see above there is an item called RSI Buy Enabled, click the button next to it to activate it, it will turn blue when active. You are now using RSI as confirmation for buy orders but like previously mentioned, you can set the RSI Buy Level too. This is normally set to 30, if you want to change it you can but we highly reccommend you use the Backtesting add-on to find out what the best setting is. A change in value from 30 to 40 could really make a BIG difference, either positive or negative. When the RSI Buy Level is set to 30, a buy order will only be placed if your buy strategy settings are met AND RSI is 30 or lower.
If you want to use RSI for selling too, then enable RSI Sell Enabled and set the RSI Sell Level accordingly. This is set to 70 by default, so Gunbot will only make a sell when your sell strategy is met AND RSI is 70 or above. You can also choose to change the amount of candles Gunbot uses to calculate the RSI, you can do this with the RSI Length parameter which is set to 14 by default. Again, the backtesting add-on is a great tool to see if it is worth changing it at all. And last, you can choose if you want to use the default RSI method oscillator or cross. Change this if you know what you are doing.
For a list of all of the confirming indicators that Gunbot offers, click here.