In today’s video we are going to talk about a simple 2 RSI trading strategy. This strategy is based on 2 different RSI indicators and we are trading on a 15 minute timeframe. First I explain the strategy, after which I test it live (in the video) so you can see that the strategy really works.Before you start with the strategy, it helps to know what the RSI exactly means. Below the price we see the RSI indicator. The indicator shows an average line of the price.
With this average line, you can easily tell if the price is moving above an average interest price or below an average interest price.
The indicator has a value from 0 to 100 between which the line moves.
Two of these values are the most important.
We can easily where these two levels are on the indicator. The bottom row has a value of 30 and the top row has a value of 70.
With this information, we can map two important areas. A rising line above the 70 value means the price is overbought. In other words, the price is higher than the average people are willing to pay and the price may drop again as a result.Is the line below the value 30? This means that the price is oversold. In other words, the price can rise again..Now that we know this, we can take the next step. The next step is to add the RSI to the chart again. Make sure you now have 2 different RSI indicators.
Double click on the bottom indicator and go to the inputs and change the delay to 4 hours.
This means the lower RSI is now calculating the average trend on the 4 hour chart. You will also see that this RSI is moving much slower.
At this moment, we can see in a second what price is doing on both the 15 minute chart and the 4 hour chart.What we are looking for now is, we wait until the lower RSI is overbought or oversold. Here we see on the price that the RSI on the 4 hour time frame is oversold.
Buyers may therefore be able to enter, as the price is now cheap on average.Now that we know the price over the 4 hour period is oversold, we can take a look at the 15 minute period RSI. We also want to see an oversold signal here so that we can buy a position.
We are now seeing a low average on the price of the upper RSI at the same time as the lower RSI. This gives us enough confirmation to open a position. But we will still wait.
Of course you need an exchange to open a position. Since we are trading in cryptocurrency we can recommend you Bybit.
Bybit offers a $1700 one-time signup bonus for free trading, so it’s worth to check it out.Now that we know that the price on both indicators is favorable to buy, we are still waiting for further confirmation. We wait for the RSI over the 15 minute period to cross the 30 line again. This indicates that the buyers are actually entering because the price is rising again. So we are still waiting for certainty that other traders will step in as well.
Here you see on the price that the RSI crosses the 30 line again. We are now opening a long position. This means that we expect that the price will rise again.Now there are some things to watch out for. These are the points at which you sell the position again for a profit and the stop loss at which you sell the position again at a loss to avoid further losses.So, we first open a position on Bybit as soon as the line crosses line 30 again over the 15 minute RSI period. After that, we always set a stop loss first. We place the stop loss below the last low.
The target we aim for is always twice the size of the stop loss. This means that we always go for a risk / reward ratio of 2. We are therefore doubling our position. You can see that this position closed well with a profit.
I’ll show you another example.
Here we can clearly see on the price that the RSI over the 4 hour period goes below the 30 level. In addition, we also see that the 15 minute RSI goes below the 30 level.
Then the RSI over the period of 15 minutes goes back above the 30 level, which allows us to buy a position.
We place the stop loss below the last drop and set our target at twice the stop loss. You can see that this position also closed well with a profit.
A little further on the chart, we immediately see another entry point. Both indicators move below the 30 level and then we see the 15 minute RSI line move back above the 30 level, so we can open a position again. We place the stop loss below the last low and the target twice the stop loss.
As you can already see that this strategy is very profitable. But, to provide full proof of this, I will test the strategy a few more times live to make sure you can execute this strategy. (check the video).
In a month and a half, I opened a position 15 times. Only four of them were a stop loss and 11 positions were profitable. On the 11 profitable positions, I won 2 times my stake, so I earned 22 times my stake.Out of these 22 times, I take a stop loss 4 times, leaving me at 18 times my stake. Great profit as you can see. Suppose you, as a beginner, only have a little capital at your disposal and, for example, only wanted to lose $ 50 on a stop loss. You would still have earned $ 50 x 18 times, or $ 900 in a month and a half.If you are more experienced and, for example, you can lose $ 500 on a stop loss, you would have made $ 9,000 in a month and a half.
Don’t want to analyze the chart yourself? I recommend you take a look at our home page. With the Prämie subscription, we analyze for you and we just tell you when we have found a trade. All you have to do next is open the position yourself and enter the stop loss and take the profit.