For the past couple of days, I've been testing Gekko BTC trading bot, executing a few trades running the bot on my laptop, ending to build a VPS to run Gekko trading bot on a cloud. As you can see for right now - I'm fully determined to master this trading bot.
To master trading like a pro some should learn basic technical analytics, in today's article, I will speak about using Relative Strength Index (RSI) for crypto trades. I believe RSI is one of the easiest ways to trade cryptos.
Disclosure: I'm not a financial advisor and I don't give you any advice, I'm just sharing my own experience. Investments in stocks, funds, bonds or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.
RSI (Relative Strength Index)
The relative strength index (RSI) is a momentum indicator developed by noted technical analyst Welles Wilder, that compares the magnitude of recent gains and losses over a specified time period to measure speed and change of price movements of a security. It is primarily used to attempt to identify overbought or oversold conditions in the trading of an asset.
Backtest
For following backtests I will use data for BTC/EXP on Poloniex.com exchange for a time period (2018-02-01 00:00 - 2018-02-19 16:59)
Importing data for backtesting on Gekko
Once the import is done, we are ready to start backtesting. I will start with a default RSI backtest offered out of the box:
- Candle size:1 hour
- Warmup period: 10 hours
- Interval: 14
- Persistence: 1
Backtest BTC/EXP 1 hour candle
Nice, with failing market by -13% and with just 4 trades our simulated profit would increase by 7.7% in just 19 days. Results are pretty impressive. I mean +7.7% in a falling market. Awesome.
I like the above chart for 75%, let me explain - those 2 red dots means bot have sold EXP back to BTC, while 2 green dots means bot have bought EXP. I don't like the first green dot, when bot has bought just shortly before the dip. I can explain this simple, probably the warm-up period of 10 hours wasn't enough. Not sure. What I really like - bot have sold at the peak twice.
Well, as we can see from the graph above there are more ups and downs in the chart, let's see if more trades would happen if we would adjust Gekko trading bot
- Candle size:30 minutes
- Warmup period: 5 hours
- Interval: 14
- Persistence: 1
Backtest BTC/EXP 30 minutes candles
Wow, in the same 13% falling market bot have made simulated profit +17% with just 8 trades
Using 30 minutes candle size Gekko trading bot has noticed 2 more large ups and downs.
17% gains in just 19 days is Awesome, but let's try push harder and see what could we get from 15 minutes candle size
- Candle size: 15 minutes
- Warmup period: 2 hours 30 minutes
- Interval: 14
- Persistence: 1
Backtest BTC/EXP 15 minutes candles
Still good, better than 1-hour candles, but worse than 30-minute candles, let's see what will happen with 5-minute candle sizes:
- Candle size: 5 minutes
- Warmup period: 50 minutes
- Interval: 14
- Persistence: 1
Backtest BTC/EXP 5 minutes candles
Trying to scalp more would give a negative -2.32% growth. last but not least, let's try 1-minute candle sizes:
- Candle size: 1 minute
- Warmup period: 10 minutes
- Interval: 14
- Persistence: 1
Backtest BTC/EXP 1 minute candles
Surprisingly but trying to scalp each movement might work, and actually gives a simulated profit of almost 8% in the same falling market. Amazing.
Now, you have some basic idea how to trade with RSI method in Gekko trading bot, also now we know that changing candle sizes can change the total profit drastically.
Do your backtesting for each coin, before you are planning to execute live trades. In fact, I would recommend backtesting at least 3 months of data. Also, I wouldn't encourage to trade with all of your capital. Play with some play money you are comfortable to lose.
Disclosure: I'm not a financial advisor and I don't give you any advice, I'm just sharing my own experience. Investments in stocks, funds, bonds or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset.