Trading Indodax Using the Stoch RSI and RSI Indicators
Have you used the Stoch RSI and RSI (Relative Strength Index) indicators to analyze a coin/asset? If not, let’s look at the following article, which results from an Indodax member’s writing!
StochRSI and RSI are indicators used to analyze whether a coin/token is in an oversold or overbought phase. However, in this article, we will not go into detail about what StochRSI and RSI are but more about how we determine when to buy and sell a coin/token using the StochRSI and RSI indicators.
Example of a Bitcoin chart with a timeframe of 4 hours/hours
- An example of determining the timing of buying coins/tokens
Here the standard Stoch RSI settings are LengthRSI 14, LengthStoch 14, SmoothK 3, and SmoothD 3, and the RSI length setting is changed to 7 because it is better for small timeframes. When the stochRSI line is below the box, it can be said that the coin/token is oversold, and this is a good time for us to buy the coin/token. And the best time, in my opinion, to buy a coin/token is when the blue stoch RSI line crosses or looks like it will cross the red line outside the bottom box, and at the same time, the RSI is also below 30. Then what if the line crosses inside the box, like:
- Cross in the box
In my opinion, buying a coin is risky when the stock value is already high, especially near the upper limit of the box, but this can be done if we still have capital left. But remember, indicators are not always 100% accurate. We have to stay on guard and make a stop loss / cutloss if the price drops. And in my opinion, the loss limit that must be cut is in the 5-10% loss of the total assets we use to buy the coin/token.
Lastly, when should we sell the coins/tokens we bought earlier? Look at picture 3:
- Selling coins/tokens
Based on Figure 3. It can be seen that the right time to sell the coin/token is when the coin has shown an overbought indication or when the stochRSI is already above with signs of wanting to cross down with the RSI already above 70. But we don’t have to wait for it to cross and rsi is leaning down just selling. We can sell when we feel the profit is enough and wait again when the stochRSI and RSI are below again or look for other coins/tokens whose stochRSI and RSI are still like picture 1.
If we buy coins/tokens at the right time described above and sell them at the same time as described, we can get a profit of 10-14% in less than 1 week. stochRSI and RSI, we can get a profit of about 30-40% per month. But keep in mind that we don’t always make a profit. Sometimes, things get in the way, like FUD or bad news from various parts of the world. Yes, back again, we must have a target stop loss / cutloss. If we play trading with a short/short time range, we must be brave to stop loss/cutloss. And if we experience a loss, don’t give up immediately. Get back up and use the procedures explained to determine a good time for us to buy and sell a coin/token.
In closing, buy coins/tokens with more hits or have many events and use the methods described. To find out what coins will hold events and what events will be held, visit the coinmarketcap.com website. And don’t forget when we find a coin/token that hits again or the event is good, continue to analyze using the Stoch RSI and RSI indicators as explained to get the maximum profit.
Ramba Kuntala Sadean, a participant in the Indodax Academy article writing competition, wrote this article.
