Simple MACD, MACDSIGNAL, Stochastic Oscillator K and RSI trading strategy template
Strategy template description
This strategy identifies a period of uptrend using RSI and it searches for more fine-grained entry points using MACD and Stochastic.
It will exit when the trend is exhausted and identified either by RSI or Stochastic.
Safeties are usually helping and it's something each trader can play out with. Start backtesting and see what works best.
Step 1: Login and click on Create Strategy
Once you're logged in to the Vestinda app, click on Create Strategy from the left menu.
Step 2: Use a strategy Template
Click on Use a Strategy Template from the overlay.
Find the template in the list and click on "Use this Template" button
The template name inside the Vestinda app is Template RSI MACD Stochastic. You can find it on the Templates page here: https://app.vestinda.com/templates
✅ Everyone has access to templates. You can use it to create trading strategies without coding skills and jump-start learning.
Step 3: Learn how the strategy works
Once you reach the template page, you have the entire strategy code ready to be used.
You can see the parameters for each indicator, but also modify the timeframe and all parameters.
Step 4: Backtest strategy or Demo Trade
Before any execution, backtesting the strategy is the best place to start from. You can do it on thousands of assets and many years of historical data.
This is helping you learn how to use these indicators, in what market conditions they work best, and what assets to trade using this strategy and indicators. Read more about Backtesting.
Demo Trading is another way to simulate the strategy without risking real money. This allows you to start using the strategy on the market moving forward on any available asset. Read more about Demo Trading.
Step 5: Results
This is the result of backtesting this template on BTCUSDT on a 12 months period from Feb 2022 to Feb 2023.
With a simple strategy like this, we got an outcome that returned better than the benchmark. Profitability is not great, but adding more filters to the entries can help
Once you're confident enough, you can start Real Trading.
Indicators in the strategy
The Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator used in technical analysis. It is calculated as the difference between a security's 26-period exponential moving average (EMA) and its 12-period EMA. A 9-period EMA of the MACD, known as the "signal line", is plotted on top of the MACD to act as a trigger for buy and sell signals.
The MACD is commonly used to identify changes in momentum and trend, as well as potential trend reversals. A bullish signal is generated when the MACD line crosses above the signal line, while a bearish signal is generated when it crosses below the signal line. The MACD can also be used in conjunction with its histogram to identify trends, momentum and potential divergences.
MACD Signal refers to the 9-period exponential moving average (EMA) of the Moving Average Convergence Divergence (MACD) line in technical analysis. The MACD Signal line is plotted on top of the MACD line and acts as a trigger for buy and sell signals.
In the MACD indicator, a bullish signal is generated when the MACD line crosses above the MACD Signal line, while a bearish signal is generated when it crosses below the MACD Signal line. The MACD Signal line is used to confirm changes in momentum and trend, and can also be used to identify potential divergences between the MACD line and the price of the security being analyzed.
Stochastic Oscillator K
The Stochastic Oscillator K is one of two lines in the Stochastic Oscillator technical analysis indicator. It is used to measure the level of a security's price relative to its price range over a specified number of periods.
The Stochastic Oscillator K line is calculated as the current closing price of a security divided by the highest high and the lowest low over a specified number of periods. The resulting value is then normalized to a value between 0 and 100. When the Stochastic Oscillator K line is above 80, the security is considered to be overbought, and when it is below 20, it is considered to be oversold. A bullish reversal is indicated when the Stochastic Oscillator K line crosses above 20, while a bearish reversal is indicated when it crosses below 80.
RSI (Relative Strength Index)
The Relative Strength Index (RSI) is a popular momentum oscillator used in technical analysis. It measures the strength of a security's price action by comparing the magnitude of its recent gains to the magnitude of its recent losses and normalizing the result into an index value that ranges from 0 to 100.
RSI is often used to identify overbought and oversold conditions in an asset, as well as potential trend reversals. Values above 70 are considered overbought, while values below 30 are considered oversold. A bullish reversal is indicated when the RSI value crosses above 50, while a bearish reversal is indicated when it crosses below 50.
This template is inspired by the following video: