This strategy is based on the RSI indicator. It buys an asset if the price is below the "oversold" RSI level, and sells when either than profit target or stop-loss level has been reached or when RSI is above "overbought" level.
The Relative Strength Index (RSI) is a momentum indicator used in technical analysis that measures the magnitude of recent price changes to evaluate overbought or oversold conditions in the price of an asset.
How to configure Mean Reversion
Exchange: The exchange to run this bot on
Market: The pair (symbol) to trade. Quadency's standard convention is Base/Quote. For example, in BTC/USD, BTC is the base currency and USD is the quote.
Starting Capital: The maximum amount of Quote currency available to the bot for trading. When backtesting, this value can be any amount. However, in live trading mode, the bot will stop trading if funds available in the Quote currency wallet become insufficient. Click here to view the minimum order size guide.
Candle timeframe: Select the chart time frame for this strategy. The timeframe can go from 1 minute up to daily. The smaller the candle timeframe is, the more trades will be placed and vice-versa.
RSI Overbought level: The level where the market is considered overbought/overvalued where a sell signal will occur.
RSI Oversold level: The level where the market is considered oversold/undervalued where a buy signal will occur.
RSI period: this is the number of candles to look back to calculate the RSI
if 20 is selected, the RSI will be calculated using the last 20 candlesticks.
Note: RSI overbought level should have a higher value than the RSI oversold level.
Buy Condition: Price is below the defined "Oversold" level - Buy using 100% of starting capital
Sell Signal: Profit Target or Stop-Loss (option 1), or Indicator Confirmation (option 2)
Close the position when Profit Target or Stop Loss is reached (Overbought level will be ignored)
The position should only be closed when RSI is above defined RSI "Overbought" level (stop-loss and profit target will be ignored).
This strategy sends all orders as Market orders. It is advisable to trade pairs with sufficient liquidity to avoid slippage. Thinly traded markets can result in worse than ideal fills, causing the profits to be smaller than expected.
Shorter candle intervals result in more frequent trades than longer ones
Tighter profit target and wider stop-loss will result in smaller but frequent profits
The bot evaluates the position at the end of each candle interval, it is possible for the bot to not place any order if the conditions are met within the candle timeframe but not at the end.
Be sure to back-test your settings before starting live to make sure the strategy performs well on the market and the timeframe selected
Any profits from trades are automatically reinvested in subsequent trades. For example, if you start the bot with $100, and the first trade results in a $2 profit, the next trade will use $102, and so on.