Who Else Wants to Profit with the Gunbot ADX Crypto Trading Strategy?
Gunbot Strategies 101
All Gunbot traders strive to build their own profitable strategies, either on their own asking on the Telegram channels or even downloading one ready-made in the Gunthy Marketplace, all with the same goal of finding a reliable crypto trading strategy.
So my goal with this article is to explain how to set up a strategy using the ADX indicator (ADX) Average Directional Index.
Identifying a strong directional movement is the most important thing for a trader, regardless of what type of trader you are.
After you enter a position, you need a strong move in your trade direction to make a profit.
Gunbot Strategies ADX
ADX is the Trend Strength Indicator and identifies when the price is trending strongly and measure trend strength.
It is worth noting that the indicator is non-directional and will measure the trend strength by rising in both uptrend and downtrend.
You can read more specifics on the Average Directional Index in Investopedia.
As a rule of thumb, let me tell you that when the ADX indicator is reading below 25, you can consider this a non-trading period or range market on which you shouldn’t enter the trade.
On the other hand, a reading above 25 is enough to signal the presence of a strong bullish or bearish trend, hence indicating it is time to get in or out, depending on your position.
This setting you can find in Gunbot as “ADX_LEVEL,” and the default value is, of course, 25, so you can leave that with the default setting.
The ADX indicator uses a smoothing moving average in its calculation, and you can find out that the best ADX indicator setting to use is 14 periods, which is also set as a default in your Gunbot Strategies section, and the name is “DI_PERIOD.”
You can argue that you can combine this with other indicators ts, and yes, it could give you more confirmation, especially the RSI.
For example, you can use it to gather your entry signals while the ADX already told you the intensity.
In this article, especially when you trade with any Gunbot strategy, I recommend you keep it simple because the more indicators you add, the more checks the bot will have to go through.
Gunbot Strategies are executed following the “AND” rule, and not “IF, THEN” Every strategy condition for trade must take place at the same time.
The rules are set in place by now in your bot, but what if you don’t have Gunbot yet?
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Okay, allow me to explain this Gunbot strategy to understand the rules and apply it for manual trading.
These Average Directional Index trading rules will ensure that you only trade when there is a strong trend regardless of the Time Frame you choose.
Gunbot Strategy Rules
Rule #1: The ADX Indicator must-read above 25; this will confirm a trend development.
Rule #2: Check the Direction of the Trend; for this, you can add the 20 or 50 Moving Average indicators, and if you’re in a lower time frame, feel free to zoom-out to the daily to make sure you get a bigger picture of the overall market trend for the particular pair of your choice.
Rule #3: Use the RSI indicator to enter or exit the trade; as a rule of thumb, when RSI is under 30 shows an oversold market and a reversal zone, while RSI over 70 will indicate overbought.
Please note that these values are not set in stone, and smart trading means looking beyond what the textbook says, but overall at least you got an edge to enter or exit and some values to go from.
Rule #4: Protect your money with Stop Loss, or if you’re a Gunbot user, you can choose the Dollar Cost Average (DCA) feature, but in any case, your decision should be made before you enter the trade, and in Gunbot case you can preset this also in your Gunbot strategies page on the GUI or in the JSON file.
If you’re trading manual, you should profit when the ADX indicator goes back under the 25 mark since that would indicate you the trend is running weak.
In case you’re using Gunbot, you already had your GAIN set up beforehand.
The bottom line is that n my experience, the best profits come from catching strong trends, and the ADX strategy can help you with that.
But this is just one simple strategy, by no means better than any other one you may see, just a set of rules to follow that can help you accomplish your trading goals.
As a Disclaimer, I must add “This Is Not Trading Advice” this strategy is meant for educational purposes. Use it at your discretion. It is just my personal experience and one of the basic Gunbot Strategies.
I really hope this article helps you understand a bit more about Gunbot Automated crypto Trading Strategies and win some trades.