Discover 9 of the Most Used Gunbot Technical Indicators
How to Apply Trading Indicators to Your Gunbot Strategies. Learn the Fundamentals of Crypto Technical Analysis. A simple guide to help your TA understanding.
Gunbot uses many of the technical indicators that professional traders widely implement in Forex and the Stock Market; you can define your trading strategies with them.
Therefore is important that you understand what those indicators do so that you can use them properly to your advantage, and that’s the main focus of this article because…
One of the critical factors for a successful crypto trading career is the proper knowledge about the different components involved in this business, specifically the effective use and understanding of Technical Analysis, including various technical indicators to identify potential entry and exit points trading chart.
It is difficult to predict which way the value of cryptocurrencies will move, so indicators exist. These indicators are technical-analysis-based instruments that help traders better forecast the fluctuation in the cryptocurrency price.
By now, you should know that Gunbot can only do what you tell it to do; it will place the orders when your strategy-settings meet the market situation.
That’s why you need to read this crypto trading technical indicators guide! So let’s dive in…
Gunbot Technical Indicators – Average Directional Index (ADX)
The ADX is a regular spot trading strategy that takes advantage of the ADX indicator; the ADX strategy is included and preconfigured in Gunbot. You can make your Buy and Sell methods dependant on this indicator or use it as a confirming indicator for any other strategy, but more on that later…
As you may know, trading in towards a strong trend lowers risk and boosts profits. That’s why when determining whether a price is strongly trending, the Average Directional Index (ADX) is used by many traders.
The ADX indicator determines the intensity of a pattern. It is calculated by analyzing the price range expansion during a specific time.
The standard period is 14 bars, but it is adjustable according to your preference. ADX may be applied to any trading vehicle, including securities, mutual funds, ETFs, and futures.
The ADX is represented as a single line with an initial value of zero to at least one hundred.
Also, it is a non-directional indicator that measures trend intensity regardless of whether prices trend stretches or deflates. It is often plotted alongside the two-directional movement indicators (DMI) that lie in the same frame.
ADX principles aid you in identifying the most powerful and efficient trading patterns. The values are also crucial in determining whether an asset is trending or not.
Traders often use ADX readings above 25 to show that the trend is high enough for trend-trading strategies. However, when the ADX is below 25, you should avoid trend-trading techniques.
Trading the most extensive patterns and avoiding range conditions yields the best results.
ADX not only detects trending situations but also assists traders in identifying the most profitable patterns to trade. The ability to measure trend strength gives traders a significant advantage.
Nevertheless, you shouldn’t get caught trying to trend trade in sideways market action if you’re using the ADX indicator to identify range conditions.
Learn More about the Gunbot Average Directional Index Indicator Strategy
Gunbot Technical Indicators – Money Flow Index (MFI)
Gunbot calculates the money flow index (MFI) by looking at the money flow status, taking both price and volume details into account.
It is expected to function similarly to the RSI (Relative Strength Index) in detecting overbought and oversold situations. However, the RSI indicator is price-only, while the MFI is a volume-weighted one.
Thus, the MFI number decreases as some cryptocurrencies such as BTC become oversold. Relative to these ideas, some theories suggest that an oversold BTC/USD indicates that the ASK book’s volume is increasing, implying that a cryptocurrency pump is imminent.
Overall, traders and investors can predict pump and dump using this volume.
Why is MFI important for you?
Anyone who has been around this business for a while knows that several cryptocurrencies’ price-hike will decrease others’ value.
The Money Flow Index indicator is part of a feature in Gunbot that allows you to stop trading if it detects a cryptocurrency pump temporarily. Bear in mind that the MFI is not always easy or accurate to measure on certain exchanges.
Enter Gunbot BTC PND Protection; activating this feature will disable the buy orders when there’s too much price and volume push on Bitcoin.
There is always a tendency that some of these cryptocurrencies will rapidly increase in value, causing others to bleed down the street for a long time.
For instance, as BTC mooned, altcoins tend to lie low. It causes insufficient opportunity to purchase alt-coins with something other than BTC. However, as the market expanded and more ETH, BCH, XMR, and USDT/USDC/USD pairs became available, more options were for buying altcoins than just BTC.
That’s why it is highly recommended that you only activate this feature if the Bitcoin price changes have a critical effect on your trading pairs.
Gunbot Technical Indicators – Relative Strength Index (RSI)
The Relative Strength Index (RSI) metric, founded by technical analyst Welles Wilder over four decades ago, enables traders to identify whether a cryptocurrency’s price has deviated from its original trend, allowing you to benefit before the market recovers itself.
Traders may use the RSI to locate major trade entry points, especially that this crypto metric has proven to be an effective tool for trading the unpredictable crypto markets over time.
The RSI uses an algorithm to determine whether an asset is overbought or oversold, which is Bitcoin in this context. The technique creates a value between 0 and 100, painted on the trading chart in a wavelike pattern known as an oscillator.
RSI = 100 – 100 / (1 + RS)
RS = Average of X periods closes up / Average of X periods closes down X = The number 14 is preferred, but it is adjustable according to your preference.
When the RSI falls below 30, an asset is deemed oversold or undervalued. On the other hand, if it rises above 70, it is considered overbought.
The RSI often returns an oversold value whenever an investment has reached a depletion level after sustained bleeding. This value falls under 30, indicating that perhaps the traders are likely to take control and drive the price higher.
You can use the RSI indicator as a “confirming indicator” for any strategy to “corroborate” your entry or exit signal.
Since technical indicators are not perfect predictors of future price movements, sometimes traders feel more secure deciding to signal if more than one indicator sends the same signal. This is also known as “confluence.”
The RSI as a stand-alone is pretty weak, but it is handy to improve the odds of success by filtering out some of the fake signals provided by other indicators.
You can use the RSI indicator in Gunbot and set your crypto bot to execute when the price oscillates or crosses the value defined by you in the strategy variables.
Gunbot Technical Indicators – Stochastic Oscillator
The etymology of the term “stochastic” derives from the Greek word “guess,” which, in the sense of crypto trading, refers to forecasting the future based on historical actions. Thus, this crypto trading indicator assesses the changes in the equilibrium state of cryptocurrencies.
Moreover, the stochastic predictor, also known as the stochastic oscillator, is among the commonly employed specialized research techniques in crypto trading. Despite this, the vast majority of traders are still unaware of how to do it.
In reality, this indicator has more than what most people perceive when learning and using it practically. Generally, a stochastic oscillator indicates the trade’s stir, relating it to a crypto asset’s closing value in a specific period and price range.
Relatively, this metric includes information on the strength and momentum of patterns. It analyzes prices and shows you how quickly and strongly they are evolving.
It is essential to know that you should not rely on the stochastic indicator alone like any other trading tool. Therefore, to receive meaningful signals and improve your trades’ quality, you must combine the stochastic indicator with, Moving Averages, Price formation, and lastly, the Trendlines.
The Stoch indicator is another example of a confirming indicator that you can use in Gunbot.
You can use it in addition to your main strategy and can be used to buy or sell; keep in mind that Gunbot will trade when your strategy conditions and the STOCH_BUY_LEVEL, STOCH_SELL_LEVEL happen.
Alternatively, you can also use the Stochastic RSI (StochRSI) Indicator in Gunbot, and choose which signal you want to use to execute (cross or oscillator) and similar to the Stochastic indicator, you can choose to use this indicator for buying or selling, but if you don’t want to do both, set the side you don’t want to use to -1001…
Learn more about the Stochastic RSI Indicator
Gunbot Technical Indicators – Bollinger Bands (BB)
Bollinger Bands represent market-structure curves made up of a price movement characterized as a middle band, an upper band, or a lower band. It helps the traders determine if the price of an asset is relatively high or low.
Investors perceive a price near the upper band to be comparatively high, whereas a lower band price is considered relatively low.
Crypto-traders can use Bollinger Bands on any timeline. Still, depending on whether you are trading on higher or lower timeframes, the moving average length and standard deviation should be decreased or increased.
A 20-period moving average and a standard deviation of 2 are the default set-up. However, it gives you an option to reduce these to a shorter (15 and 1.5) or a longer (25 and 2.5) timeframe.
When you’re using Bollinger Bands, it is necessary to note these concepts:
- You should use the bottoms to set up a long position (buy), and you should enter once the asset shows signs of strength.
- Tops are used to establish a short post, but they need more confirmation than a bottom.
- Once there is a sign of weakness, enter the short (sell).
Hence, these imply that the traders and investors can use Bollinger Bands and the BandWidth measure to spot the Bollinger Squeeze and trade the breakout at the start of a trend.
The Bollinger Bounce, on the other hand, is a turnaround strategy that is based on market behavior. Technically, it is better to try a trading chance anytime the price activity reaches the lower band and the oscillator is positive. Otherwise, it is easier to look for a sales opportunity.
When you use the Gunbot Bolinger Bands Strategy, you will configure what percentage from the lower Band the bot should buy and what percentage from the upper Bollinger Band; it should sell.
Gunbot Technical Indicators – Average True Range (ATR)
The ATR indicator is a highly efficient way of measuring market volatility in crypto trading so that you can make an educated trading decision. When entering or leaving a market, knowing the business turbulence in specific trading sessions decreases volatility danger.
As a result, the ATR predictor will display the average deviation from high to low over the previous 14 days on a daily table. On the contrary, the ATR indicator varies based on the map timeline.
On a 1-hour map, for example, the ATR indicator will show the average variance over the previous 14 hours. The value of the ATR indicator is generally delivered within the top-right corner of the ATR indicator window.
In conclusion, the ATR measure is designed to calculate price shift volatility. This indicator can be used in any market, including forex, stocks, commodities, and cryptocurrencies, since it is a universal indicator.
The Gunbot Average True Range Strategy is called ATRTS because it takes advantage of “Trailing Stops,” The algorithm will calculate trailing stops to give you the buy and sell signals when the volatility increases or decreases crosses the trailing stop.
Note: The ATR indicator is a good example of an indicator you should use together with a momentum indicator because it doesn’t give you data about the price direction.
Gunbot Technical Indicators – Ichimoku Cloud
Ichimoku Kinko Hyo means equilibrium map at a glance. Goichi Hosoda, a Japanese writer, created the indicator and published it in his book in 1969. As the translation implies, its best feature is that it instantly reveals what sort of trade you should be in and possible targets when you look at the table.
The price is drawn to Senkou lines, which are extensive support/resistance areas. Traders plan their entrances, exits, and stops around them, often using data from other indicators as well.
The TK lines and TK Cross
The balance lines, also known as Tenkan-Sen and Kijun-Sen, are quick and slow-moving averages. Since they are shifting norms, traders can look for across while searching for a pattern reversal. This cross is known as the TK cross.
On the other hand, when there is no cross in sight, TK lines are also significant. If the price remains close to them, it implies that the commodity is neither overbought nor oversold.
Moreover, suppose the market action deviates significantly from the TK lines. In that case, it indicates that the price is out of control and that a pullback is possible, but it is not a signal to open a spot for the withdrawal on its own.
In ranging markets, however, you will not get much information from the Ichimoku Cloud.
The cloud will frequently switch between red and green in market ranges, providing very little actionable information. On short timeframes, the same thing happens, and there are far better indicators and strategies to use if you want to scalp cryptocurrency.
To sum it all up, these measures will usually allow you to classify your support and resistance levels based on volume. Since the cloud is only rendered from price action cycles and ignores volume entirely, it makes sense to use a volume-based indicator with Ichimoku.
The Gunbot Ichimoku Strategy can Buy when a full candle gets totally below Kumo, Tenkan, or Kijun, and it will Sell, when it gets above any of the 3, it is up to you to decide which one you want to use.
Gunbot Technical Indicators – Exponential Moving Average (EMA)
When it comes to trading and technical analysis, many cryptocurrency traders use moving average methods for various reasons, depending on their stated objectives.
However, it is essential to remember that EMAs are variable resources used in conjunction with other instruments when making investment decisions.
EMA is a moving average that shifts in response to price changes that gathers data from the previous session while discarding the oldest data in the time series. As a result, the EMA reacts to recent price changes faster than the Simple Moving Average (SMA).
On the other hand, the Exponential Moving Average belongs to the existing technical research indicators list, which is a guaranteed handy tool when properly used.
Although it is necessary to note that the EMA does not forecast or foresee any change but rather confirms a pattern at a predetermined time rather than following the price curve.
One of the most common applications is as a breakout strategy indicator. These bands capacitate you to generate trading signals if you have a breakdown system with trend tracking using the Bollinger Bands and the EMA because these will draw lines above and below the price on the graph.
If the price crosses above the upper line, you can take it as a trading signal in that direction.
Furthermore, Exponential Moving Averages Crossing is another very effective trading strategy. You are combining two exponential moving averages, one for the short term and the other for the long term. When the shortest moving average crosses the longest moving average from the bottom up, a signal is generated.
The Gunbot Gain Strategy is the prime example of using the EMA indicator for entering a trade; you can use EMA as an alternative for any strategy.
Example of Gunbot Technical Indicators in the GUI Trading Chart
Gunbot Technical Indicators – Time Series Analysis (TSA)
The Time Series indicator uses a statistical framework in determining the trajectory of the closing average value trend over a given period.
However, this indicator relies not only on the common linear regression; rather, it charts the last position of the said trends, making a clear image of the actual trajectory.
This predictor is also known as a progressive linear regression indicator or a regression oscillator, which gathers the variation’s trading points before matching its trend.
The concept of a Time Series Indicator is the same as that of a running average. In contrast to standard moving averages, this indicator has two advantages; when it comes to adapting to market fluctuations, a Time Series is better than a rolling average.
Since it matches the figures instead of combining them, this particular indicator is more prone to price shifts.
The least-squares fit procedure, which involves computing a linear regression trendline, is used to measure the Time Series Prediction. The least-squares fit methodology matches the chart’s data by decreasing the variations between the actual statistical trendline and its data point components.
As its name suggests, the Time Series Analysis can forecast the price for the subsequent cycles. This calculation is dependent on the security’s price pattern over the given timeframe.
Time Series Projection’s value estimates the cost for the following process if the present trend persists.
The Gunbot TSA Strategy will place a buy order when the ask price crosses down the projected price and a sell order when the bid price crosses up the projected price; the bot makes this projection based on the trend smacross values as strong indicators of the expected price move.
Gunbot Technical Indicators – Final Words
I hope this article helped you better understand the logic behind some of the basic technical indicators used in Gunbot.
You can apply what you’ve learned to your “Gunbot strategy settings,” thus reducing the risk of making mistakes that might cause you to lose money.
So, now that you know how to use the main Gunbot Technical Indicators, you’re probably eager to start. If you’re like most doers, you’re going to want to take the first step right away.
That’s great. I’m glad you’re excited. And I’m glad you’re going to take action, which puts you quite a bit in front of so many other passive readers who never quite take their first step towards success…
However, before you jump in, let me quickly share with you 5 Trading Mistakes you need to avoid so you can profit.
Top 5 New Crypto Trader Mistakes
- Not setting a solid risk management strategy.
- Overtrading: It may sound crazy, but sometimes you make money by sitting and not trading.
- Revenge Trading: Yeah, I know its easier to say than do, but after a loss, stay calm and don’t try to fight the market
- Being too Stubborn to Change your Mind: This doesn’t mean you have to change your strategy every day, but when something is not working, changing your procedure will help.
- Ignoring Extreme Market Conditions: Honestly, we’re all happy when Bitcoin moons, but please be wary of parabolic movements.
Got it? Nice, now get to it! But keep coming back for more Gunbot and Crypto Trading Tips…