Entry Strategies

Entry strategies used by BravoBot to enter trades.

Relative Strength Index (RSI)

The Relative Strength Index is an indicator used to determine if a stock or asset is overbought or oversold. The indicator consists of a line that moves between 0 and 100. RSI line is plotted usually by using 14 (standard but adjustable) previous candles worth of average price changes.

When the RSI line crosses into the area below 30 the stock or asset is deemed to be oversold, indicating a possible reversal. The same goes for when the RSI line crosses into the area above 70, the asset or stock is overbought and a possible reversal is going to happen.

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RSI Formula

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Image source: Disnat

For more information (also the source) visit: Investopedia and Disnat

How to Visualize Relative Strength Index

1. Head over to TradingView and go to your desired pair.

2. Click "Indicators" in the top bar.

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3. Select "Relative Strength Index"

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4. Click on the cogwheel to change settings

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5. Tradingview has an extra moving average line that you can disable by clicking the "Style" tab at the top

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6. Turn off "RSI-based MA"

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7. Now you can modify the Relative Strength Index indicator and once you like the settings you can transfer them over to BravoBot

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Simple Moving Average (SMA)

The Simple Moving Average (SMA) is an arithmetic moving average indicator. This indicator is displayed as a line that overlaps the candles on the graph. This line is often used to see if the current price action is above or below the line. If the price action is above the line the market is considered to be bullish, however, when the price action is below the line the market is considered to be bearish. 

The longer the timeframe that is used to calculate the SMA the slower it will react to market changes.

Another way SMA can be used is by using multiple timeframes together to find “golden crosses”. This is when the 50-day SMA goes above the 200-day SMA. The opposite of a golden cross is a “death cross”, which is when the 50-day SMA goes below the 200-day SMA.

SMA is calculated by adding the prices of the candles together and then diving them by the timeframe. For example, if you want to get the SMA for 5 days you would add the previous 5 days' candle prices together and divide the sum by 5.

SMA Formula

To calculate the SMA this is the equation

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How to Visualize Simple Moving Average

1. Head over to TradingView and go to your desired pair.

2. Click on "Indicators" in the top bar

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3. Select "Moving Average"

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4. Click on the cogwheel to change settings

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5.  Now you can modify the Simple Moving Average indicator and once you like the settings you can transfer them over to BravoBot

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Exponential Moving Average (EMA)

Before reading this documentation please check the Simple Moving Average (SMA) documentation, this will make a lot more sense afterward.

The Exponential Moving Average is a type of moving average indicator that takes into account the average among previous candle price data. The average among the prices is used to plot a line that goes over the price action.

When the price action is above the EMA the market is deemed to be "bullish", while the price action is below the EMA the market is deemed to be "bearish".

The differentiating factor between Simple Moving Average and Weighted Moving Average is that the EMA adds more weight to the more recent candles at a exponential interval. So the more recent candles have more significance when used to calculate the average.

EMA Formula

emaformula.png

Images source: Investopedia

For more information (also the source) visit: Investopedia

How to Visualize Exponential Moving Average

1. Head over to TradingView and go to your desired pair

2. Click on "Indicators" in the top bar

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3. Select "Moving Average Exponential"

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4. Click on the cogwheel to change settings

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5.  Now you can modify the Exponential Moving Average indicator and once you like the settings you can transfer them over to BravoBot

emaexample.webp

Weighted Moving Average (WMA)

Before reading this documentation please check the Simple Moving Average (SMA) documentation, this will make a lot more sense afterward.

The Weighted Moving Average is a type of moving average indicator that takes into account the average among previous candle price data. The average among the prices is used to plot a line that goes over the price action.

When the price action is above the WMA the market is deemed to be "bullish", while the price action is below the WMA the market is deemed to be "bearish".

The differentiating factor between Simple Moving Average and Exponential Moving Average is that the WMA adds more weight to the more recent candles at a static interval. So the more recent candles have more significance when used to calculate the average.

WMA Formula

wmaformula.png

Images source: Investopedia

For more information (also the source) visit: Investopedia

How to Visualize Weighted Moving Average

1. Head over to TradingView and go to your desired pair

2. Click on "Indicators" in the top bar

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3. Select "Moving Average Weighted"

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4. Click on the cogwheel to change settings

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5.  Now you can modify the Weighted Moving Average indicator and once you like the settings you can transfer them over to BravoBot

wmaexample.webp

Bollinger Bands® (BB)

Bollinger Bands® is an indicator that consists of two trend lines. The upper trendline is usually set up with two standard deviations (modifiable) from a 20 (modifiable) period Simple Moving Average (SMA), the bottom trendline is calculated the same way however the standard deviation is negative. 

The BB’s can tell the user many things. Just like the Relative Strength Index (RSI), it can help in determining if the current price is within an overbought or oversold territory. Another thing BB’s are great for is being able to visualize the volatility of the market, the closer the two bands are together the less volatility there is in the market, the opposite is true when the bands are far apart. BB’s can also help in determining the direction of the market, if the price action is between the upper band and the SMA then the market is deemed to be bullish, while the price action is between the bottom band the SMA then the market is deemed to be bearish.

Bollinger Bands® Formula

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Image Source: Investopedia

For more information (also the source) visit: Investopedia and BollingerBands

How to Visualize Bollinger Bands®

1. Head over to TradingView and go to your desired pair

2. Click "Indicators" in the top bar

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3. Select "Bollinger Bands"

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4. Click on the cogwheel to change settings

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5. Now you can modify the Bollinger Bands® indicator and once you like the settings you can transfer them over to BravoBot

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Price Change (%)

Price Change (%) is an indicator that uses previous candle data to see by what percentage the market has changed.

Usage on BravoBot

There are two ways to use this entry strategy on BravoBot. The first method is simply requiring the percentage to be higher than user-set percentage on a bullish market or lower than user-set percentage in a bearish market on a user-set time-frame.

The second way to make calculated percentage be within the range between the user set number and 0%. For example on a downwards market maybe you wish to set the entry signal to be that the price decrease percentage over 7 days must be between -5% and 0. So if the price change % is between -5% and 0 then the bot will enter.

Example:

For the following settings these conditions have to be met: the current price must be over 2% greater than the last candle on the 1 day candle chart for the bot to enter a position.

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Chaikin Money Flow (CMF)

The Chaikin Money Flow is an indicator measuring the amount of Money Flow Volume over a specific period. It is calculated by adding Money Flow Volume for a specific period (usually 20 or 21 days). The indicator fluctuates above and below 0 (-1 to +1).

The indicator can be used to see the selling and buying pressure with CMF. Positive CMF means that there is buying pressure, while negative CMF means there is selling pressure. So positive CMF indicates an uptrend, while a negative CMF indicates a downtrend.

Another use for CMF is looking for crossovers. A cross through the 0 lines upwards can indicate a positive trend. While a cross downward can be used as an indicator of a negative trend.

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Chaikin Money Flow Formula

  1. Money Flow Multiplier = [(Close  -  Low) - (High - Close)] /(High - Low) 

  2. Money Flow Volume = Money Flow Multiplier x Volume for the Period

  3. 20-period CMF = 20-period Sum of Money Flow Volume / 20 period Sum of Volume 

Formula Source: StockCharts

For more information (also the source) visit: StockCharts

How to Visualize Chaikin Money Flow

1. Head over to TradingView and go to your desired pair

2. Click "Indicators" in the top bar

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3. Select "Chaikin Money Flow"

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4. Click on the cogwheel to change settings

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5. Now you can modify the Chaikin Money Flow indicator and once you like the settings you can transfer them over to BravoBot

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Rate of Change (ROC)

The Rate of Change is a momentum oscillator indicator measuring the percent change in price between periods. It uses the previous closing price and compares it with the closing price “n” periods ago. When ROC is negative, the price goes down. When the ROC is positive, the price is going up. The further ROC moves from 0, the greater the momentum of the price change into the respective territory.

ROC can be used for trend identification by combining multiple timeframes. For example, for trading stocks, a popular combination is combining the 250-day (roughly how many trading days there are in a year) and 125-day (trading days per half year) ROC, and if both of them are positive it indicates that the long-term change is up, so the signal is to long, same combination can be used for shorting but with opposite conditions being present. 

ROC can also identify extremes and anticipate reversals by identifying when an asset or stock is overbought or oversold. During an upwards trend, for example, you will see minor pullbacks, but the higher highs and lower lows will still be present; you will start to notice how ROC will reach a similar level during each low, essentially pointing out to you the oversold range. In the same way, you can find the overbought range with the opposite condition.

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Rate of Change Formula

  1. Money Flow Multiplier = [(Close  -  Low) - (High - Close)] /(High - Low) 

  2. Money Flow Volume = Money Flow Multiplier x Volume for the Period

  3. 20-period CMF = 20-period Sum of Money Flow Volume / 20 period Sum of Volume 

Formula Source: StockCharts

For more information (also the source) visit: StockCharts

How to Visualize Rate of Change

1. Head over to TradingView and go to your desired pair

2. Click "Indicators" in the top bar

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3. Select "Rate of Change"