How to create a golden cross crypto trading bot
Wed May 03 2023
A Golden Cross occurs when a short-term moving average crosses above a long-term moving average, and is commonly used in algorithmic trading to signal a potential trend reversal.
The world of cryptocurrency trading is no stranger to the terms Golden Cross and Death Cross. These two indicators are used to detect trend reversals and are well-suited for algorithmic trading strategies. In this article, we will explore the importance of these signals and demonstrate how to create a trading strategy based on them using a no-code solution.
Understanding Moving Averages
To comprehend the Golden Cross and Death Cross, it is essential to first understand Moving Averages (MAs) and their relationship with these signals. MAs are lines plotted over an asset’s price to measure its average price over a specific period of time, as illustrated by the blue and yellow lines in the chart below.
MAs can be simple (SMA) or exponential (EMA), with the latter assigning more weight to recent prices and less to older ones, while the former treats all prices equally. The period, such as SMA50, takes into account the last 50 candles on a candlestick chart.
Identifying the Golden Cross Signal
A Golden Cross occurs when a short-term moving average crosses above a long-term moving average, typically with the 50-day MA as the short-term and the 200-day MA as the long-term average.
Golden Cross signals are commonly used in swing trading strategies that deal with medium to long timeframes but can also be applied to shorter timeframes by accounting for additional volatility. This pattern is usually seen as a bullish signal, and its straightforward setup and automation make it well-suited for algorithmic trading.
To develop a strategy based on the Golden Cross, ensure that the SMA50 is higher than the SMA200. However, it is advisable to confirm the movement by incorporating other moving average indicators, such as the MACD and RSI, into your strategy.
Implementing a Golden Cross Trading Bot
To create a no-code Golden Cross trading bot, visit Æsir and sign up for a free account. After logging in, go to Create New Strategy. You will then see a screen similar to the one below.
General Configuration Settings
The “General Options Layer” is a set of configuration settings that must be defined for any strategy, including our Golden Cross one. These settings include parameters like trade amount, maximum number of open orders, coins to analyze, and exit strategies such as Stop Loss and Take Profit.
The “Frequency” parameter determines how often your strategy checks for buy and sell signals. The faster the strategy, the smaller this number should be.
Creating the Golden Cross Signal
In the “Layer Selection” section, add the Technical Analysis Layer, which allows for comparisons against most indicators. Click on Add Condition and select 50 Period Simple Moving Average Greater Than 200 Period Simple Moving Average. Set the candle interval to your desired value, keeping in mind that longer timeframes tend to perform better.
After saving your settings, add a confirmation signal by clicking on the Computed Oscillators layer and selecting the 1h MACD Moving Average.
You may want to experiment with different timeframes and confirmation signals for optimal results.
After saving the confirmation signal settings, save the entire strategy on the right-hand side. Navigate to “MyStrategies” and start your strategy.
Congratulations! You are now running a Golden Cross strategy in Paper Trading mode, which uses virtual money to simulate live trading. Remember to test various scenarios and configuration options. The example provided here should not be used with live funds, as it is important to customize your strategy based on your specific needs and preferences.