TradeSmith

Market Indicators

A reference guide to every technical indicator available in TradeSmith — what it measures, how to interpret it, and how TradeSmith uses it to filter trade entries.

TradeSmith evaluates trading pairs using a set of classic technical indicators before allowing TradeFuel to open new DCA positions. Each indicator provides a different lens on market behavior: momentum, trend direction, volatility, and volume. Understanding what each indicator measures — and what conditions are favorable for DCA entry — is essential to configuring TradeSmith effectively.

Indicator	What It Measures	Typical TradeSmith Use	Default Setting
RSI	Momentum / overbought-oversold level	Block entry when RSI > threshold	RSI < 65 on 1h
MACD	Trend direction and momentum shift	Require bullish MACD crossover	MACD not bearish on 1h
Bollinger Bands	Price vs. volatility range	Prefer entries near lower band	Price below mid-band
EMA	Smoothed trend direction	Filter by trend: price above/below EMA	Price above EMA200
Volume	Market activity and liquidity	Exclude low-volume or erratic-volume pairs	24h vol > 500k USDT

RSI — Relative Strength Index

RSI measures the speed and magnitude of recent price changes on a scale of 0–100. It is the most widely used momentum oscillator and an excellent entry quality filter for DCA trading.

Interpretation

›RSI above 70: Overbought — the asset has risen rapidly and may be due for a pullback. Entering a DCA position here means your base order is near a local high.
›RSI 30–70: Neutral territory — the market is neither stretched to the upside nor the downside. Generally acceptable for DCA entries.
›RSI below 30: Oversold — the asset has fallen sharply. For DCA specifically, this can be an excellent entry signal since you want to buy into weakness, not strength.

TradeSmith Configuration

TradeSmith allows you to set an RSI entry threshold. The most common configuration is: only allow new DCA entries when RSI < 65 on the 1-hour chart. This prevents opening a position when the asset is already running hot and near a short-term top.

You can tighten this to RSI < 55 for more conservative entries that only open during genuine pullbacks, or loosen to RSI < 70 if you want more frequent trades at the cost of occasionally entering into overbought conditions.

›Period: typically 14 (standard RSI period)
›Timeframe: 1h recommended for entry conditions
›Conservative threshold: RSI < 55
›Default threshold: RSI < 65
›Permissive threshold: RSI < 70

MACD — Moving Average Convergence Divergence

MACD shows the relationship between two exponential moving averages — typically the 12-period and 26-period EMAs. The MACD line is the difference between them. The signal line is a 9-period EMA of the MACD line. The histogram shows the difference between the MACD and signal lines.

Interpretation

›MACD line crosses above signal line: Bullish crossover — upward momentum is building. Generally favorable for opening new long positions.
›MACD line crosses below signal line: Bearish crossover — downward momentum is increasing. A strong bearish MACD is a red flag for new DCA entries.
›MACD above zero line: Bullish overall trend — the short EMA is above the long EMA.
›MACD below zero line: Bearish overall trend.

TradeSmith Configuration

The most common TradeSmith MACD rule is: block new entries if MACD is in a strong bearish crossover state. This avoids opening DCA positions right at the start of a downward trend. You do not necessarily need to require a full bullish crossover (too restrictive) — simply requiring that MACD is not actively crossed bearish is often sufficient.

›Fast period: 12
›Slow period: 26
›Signal period: 9
›Timeframe: 1h recommended

Bollinger Bands

Bollinger Bands consist of three lines: a middle band (20-period simple moving average), an upper band (middle + 2 standard deviations), and a lower band (middle − 2 standard deviations). They expand during high volatility and contract during low volatility.

Interpretation

›Price near the lower band: Asset is trading below its recent average and near a statistical extreme. For DCA, this is a potentially good entry — the asset is already in a pullback.
›Price near the upper band: Asset is at the top of its recent range. Entering here means your base order buys at a local high, requiring a larger recovery move for all safety orders to fire usefully.
›Price near the middle band: Neutral positioning — the asset is at its recent average. Acceptable for DCA entries in most conditions.

TradeSmith Configuration

Typical rule: only allow new DCA entries when price is below the Bollinger Band middle line (20-period SMA), or optionally only when price is near the lower band. This ensures you are entering into weakness rather than strength.

›Period: 20 (standard)
›Deviation multiplier: 2.0 (standard)
›Entry condition: price below mid-band, or price within 10% of lower band

EMA — Exponential Moving Average

An EMA is a moving average that gives more weight to recent prices, making it more responsive to current market conditions than a simple moving average (SMA). EMAs are primarily used in TradeSmith as trend filters.

Common EMA Uses

›EMA200 (uptrend filter): Only open DCA positions when price is above the 200-period EMA. This ensures you are trading in the direction of the longer-term trend rather than fighting a major downtrend.
›EMA crossover: A short-period EMA (e.g. EMA9) crossing above a longer-period EMA (e.g. EMA21) signals upward momentum — can be used as a bullish entry condition.
›Price vs EMA50: If price is more than 5% above the EMA50, the asset may be overextended and a correction is more likely — useful as a "don't buy yet" filter.

TradeSmith Configuration

The most conservative and reliable EMA rule is: only allow entries when price is above EMA200. This single filter eliminates the majority of "bear market trap" entries where a temporary bounce in a downtrend triggers a DCA position that eventually fails.

On shorter timeframes (15m, 1h), the EMA200 represents roughly 200 hours or 8 days of price history. On the daily chart, it represents 200 trading days — approximately 10 months. Match your EMA timeframe to your trading horizon.

Volume Analysis

Volume measures the total quantity of an asset traded within a given period. TradeSmith uses volume in two distinct ways: as a liquidity filter and as a volatility signal.

Minimum Volume Filter (Liquidity)

Pairs with very low 24-hour trading volume are illiquid. Your orders can have significant slippage — the actual fill price differs from the expected price because there are not enough counterparty orders. TradeSmith filters out pairs below a configurable minimum volume threshold.

›Recommended minimum: 500,000 USDT 24h volume
›For smaller accounts: 250,000 USDT minimum may be acceptable
›For larger orders: consider 1,000,000 USDT+ minimum

Volume Spike Detection (Volatility)

Unusually high volume (e.g. 5–10x average volume) often accompanies significant events: news, exchange listings, flash crashes, or pump-and-dump activity. TradeSmith can flag or block entries during abnormal volume spikes to avoid entering into highly uncertain market conditions.

›Low volume spike tolerance: Block entry if volume is more than 3x the 14-day average. Very conservative.
›High volume spike tolerance: Allow entry unless volume exceeds 10x average. More permissive.

TradeSmith Overview

Pair Filtering