Signals
A signal is a boolean rule evaluated on trading data. Strategy Builder uses signals to determine which condition is active.
What Is A Signal?
A signal evaluates to true or false from market data. Each signal is attached to a strategy condition. Conditions are checked in order, and the first true condition becomes active. The final condition usually has no signal and acts as the fallback.
1-Bar Lag
All signals are evaluated with a 1-bar lag to prevent lookahead bias.
- Monday's close is used to compute the signal.
- The signal becomes tradable on Tuesday's open.
- This keeps the analysis aligned with observable information.
SMA (Simple Moving Average)
SMA tests whether price is above its average over the last N trading days.
When price is above the moving average, the signal is true. When price is below it, the signal is false.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Period | Number of trading days in the average. Longer periods respond more slowly. Shorter periods respond more quickly. | 50, 100, 200 |
EMA (Exponential Moving Average)
EMA is similar to SMA but gives more weight to recent prices.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Period | Smoothing window in trading days. Shorter periods react more quickly. Longer periods are smoother. | 50, 100, 200 |
VIX Threshold
VIX Threshold tests whether the VIX level is below a chosen threshold.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Threshold | VIX level below which the signal is true. | 20, 25, 30 |
RSI (Relative Strength Index)
RSI compares recent up and down moves on a 0 to 100 scale. This signal becomes true when RSI is above the selected threshold.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Period | Number of days used to compute RSI. | 14, 7 |
| Threshold | RSI level above which the signal is true. | 30, 50, 70 |
Momentum
Momentum tests whether price is higher than it was N trading days ago.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Lookback | Number of trading days used for the comparison. | 60, 120, 200 |
Drawdown
Drawdown tests whether the current decline from the prior peak is less than a chosen threshold.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Threshold (%) | Maximum allowed decline from the prior peak. | 10%, 15%, 20% |
Composite Signals (AND / OR / NOT)
Composite signals combine other signals with boolean operators.
- AND: all child conditions must be true.
- OR: at least one child condition must be true.
- NOT: inverts the child condition.
Condition Evaluation Order
Strategy conditions are evaluated from top to bottom on each trading day.
- The first condition is checked.
- If it is false, the next condition is checked.
- The first true condition becomes active.
- The final fallback condition catches any remaining state.