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 |
Price vs MA Hysteresis
This rule uses separate moving averages for re-entry and exit.
While the strategy is out, the signal turns true only after price rises above the entry moving average. Once the strategy is in, the signal stays true until price falls below the exit moving average.
| Parameter | What It Controls | Typical Values |
|---|---|---|
| Entry period | Moving-average window used to turn the signal back on after an exit. | 20, 50, 100 |
| Exit period | Moving-average window used to keep the signal on until price breaks down. | 100, 150, 200 |
| MA type | Choose SMA or EMA for both moving-average calculations. | SMA, EMA |
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.