This approach allows any indicator, any model, even fundamental events such as news, etc. 100 is therefore a buy signal and 0 a sell signal. To solve this problem while maintaining the greatest possible flexibility, we have adopted a completely different approach when developing our software product "Dynamite Sentimentor": In order to be able to interpret an event accurately, we assign it a sentiment value between 0 and 100, the value 50 representing a totally neutral position. If Rule A gives a buy signal and Rule B a sell signal, is it neutral or should the buy signal be given more importance than the sell signal? In addition, it very quickly becomes clear that the different elements of the configuration for position entry contradict each other. The pure AND/OR combination is generally too rigid to obtain satisfactory solutions. This immediately raises the question of how individual rules can be combined. Of course, the number of false signals or the number of transactions that reach break-even (here, transaction costs are usually included in the calculation) can be reduced by adding another configuration. Additional filtering conditions using indicators, time periods and/or aggregations.Definition of an additional entry condition.Adding additional conditions in the configuration.This can be achieved with the following measures: The objective is to reduce the number of false signals and at the same time the total number of trades (potential losses due to commissions!). This is where you start by adding additional filtering conditions. Unfortunately, this generally leads to frequent false signals, no matter what the entry method is. Unfortunately, most of the time, you happily trade into position as soon as the defined configuration appears. This means that entry at the earliest possible time is only possible at the close of the candle. In this case, the crossing is really only completed once the period in question in the chart is complete. An upward crossing of the two lines gives a buy signal and a downward crossing gives a sell signal. The use of the crossing of two moving averages such as MACD is an example of a classic trend following approach. It is important to distinguish between configurations that follow the trend and those that identify turning points in a trend to trade correction movements (so-called swing strategies). When entering the market, it is always a matter of finding a set of rules that best interpret the market movement you want to trade. Then, we will examine the different filtering possibilities on the NanoTrader trading platform.Ĭlick here to test a free real-time demo of NanoTrader Full BASIC PRINCIPLES FOR POSITION ENTRY First, we will cover some basic notions about entry techniques. This article deals with position entry and in particular the different filtering techniques to avoid false signals. ![]() ![]()
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