Using Entry/Exit Systems to Generate Signals

Using Entry/Exit Systems to Generate Signals

Values in TradingSolutions data series are stored in fields. Like functions, entry/exit systems produce their output in data fields. However, unlike functions, the output of entry/exit systems is a market entry/exit signal that is produced based on rules for when to enter or exit a financial market. Entry/exit system rules can also be looked at as "conditions to watch for".

& For a step-by-step introduction to this topic, see the tutorial called Make a Traditional Prediction: Part 2.

Creating a New Signal Field with an Entry/Exit System

To apply an entry/exit system to create a signal field, open the Create a Field Wizard and select to create a new field to Apply a rule-based entry/exit system. This will begin the Apply an Entry/Exit System Wizard.

The Apply an Entry/Exit System Wizard begins with the Select Entry/Exit System page, which allows you to select which entry/exit system to use for generating a signal. The entry/exit systems are broken into groups that have different purposes. A brief description of each group and entry/exit system is displayed when they are selected, helping you to understand what the selection includes.

The wizard continues with the Select Inputs page, which allows you to select which inputs to provide to the selected entry/exit system. Inputs to functions are typically data fields from the data series to which the signal field is being added; however, they can also be numbers (constant values) or data fields from other data series in the portfolio.

Ä Note: If a data field is selected from a data series that does not have the same dates or periodicity as the target data series, TradingSolutions will use the last known value as the input. For example, if quarterly data is used for an entry/exit system in a daily data series, the value from the preceding quarter will be used until a new quarter is reached. This holding of values can also be seen when charting values from different data series.

The final page of the Apply an Entry/Exit System Wizard is the Select Name page. TradingSolutions provides several suggestions for names for the new field based on the entry/exit system and inputs selected. Any of these names can be used directly from the combo box, or you can enter your own. The name of a field should be something meaningful so that you know what the values in the field are without having to see how they are calculated.

& For more help applying an entry/exit system, see the help for the Create Signal Analysis Fields Wizard.

Using the Output of the Entry/Exit System

The output of entry/exit systems is an entry/exit signal of discrete values that indicate which of the rules was true. The rules are checked in the following order to produce the corresponding values.

$image\ebd_ebd443.gif$ Enter Long 1.00

$image\ebd_ebd444.gif$ Enter Short -1.00

$image\ebd_ebd445.gif$ Exit Long -0.30

$image\ebd_ebd446.gif$ Exit Short 0.30

$image\ebd_ebd447.gif$ Hold 0.00

This value can be interpreted as the direction that the rules of the entry/exit system indicate that the data is moving. Positive values indicate the price will increase, requiring a short exit or a long entry. Negative values indicate the price will decrease, requiring a long exit or a short entry. A value of zero indicates that no significant increase or decrease is expected, so the current position should be held.

These signals can be displayed in a Chart View, a Spreadsheet View, or in the Portfolio View in a display field.

& For more help with entry/exit systems, see Creating and Analyzing Entry/Exit Signals.

& For help with optimizing entry/exit systems, see Optimizing Entry/Exit Systems.