Tutorial: Creating Trading Signals
Applying an Entry/Exit System
Applying an Entry/Exit System
i Tutorial Task
Apply an entry/exit system and optimize its parameters.
Another way to create a signal in TradingSolutions is using a rule-based entry/exit system. This is the method typically used in traditional technical analysis. Signals are generated based on rules. These rules can be as simple or as complex as desired. And, the underlying parameters to these rules can be optimized for individual stocks.
TradingSolutions includes several basic entry/exit systems based on single indicators. The results from these basic systems typically will not be as good as those from a prediction of the model of the optimal signal. However, they provide good examples of how you can create more complex entry/exit systems.
For this example, let’s enter long when a short-term moving average crosses above a long-term moving average and enter short when the opposite happens.
Step-by-step Instructions
1. Right-click on Merck & Co., Inc. and select Add New Field…. This will display the Create a Field Wizard.
Figure 1. Selecting "Add New Field…".
2. Select Apply a rule-based entry/exit system and press Next.
Figure 2. Location of "Apply a rule-based entry/exit system."
3. Review the introduction to the Apply an Entry/Exit System Wizard and press the Next button to advance to the Select Entry/Exit System page.
4. By default, all groups of entry/exit systems will be selected. Select Moving Average System from under Entry/Exit Systems in the Selected Group.
Ä Note: There may be several similarly named systems in this list. Select the first one.
Figure 3. Selecting "Moving Average System".
5. View the description of the selected system. Press the More button next to the description to display a complete description. When you are finished with this additional information, press Done.
Ä Note: If you do not see a description beneath the list of trading solutions, make sure the Display Descriptions box is checked.
Figure 5. Location of description and More button.
6. Press Next to advance to the Select Inputs page.
7. By default, this system will use the Close field for prices and optimize the periods of the two moving averages to find the best results. Press Next to keep these defaults.
Figure 6. Default inputs to selected system.
8. On the Select Name page, press Finish. TradingSolutions will begin optimizing the system.
9. Let TradingSolutions perform the requested tasks. Optimizing a new signal can take several minutes. For information on monitoring this processing, see the Notes.
10. After processing has completed, you will have a new signal for this stock which can be used for trading. For information on how to analyze signal or use it for trading, see the Notes.
Congratulations!
You have learned how to apply a basic entry/exit system and have it optimized to provide the best results for a stock.
Advanced tutorials will introduce you to creating your own entry/exit systems. However, the application of this basic system should show you the basics of how this works.
The next tutorial combines predictions and entry/exit systems into a more traditional approach to using neural networks in financial trading.
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