Use the trading strategy rules page to enter the rules that determine how the Trading Strategy trades and control how those rules are optimized.
- To Select the optimization method used to determine the best rules and rule parameters for the trading strategy:
Select the desired optimization method from the drop down box
No Rule Optimization – Trades using the user specified rules. Performs no modifications to any rules or rule parameters.
Rule Parameter Optimization – All of the conditions (rules) are used, but the GA evolves optimum parameters during optimization. These parameters do not produce rules that are individually optimum, but optimal as a complete set.
Rule Selection Optimization – Chooses among all the rules specified, leaving only the ones that work best together during optimization. Does not modify any of the rule parameters.
Full Rule Optimization – Performs both Parameter Optimization and Rule Selection at the same time.
Custom Rule Optimization – Allows individual selection of which rules are optimized, which rules are always used, which parameters are optimized and which parameters are locked to their original value.
The Long Entry tab allows you to specify your entry conditions to a long position. If you don’t want to trade long in this trading strategy, then deselect “Generate a buy long order ‘”. This will allow you to continue without entering any entry conditions, trailing stops, or exit conditions for a long position. For more information about the different types of trading strategies see Trading Strategy Types.
- To insert long entry conditions:
Press the Add Condition(s) button.
- To show or hide a long entry condition’s parameters or parameter ranges:
Click on the + sign to the left of the condition to show its parameters or parameter ranges. To modify the parameter or parameter range, press the Modify Parameter button or double click the parameter or parameter range.
Click on the – sign to the left of the condition to hide its parameters or parameter ranges.
- To modify a long entry condition, long entry condition’s parameter, or long entry condition’s parameter range:
Select the item in the list you wish to modify.
Press the Modify Condition button or Modify Parameter button (depending on what item you have selected).
Double-click on the item in the list you wish to modify.
- To remove a long entry condition:
Select the entry condition(s) in the list you wish to remove.
Press the Remove Condition(s) button or press the delete button on you keyboard.
- To individually control parameter optimization of a long entry condition parameter:
Click in the box to the left of the parameter name.
A black lock icon in the box to the left of a parameter, indicates that NeuroShell will only use the listed parameter value.
A red circular arrows icon in the box to the left of a parameter, indicates that NeuroShell Trader will determine a parameter value within the listed parameter range that gives the best results during optimization.
A gray circular arrows icon in the box to the left of a parameter, indicates that the listed parameter range specifies only a single value, so NeuroShell Trader will only use that single value.
- To individually control rule selection optimization for a long entry condition:
Click in the box to the left of the condition.
A black lock icon in the box to the left of the condition, indicates that NeuroShell will always use that condition.
A red circular arrows icon in the box to the left of the condition, indicates that NeuroShell Trader will determine during optimization whether or not that condition should be used to obtain optimal results.
When a condition’s parameters are not shown/expanded, a black lock icon with small red arrows in the lower right corner simply indicates that although the condition itself is always used, one or more of it’s undisplayed parameters will be optimized. In other words, parameter optimization is enabled for this particular condition.
When a condition’s parameters are not shown/expanded, a red circular arrows icon with small black lock in the lower right corner simply indicates that although NeuroShell will determine during optimization whether or not the condition is used, none of it’s undisplayed parameters are being optimized. In other words, rule selection is enabled for this particular condition.
Select the <Order Type> that you want to use when entering a long position:
Market Order – Enters at the opening of the next bar. The entry price is the opening price plus slippage.
Stop Order – Enters if the next bar trades at or above the stop price. The entry price is the stop price (or open price if the bar opens above the stop price) plus slippage.
Limit Order – Enters if the next bar trades at or below the limit price. The entry price is the limit price (or open price if the bar opens below the stop price).
Stop Limit Order – Enters the market if the next bar trades above the stop price and then subsequently trades at or below the limit price. The final entry price is the limit price.
Market Close (next bar) Order – Enters at the closing of the next bar. The entry price is the closing price plus slippage.
Market Close (current bar) Order – Enters at the closing price of the last completed bar. The entry price is the closing price plus slippage.
If you select a stop order, limit order or stop limit order be sure to enter the corresponding stop price and/or limit price. Note that the stop, limit, and stop limit orders are day orders and are therefore canceled if not filled by the end of the next bar. If you want to trade from the open to the close of a single bar, use a market order to enter at the open of the next bar and a market close order with the same conditions to exit at the close.
Select the <Number of Conditions> that you want to be true for a long entry signal to be generated. As an example, if you have three items listed and you have selected the <Number of Conditions> to be 2, then when any 2 of the three entry conditions are true a long entry signal will be generated.
When displayed on a chart, a Long Entry is annotated with a solid blue upward triangle below the bar on which the long entry signal was generated. The entry price is annotated on the next bar with a blue X. When using stop, limit and stop limit orders, no entry price annotation will appear on the next bar if the order is not filled and you will likely see a series of entry signal annotations for subsequent bars until an order is filled.
If you are using a stop price, then the stop price is displayed on the chart as a horizontal blue line placed at the stop price level and extending from just after the bar on which it was calculated to the next bar for which it is active. If you are using a limit price, then the limit price is displayed on the chart as a horizontal dashed blue line placed at the limit price level and extending from just after the bar on which it was calculated to the next bar for which it is active.
After setting your long entry conditions, <Order Type>, and <Number of Conditions> you can select the Long Trailing Stop tab, Long Exit tab, Short Entry tab, Short Trailing Stop tab, Short Exit tab or the Next button.
- It should be understood that trading can result in losses, and that past performance of a trading system is no guarantee of future performance.
- When using Full Optimization or Rule Selection, the trading strategy allows reduction in the number of conditions below the number specified that must be true when a better solution if found with fewer rules. When the number of conditions selected by the optimizer is less than the specified number that must be true, all the optimally selected rules must be true for the entry to occur.
- Switching back and forth between custom optimization and one of the first four optimization modes will remember your last custom settings. However, when in one of the first four optimization modes, modifying the individual optimization settings of a rule or parameter will automatically switch to custom optimization and any previous custom settings will be lost.
Topics of Interest:
What are Trading Strategies?
Trading Strategy Types
What are Genetic Algorithms?
How Does a Genetic Algorithm Work?
Why is a Genetic Algorithm Better Than Other Optimizers?
What Types of Problems Do Genetic Algorithms Solve?
How are Genetic Algorithms Used in the NeuroShell Trader Professional?