JFC Self Adaptive Indicator Signals

“Indicators, Signals, Strategies and Systems”

            These four terms can be a bit confusing at first. Let’s start with a few definitions.

Indicators

            Indicators are the programs which place dots, lines, histograms, either directly on the price bars themselves or in a subgraph below the price charts. These tools are used to visually aid the trader in interpretation of many of the technical analysis routines which are available today. They do not generate buy or sell signals. They do not generate statistical tables indicating the frequency of their occurrence, degree of reliability, etc.

            These programs simply add programmed, visual aids on a price chart.

Signals

            Signals are the actual programs that generate buy and sell signals for a strategy. Signals by themselves cannot be applied to a chart if you are using TradeStation 2000i. They can only be used in this program after they have been converted into a strategy using the Strategy Builder. They may, however, be added as such to a chart in TradeStation 8.0. Read more on this below.

Strategies for TradeStation 2000i

            Strategies are the actual analysis techniques that you apply to a price chart. They are created using the Strategy Builder, an integral component of TradeStation 2000i. The Strategy Builder can be used to combine any number of individual signals into a strategy.

            For example, a trader may decide, after observing several of the associated indicators on a price chart, that the entries from the Reversal indicator look to be effective. Exits using the Volatility Stop Indicator also appear to be an effective trading tool when combined with the entries from Reversal.

            To test this scenario the trader opens the Strategy Builder and creates a new strategy by adding the Reversal Buy & Sell Signal and the Vol Stop Exit Signal to the new strategy. The resulting strategy can then be applied to the chart to actually test the trading theory which was first visualized by observing the indicators on the chart.

            Other signals may be added to this strategy if desired. For example, the trader may wish to incorporate the Entry Point function into the Reversal Entry strategy. To do this, he / she would first remove the Reversal Buy & Sell Signal and add the Rev Buy ept Signal and the Rev Sell ept Signal to the strategy.

Strategies for TradeStation 8.0

            The terminology gets a bit confusing here. When “signals” from TradeStation 2000i are transferred into TradeStation 8.0 they become “strategies”. There are no “signals” as such in TradeStation 8.0. The exact same program which is listed in TradeStation 2000i as a “signal” will appear in TradeStation 8.0 as a “strategy”. If you transfer a “strategy” from 2000i into 8.0 two entries will appear in the list of strategies available for application. You will find a “strategy group” which, when applied, will place your strategy combination from 2000i on the 6.0 chart. You will also find all of the component signals which made up your 2000i strategy listed as strategies in 6.0.

 I told you it was confusing.

The process of creating a strategy in TradeStation  6.0 is quite similar to the one used above to create a strategy for TradeStation 2000i. In this case, since there is no Strategy Builder in this version, you may simply add the appropriate strategies directly to the price chart using the insert analysis techniques routine.

To duplicate the above example in TradeStation 8.0 you would simply add the Reversal Buy and Sell strategy and the Vol Stop Exit strategy to a price chart. Essentially, you are just skipping the step of first building a strategy using the Strategy Builder.

There is one thing to be aware of here, especially for those who have been familiar with the use of strategies in 2000i. When you added a different strategy to a chart in 2000i, the new strategy automatically replaced any previous strategy that was on the chart. Any signals that then appeared were always the result of the newly applied strategy only.

            When you add a new strategy to a chart in TradeStation 8.0 any previously applied strategies remain on the chart. Nothing is deleted as was the case with 2000i. The trades generated after the application of the new strategy will arise from both of the strategies now on the chart. This can drive you crazy until you realize that it is necessary to either disable or remove the previous strategy if you wish to see trades which are generated by the last applied strategy. Obviously, as with the example above, there will be instances where you wish the final trading routine to be a result of multiple strategies. Just be aware that there is no automatic removal of strategies upon the application of other strategies.

If you settle on a trading routine which you would like to apply to multiple charts you can use the template option in 6.0 to create a single application containing all the signals you have used to make up your final trading routine. Right click on the chart and select template – save template. Give your new template a name and click ok. The next time you want to apply this trading routine to a chart simply right click on the chart, select template, and then select the template you just created and click apply. You will see the same trading routine now operating on the chart. In this fashion you have saved your combination of strategies in much the same fashion as was accomplished in 2000i with the use of the Strategy Builder. The added advantage to using the template routine is that all indicators that are applied to the chart when the template is created will also be re-applied when the template is entered onto a new chart.