Congruency

Here the intraday congruency about the elementary trading algorithms in the same tab is examined.

When algorithms are considered congruent or incongruent is defined first. Then the two options to manage incongruence are illustrated. Finally, examples are given.

Tab Combination and Congruency

The elementary trading algorithms within a tab must be combined together, meaning their outputs must be compared, according to the logical operators between them. So all the outputs of the elementary trading algorithms of a tab are combined and the resulting output is the combination of the tab. In Trading Conceiver the concept of congruency relates to the relative intraday behavior of elementary trading algorithms within each tab. Remember that for elementary trading algorithms operating even intradaily, that is algorithms giving signals not only at close but also at open and threshold, the intraday label 'i' appears in the relative slot when selected.

Congruent Algorithms

All Non-Intraday Algorithms

If all the algorithms you selected in a tab operate only at Close, they are congruent, and the comparison is made only at close. So the logical operators are applied only to the close values (the only available) of the elementary trading algorithms and the combined output is defined only at close.

All Intraday Algorithms

If, on the contrary, all the algorithms you selected in a tab operate intradaily, again they are congruent, and the comparison is made separately in the three parts we divide each period in:

Open
Threshold
Close

So first the logical operators are applied to the values at open of the elementary trading algorithms and the resulting output is the value of the combination at open. Then the logical operators are applied to the values at threshold of the elementary trading algorithms and the resulting output is the value of the combination at threshold. Finally, the logical operators are applied to the values at close of the elementary trading algorithms and the resulting output is the value of the combination at close. So even the output will operate intradaily, i.e it will give signals for Open, Threshold and Close.

Incongruent Algorithms

Mix of Intraday and Non-Intraday

If some of the algorithms you selected within a tab operate only at Close and others intradaily, they are incongruent. How can they be combined? Some of them give signals only at Close, while others even at Open and Threshold. The comparison in Open and Threshold is impossible, because some of them simply don't exist at those times. This is signaled by a yellow background for the intraday label.

The following actions can be taken to make the systems congruent.

Extend Option

We already discussed the Extend option, which transforms an non-intraday algorithm into an intraday one. So first of all, you might want to consider to activate it in order to make all algorithms congruent.

Select a Congruent Algorithm

In some cases two equivalent algorithms exist, one operating intradaily and the other only at close. For instance:

MA of Donchian channel upper line upside breakout
Operates intradaily.
Close greater than MA of Donchian channel upper line
Operates only at close.

At Close these algorithms behave the same way and have the same mind-set. Hence you could substitute one with the other in order to render all algorithms in a tab congruent.

How Incongruence Is Managed

A Mix Is Legitimate

Sometimes it is perfectly legitimate to mix intraday and non-intraday algorithms.

For instance you could prefer trading only at close, which makes things much easier. But you'd like to use an indicator that exists only in an intraday version, like:

  Inside day upside breakout

Another example are stop loss algorithms, which always operate intradaily. You might want to combine them with other elementary algorithms, the majority of which operates only at close.

The Comparison Is Impossible

As already stated, if a mix of intraday and non-intraday algorithms exists, their comparison at Open and Threshold is impossible.

The Tab Combination Operates Only At Close

As a consequence of such impossibility, Trading Conceiver will make the combination of the whole tab operate only at Close. That is the combination of the tab will give signals only at Close, and not at Open nor Threshold.

Incidentally, in this case in the table and in the charts the algorithms that would operate intradaily per se, are treated exactly as if they operated only at Close. So for instance, in the table only the Close column will be present.

Two Modes

For greater flexibility, Trading Conceiver lets you select between two modes to deal with incongruence within the various tabs. You select these modes through the checkbox, in the Composer:

  Considering only close

This checkbox is applicable only if the elementary trading algorithms within the same tab are incongruent; otherwise it is ignored.

Note that the radio buttons 'When to trade' have nothing to do with all this, they are unrelated to the combination within the tabs, hence irrelevant.

Considering Only Close

In this mode, with the checkbox selected, only the Close is considered. The signals given by the intraday algorithms at Open and Threshold are simply ignored.

Not Considering Only Close

In this mode, with the checkbox unselected, the signals at Open and Threshold of the intraday algorithms are considered and 'shifted' to Close. More precisely, it is enough that the algorithm has a true output at Open, Threshold or Close so that the output at Close is considered true. The only way to have false at Close, is to have false at Open, Threshold and Close. This way, if a signal (true) is given intradaily, is considered to be valid at Close, too.

Example

In the time frame considered in this example, the first algorithm, operating intradaily ('intraday' in the picture), is true in the following instants:

  1 : Open, Threshold
  2 : Open, Threshold, Close

The second algorithm, operating only at Close ('non-intraday' in the picture), is always true. They are ANDed together.

Extend the Non-Intraday

If we 'extend' the second algorithm, we can see the result in the 'extend' part of the picture, 'Long combined'. The combined is true whenever the two algorithms are both true.

Not Considering Only at Close

If we don't extend the second algorithm and unselect the checkbox Considering only close ('consider intraday' in the picture), we are 'shifting' the signals of the first algorithm to Close. Both in 1 and 2 there is an instant in time when the first algorithm is true. This is reported at Close. When combined with the non-intraday algorithm, the combination is true only at close.

Considering Only at Close

If we select the checkbox Considering only close ('consider only close' in the picture), we are considering only the Close. In 1 the first algorithm is false at Close. When combined with the non-intraday algorithm, the combination is false. In 2 the first algorithm is true at Close. When combined with the non-intraday algorithm, the combination is true at Close.