The settings affecting the signal generation algorithm play an important role in using the signals effectively. We give our users the possibility to adjust the settings so that the signals can fit their trading style but we also provide ways to easily adjust settings by using a wide variety of methods.
Each method for adjusting signal settings is designed to fit specific user needs, one method will not necessarily be more accurate than another.
It's critical to understand Confirmation Signals are generally meant to be used as trend confirmations, not direct entries & exits. Focusing on ease of use with the signal settings & using other features within our toolkits will likely be the best decision for you rather than trying to find the "holy grail" of optimized signal settings & following the signals alone.
Manual adjustment of signals settings allow the user to fit the signals to their trading style and allows a greater amount of customizability.
Confirmation signals are affected by both the Sensitivity and Confirmation Signals Agility settings. Increasing these two settings will allow the trader to make decisions for longer-term trends, however, Confirmation Signals Agility is specifically designed to filter out signals occurring during ranging markets, increasing this setting will generate more strong signals as a result.
Confirmation Signals Agility is found within "Advanced Settings" as it is intended for more advanced users who want greater customizability. It is generally recommended for manual adjustments to only focus on Sensitivity for a more simple user experience.
Method For Manually Adjusting Confirmation Signals
First, identify which price movements you are looking to trade (regardless of timeframes). Depending on how you are on your charts (on any timeframe) you can adjust the sensitivity value higher or lower to catch the price movements you are looking for. If you are looking for shorter term price movements on those timeframes, you should consider using a lower sensitivity. If you are looking for longer term price movements on those timeframes you should consider using a higher sensitivity. To find values based on the price movements you are trading see here.
Contrarian signals are only affected by the Sensitivity setting, increasing Sensitivity will aim to make contrarian signals spot more significant tops and bottoms.
Automatic Settings Estimation
Autopilot Confirmation Signal Settings
The downside of adjusting signal settings is that this task needs to be constantly repeated due to ever-changing market conditions. Autopilot Confirmation Signal Settings is a feature that allows the user to avoid adjusting signal settings completely. Instead, the confirmation signals algorithm adjusts dynamically to the market conditions in order to provide the best signals possible.
Compared to other automatic methods the "Autopilot" feature is the most user-friendly since it avoids adjusting inputs within the indicator entirely.
The Autopilot Frequency advanced setting allows autopilot to adjust to shorter or longer term trends depending on user preference.
OptiBot (From VIP Discord Server)
OptiBot tests each combination of settings within a range of [10 | 40] for both Sensitivity and the Confirmation Signals Agility on various tickers and timeframes over a period of 1000 bars and returns the pair of settings that generated the most returns. The user can input the settings given by OptiBot directly into the indicator to get the most optimized settings possible out of every other method.
Settings returned by OptiBot are not necessarily indicative of future results.
Dashboard Optimal Sensitivity
The Optimal Sensitivity is a value displayed on the Lux Dashboard and shows an estimate of the optimal Sensitivity when using both confirmation or Contrarian signal modes.
This feature works on any ticker & timeframe. In the case of using confirmation signals, the optimal sensitivity is calculated given the current Confirmation Signals Agility, changing this setting will change the optimal sensitivity.
Choosing The Right Method
While Optibot is the most precise method since it's backtesting data, there is no "best" method for optimizing signals as it's up to the user to understand their style of trading and the price variations they want to trade (regardless of timeframes).
Do you specifically want to trade shorter-term trends on the timeframes you use?
- Consider using lower sensitivity values such as 5-10
Do you specifically want to trade longer-term trends on the timeframes you use?
- Consider using higher sensitivity values such as 20+
Alternatively, you can use the default of 12 for trading medium-term trends. This provides simple and responsive signals.
Do you rely a lot on optimizing signals and are you ok with updating these manually over time?
- Use either Optibot or the Optimal Sensitivity methods to find more precise signal settings.
Optibot will be the most precise optimization method as it uses both Sensitivity & Agility by backtesting private data, however, Optibot will be limited in terms of tickers & timeframes, while the Optimal Sensitivity works on any ticker/timeframe.
Do you completely dislike the process of adjusting signal settings altogether?
- Use the Auto Pilot Confirmation Signal Settings toggle to allow the signals to adjust dynamically and work completely without settings.
- Or use the default settings of 12 Sensitivity / 26 Agility for simple & responsive signals that will help you catch medium term trends.
Using Auto Pilot or the default settings are overall the simplest user experience as it allows you to completely avoid adjusting settings altogether.