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.
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 price movements, 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.
First, adjust Sensitivity in order to have signals that allow you to catch the tops & bottoms of interest. Then (optional) adjust Confirmation Signals Agility to filter out any false signals occurring during ranging markets while making sure that increasing Agility does not introduce excessive lag for the signals of interest. In the case the signals of interest are too delayed, lower the Sensitivity in order to reduce lag until you are happy with the results.
Contrarian signals are only affected by the Sensitivity setting, increasing Sensitivity will aim to make contrarian signals spot more significant tops and bottoms.
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.
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 4000 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.
The Recommended Sensitivity is a value displayed on the Lux Dashboard, and shows the recommended Sensitivity when using both confirmation or Contrarian signal modes.
This feature works on any ticker & timeframe. In the case of using confirmation signals, the recommended sensitivity is calculated given the current Confirmation Signals Agility, changing this setting will change the recommended sensitivity.
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 medium term trends. This provides responsive and simple signals.
Do you rely a lot on optimizing signals and are you ok with updating these manually over time?
Use either Optibot or the Recommended Sensitivity methods to find more precise signal settings.
Do you dislike the process of manually adjusting signal settings altogether?
Use the Auto Pilot Confirmation Signal Settings toggle to allow the signals to adjust dynamically and work completely without settings.