algorithmic trading / trading conditions / trading rules
What is a Trading Condition? Turning Indicators into True/False Logic
Course walkthrough
Algorithmic Trading Fundamentals
All lessons in this series
- 1What is Algorithmic Trading? A Beginner's Guide to Automated Strategies
- 2What is a Trading Indicator? The Building Blocks of Algorithmic Trading
- 3Technical Analysis Indicators Explained: Mean Reversion vs Momentum
- 4What Are Fundamental Indicators? Understanding a Company's Financial Health
- 5Alternative Data Sources for Trading: Satellite Imagery, Sentiment Analysis & More
- 6From Indicators to Conditions: Building Your Trading Rules
- 7What is a Trading Condition? Turning Indicators into True/False Logic
- 8What Are Trading Actions? The Final Building Block of Algo Trading
- 9What is a Trading Strategy? Indicators + Conditions + Actions
- 10How to Know if Your Trading Strategy is Actually Good?
- 11What is Backtesting? How to Test Your Trading Strategy
- 12What is Trading Strategy Optimization? (And How to Avoid Overfitting)
- 13Recap: From Building Blocks to Deployment
- 14How to Deploy a Trading Strategy: Paper Trading to Live Trading
- 15How to Backtest a Trading Strategy on NexusTrade (Beginner Guide)
Indicators tell you what - but conditions tell you when.
A condition is the second fundamental building block of a trading strategy. It's a comparison between two indicators that evaluates to true or false.
Examples: → SPY's current price is greater than its 30-day average price → NVIDIA's revenue this year is greater than NVIDIA's revenue last year But conditions can also combine with other conditions using AND/OR logic: → SPY's price is greater than its 20-day average AND less than its 200-day average → Revenue this year is greater than last year OR revenue this quarter is greater than last quarter This is how you build specific, complex trading rules.
Watch lessons, complete hands-on activities, pass quizzes—and by the end, you'll have a real strategy deployed to the market.
Transcript
0:00Now that we understand basic indicators, it's time to transform these indicators into the second most fundamental building block of trading strategies. And that's what I call a condition.
0:13A condition is a comparison between two indicators and something that evaluates to true or false. For example, a condition might be something like SPY's current price is greater than its 30-day average price, or might be something like NVIDIA's revenue this year is greater than NVIDIA's revenue last year.
0:41It is simply a comparison between two indicators and something that evaluates to true or false.
0:50Now, conditions aren't just used when combining indicators, but they can also be used to combine different conditions. Let me explain.
1:00Let's say you wanted multiple things to be true. You want SPY's price to be greater than its 20-day average price and less than its 200-day average price. Or you might want something like NVIDIA's revenue this year is greater than its revenue last year, or its revenue this quarter is greater than its revenue last quarter.
1:24Conditions can be used to combine conditions together to create more complex and specific logic for executing trades.
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