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In systematic trading, the signal is often the first thing to catch the eye: simple, direct, seemingly unambiguous. A bullish pin bar, for example, can be described in a single line and represents an immediately recognisable pattern. However, focusing exclusively on that specific point means viewing the market in a two-dimensional way, overlooking everything else around it.
Conditions exist precisely to overcome this limitation.
A condition is not a single event, but a coherent set of relationships. It introduces temporal depth and logic: it connects what has happened with what is happening now and, implicitly, with what might happen next.
If a signal answers the question ‘what is happening?’, a condition attempts to answer ‘in what context is it happening?’.
When we start to formalise the conditions, factors that are typically overlooked come into play: the distance between the bars, the net movement separating certain levels, right down to the compression or expansion of the price.
This makes the conditions more complex, but also considerably more informative. At the same time, the very nature of this approach, which is based entirely on OHLC data and makes no use of indicators or parametric inputs, precludes any form of optimisation through parametric adjustment. The framework is descriptive and relational, rather than exploratory in the search for the best combinations.
The content of this post therefore serves as a fundamental reference for gaining a thorough understanding of the matrices and various strategies published, providing the necessary framework for correctly interpreting their logic.
A unified space for all resources, a single framework for every trader.