Logic Block — “Decide When Conditions Are Met”

The Logic Block is the brain of a trading algorithm. It evaluates indicator outputs and predefined rules to decide whether to generate a signal.

Core Purpose

• Evaluate Rules: Applies IF/THEN logic to indicator data (e.g., IF Indicator X > Threshold).
• Combine Conditions: Uses Boolean logic (AND / OR) to filter out noise.
• Signal Production: Outputs definitive actions: Buy, Sell, or Hold.
• Safety: Ensures actions occur only within strictly defined market environments.

Design Principle: Keep decision logic separate from execution. This ensures strategies remain transparent, testable, and safe from “blind execution.”

1. Logical & Comparison Actions

1.1 Crossover Logic (State Change Events)

Crossovers are used to detect transitions. They trigger at the exact moment a relationship between two values changes.

• Crosses Above: Triggers when a value moves from below to above another value.
  • Example: RSI crosses above 50.
• Crosses Below: Triggers when a value moves from above to below another value.
  • Example: EMA(9) crosses below EMA(21).

[Image of a Golden Cross and Death Cross showing moving average crossovers]

1.2 Relative Position Logic (Current State)

Unlike crossovers, these evaluate the current environment rather than the transition.

1.3 Threshold Comparison Logic (Boundaries)

Used to define overbought/oversold regions or volume spikes.

• Higher Than: True when a value exceeds a defined threshold (e.g., RSI > 70).
• Higher Than Equal To: Includes the threshold value (e.g., Volume ≥ Average Volume).
• Lower Than: True when a value is below a threshold (e.g., ATR < 1.5).
• Lower Than Equal To: True when a value is at or below a boundary (e.g., Stochastic ≤ 20).

1.4 Change-Magnitude Logic

This measures the amount of movement rather than just the direction.

• Up By: True when a value has moved upward by a specific unit or percentage.
  • Example: Price is up by 2%.
• Down By: True when a value has moved downward by a specific unit or percentage.
  • Example: Stock is down by $10.

1.5 Delta / Rate-of-Change Logic

Used to detect incremental changes between consecutive periods (Candle A vs. Candle B).

• Increases By: True when a value grows by a defined delta over the prior value.
  • Example: Volume increases by 30% from the previous candle.
• Decreases By: True when a value drops by a defined delta over the prior value.
  • Example: RSI decreases by 5 points.

2. Combining Logic (Boolean Operators)

To build a robust strategy, individual logic blocks are typically chained together:

1. AND (All must be true): (RSI < 30) AND (Price Crosses Above SMA20).
2. OR (Any can be true): (Price Down By 5%) OR (Stop Loss Triggered).
3. NOT (Inversion): NOT (Market is Choppy).