AI Trade Filter

Overview

The AI Trade Filters are a suite of six advanced, independent filters designed to enhance the performance of your automated strategies. Each filter uses sophisticated statistical analysis to identify specific market conditions, such as high uncertainty, low liquidity, or a sudden change in market behavior.

These filters can be used in two primary ways: to filter entry signals, preventing trades from being taken in unfavorable conditions, or to provide exit signals, allowing you to close trades dynamically when market conditions change. Using these filters can help increase the robustness and consistency of your trading strategy.

Logic of the Filters

To protect our proprietary algorithms, the exact mechanics of each filter are not disclosed. However, their purpose can be understood as follows:

• Market Shift Filter: Detects significant shifts in market behavior and identifies changes in the market's underlying structure.

• Volatility Regime Filter: Identifies different periods of market volatility (e.g., low, mid, or high) using advanced modeling.

• Market Structure Filter: Identifies the overall market structure (e.g., ranging, trending, or unusual) using statistical analysis.

• Price Noise Filter: Detects erratic or "noisy" price action and identifies periods when price movements lack clear directional structure.

• Uncertainty Filter: Measures market randomness and unpredictability to identify periods of high uncertainty.

• Market State Filter: Identifies the real-time market state on a continuous spectrum from ranging to extreme trending.

Settings

Each of the six filters has its own set of controls, allowing you to enable and tune them independently.

For each filter, you can select one of four Modes:

• Disable: The filter is turned off.

• Filter: The filter will only block new entry signals if its condition is met.

• Exit: The filter will only generate an exit signal for an open position if its condition is met.

• Filter & Exit: The filter will both block entries and generate exits when its condition is met.

Setting	Description	Sensitivity Range / Recommended
Market Shift Filter	Controls the filter's responsiveness to changes in market behavior. Lower values are more sensitive.	Range: 1 - 10 Recommended: 3 - 7
Volatility Regime Filter	Controls the filter's responsiveness to changes in the market's volatility regime. Lower values are more sensitive.	Range: 1 - 10 Recommended: 3 - 7
Market Structure Filter	Controls the filter's responsiveness to changes in market structure. Lower values are more sensitive.	Range: 1 - 10 Recommended: 4 - 7
Price Noise Filter	Controls the filter's responsiveness to noisy price action. Lower values are more sensitive.	Range: 1 - 10 Recommended: 4 - 7
Uncertainty Filter	Controls the filter's responsiveness to market uncertainty. Lower values are more sensitive.	Range: 1 - 10 Recommended: 4 - 6
Market State Filter	Defines the specific market state to filter. Lower values filter calmer markets, while higher values filter more volatile, trending markets.	Range: 1 - 10 Recommended: 3 - 7

Best Practices & Usage

• Use Filters One at a Time: To understand the impact of each filter, it is best to enable and test them one by one. Combining too many filters at once can make it difficult to see what is affecting your strategy's performance.

• Match the Filter to Your Strategy: Use filters that complement your strategy's weaknesses. For example, if your trend-following strategy performs poorly in choppy markets, consider using the Price Noise Filter or Market Structure Filter to avoid those conditions.

• Use "Filter" Mode to Improve Entries: The most common use case is to set a filter's Mode to Filter. This helps improve the quality of your entry signals by avoiding trades during unfavorable conditions, without affecting your strategy's existing exit logic.

• Use "Exit" Mode for Dynamic Risk Management: Setting a filter's Mode to Exit can act as a dynamic stop loss. For example, the Market Shift Filter can close your trade if the market's behavior suddenly changes, potentially protecting you from a reversal.

• Adjust Sensitivity Carefully: The Sensitivity setting is the primary way to tune each filter. Start with the recommended value and adjust it based on backtesting results. A lower sensitivity will cause the filter to activate more often, while a higher sensitivity will make it less frequent.