About Our Methodology

Learn how our Trading Signal Composite (TSC) scoring system and rotation analysis help you make better trading decisions.

Overview

Our trading signal system is built on a foundation of quantitative analysis and proven technical indicators. We combine multiple data sources and analytical techniques to generate actionable trading signals that help traders identify opportunities and manage risk effectively.

The system is designed to work across multiple timeframes, from short-term tactical trades (1H) to longer-term position trades (1D), allowing traders to adapt their strategy to different market conditions and trading styles.

Trading Signal Composite (TSC) Scoring

What is TSC?

The Trading Signal Composite (TSC) is a proprietary scoring system that synthesizes multiple technical indicators into a single, actionable score ranging from 0 to 100. This composite approach helps eliminate the noise from individual indicators and provides a clearer picture of market conditions.

How TSC is Calculated

Our TSC score combines several key technical indicators:

  • RSI (Relative Strength Index): Measures momentum and identifies overbought/oversold conditions
  • MACD (Moving Average Convergence Divergence): Tracks trend changes and momentum shifts
  • Volume Analysis: Evaluates trading volume trends to confirm price movements
  • Price Action: Analyzes price patterns and support/resistance levels
  • Momentum Indicators: Captures the strength and direction of price movements

Each indicator is weighted and normalized, then combined to produce a final score. The weighting is dynamically adjusted based on market conditions and timeframe to ensure optimal signal quality.

TSC Thresholds

Long Entry

TSC ≥ 65: Strong buy signal indicating favorable conditions for entering a long position.

Short Entry

TSC ≤ 35: Strong sell signal indicating favorable conditions for entering a short position.

Exit Long

TSC ≤ 45: Signal to exit an existing long position as conditions deteriorate.

Exit Short

TSC ≥ 55: Signal to exit an existing short position as conditions improve.

Rotation Analysis

Understanding Market Rotation

Market rotation refers to the cyclical movement of capital between different assets, sectors, or timeframes. By identifying rotation patterns, traders can anticipate where capital is flowing and position themselves accordingly before the broader market recognizes the shift.

How We Analyze Rotation

Our rotation analysis system tracks several key factors:

  • Multi-Asset Correlation: Monitors relationships between different trading pairs to identify rotation patterns
  • Capital Flow: Tracks volume and price movements to detect where capital is moving
  • Timeframe Analysis: Compares signals across 1H, 4H, and 1D timeframes to identify rotation between trading styles
  • Momentum Shifts: Identifies when momentum is shifting from one asset or timeframe to another

Timeframe Allocation

Our system allocates capital across three primary timeframes based on rotation signals:

1D

Position Trading (70% allocation)

Longer-term positions based on daily timeframe signals. Focuses on major trend changes and significant market rotations.

4H

Swing Trading (20% allocation)

Medium-term positions based on 4-hour timeframe signals. Captures intermediate trends and rotation patterns.

1H

Tactical Trading (10% allocation)

Short-term positions based on hourly timeframe signals. Takes advantage of quick rotation opportunities.

Risk Management

Built-in Risk Controls

Effective risk management is crucial for long-term trading success. Our system includes several automated risk management features:

  • Stop-Loss Calculations: Automatic stop-loss placement based on volatility and support/resistance levels (default: 10% from entry)
  • Position Sizing: Optimal position size calculation based on account size and risk tolerance (default: 2% risk per trade)
  • Position Limits: Maximum of 3 positions per timeframe to prevent over-concentration
  • Target Levels: Multiple profit targets at 15%, 30%, and 50% to allow for partial profit-taking
  • Reward-to-Risk Ratio: Minimum 2:1 reward-to-risk ratio for all trade setups

Risk Parameters

Stop Loss

10% default stop-loss percentage, adjustable based on volatility and timeframe.

Risk Per Trade

2% of account balance per trade, ensuring no single trade can significantly impact your account.

Max Positions

Maximum of 3 positions per timeframe, preventing over-concentration in any single market condition.

Profit Targets

Three-tier profit target system: 15% (partial), 30% (partial), and 50% (full exit).

Signal Generation Process

1. Data Collection

The system continuously collects market data including price, volume, and technical indicators from multiple sources. This data is normalized and validated before being used in calculations.

2. TSC Calculation

For each trading pair and timeframe, the system calculates the TSC score by combining weighted technical indicators. The calculation happens in real-time as new market data arrives.

3. Signal Evaluation

The calculated TSC score is compared against predefined thresholds. If the score crosses a threshold (e.g., above 65 for long entry), a signal is generated with the appropriate action (BUY, SELL, or HOLD).

4. Rotation Analysis

The system analyzes rotation patterns across assets and timeframes to confirm signals and identify the best opportunities. Signals that align with rotation patterns are given higher priority.

5. Risk Assessment

Before generating a final signal, the system performs a risk assessment to ensure the trade meets risk management criteria. This includes checking position limits, calculating stop-loss levels, and verifying reward-to-risk ratios.

6. Signal Delivery

Once validated, signals are delivered through the dashboard, webhooks, and API. Each signal includes the symbol, action, TSC score, timestamp, and relevant market data for your analysis.

Important Considerations

No Guarantees: Trading signals are based on technical analysis and historical patterns, but past performance does not guarantee future results. All trading involves risk, and you should never trade with money you cannot afford to lose.

Market Conditions: The effectiveness of our signals can vary based on market conditions. Trending markets may produce more reliable signals than ranging or highly volatile markets.

Your Responsibility: While our system provides signals and risk management tools, you are ultimately responsible for your trading decisions. Always conduct your own research and consider your risk tolerance before entering any trade.

Continuous Improvement: Our methodology is continuously refined based on market feedback and performance analysis. We regularly update our algorithms and thresholds to adapt to changing market conditions.

Ready to Get Started?

Experience our TSC scoring system and rotation analysis for yourself.