|The trigger stage deals with monitoring the market in search of trading opportunities with the corresponding strategy.|
A trading system may have multiple strategies designed for the same market.
An important aspect of trading systems is that they are allocated a certain amount of capital (see the base asset parameter of the trading session). As a consequence, strategies within a trading system share a certain capital allocation.
The logic behind the concept of the trigger stage assumes that different strategies within a trading system may be specialized for trading in different market situations. The trigger stage in each strategy is, therefore, the mechanism by which any particular strategy within the trading system may be selected to trade, given any particular market situation.
The triggering-on of a strategy effectively blocks the selection of any other strategy in the trading system and reserves the whole capital allocation for the one strategy selected, until the strategy is triggered-off.
Therefore, if certain strategies are meant to trade under the same market situations and open trades concurrently, then those strategies should be deployed in separate trading systems.
Once a strategy is triggered, the strategy may decide—or not—to take a position. If a position is taken, then the rest of the stages eventually become active.
However, the strategy may also be triggered off without taking a position. When a strategy is triggered off, the trading system goes back to monitoring the trigger-on definitions for all strategies, and capital is released to be used by whatever strategy is triggered-on next.
Take Position Event
|The trigger-on event defines the set of rules that need to be met for the corresponding strategy to be triggered on. A strategy that is triggered may use all the capital available to the trading system, and prevents other strategies in the system from triggering.|
In conceptual terms, the trigger-on event is the mechanism you use to define the specific situations in which you would consider trading with the corresponding strategy. Think of the trigger-on event as the definition of the scenario in which the trading idea behind the strategy should be carefully considered.
Once a strategy is triggered-on, the system starts evaluating the take position event. In conceptual terms, it means that the system has been alerted that the trading idea behind the corresponding trading strategy has produced a signal and that it should carefully monitor the market for the opportunity to take a position.
|The trigger-off event defines the situation in which the corresponding strategy shall be triggered-off. A strategy that is triggered-off releases the capital in reserve and makes it available to other strategies in the trading system.|
In conceptual terms, the trigger-off event is the mechanism you use to define the situation in which the corresponding strategy should stop considering the trading opportunity signaled by the trigger-on event. That is, you use the trigger off event to describe the scenario for the invalidation of the trading idea behind the strategy.
Once a strategy is triggered-on, only two possible scenarios may follow. Either the take position event is triggered, thus, taking a position, or the trigger-off event is triggered first.
In the first scenario, the strategy remains on until the position is closed. As the position is closed, the strategy is triggered-off. In the second scenario, the strategy is triggered-off immediately.
Take Position Event
|The take position event defines the situation that needs to be met to take a position.|
The trigger-on event merely selects a strategy to be considered for trading under the current market situation. The actual decision to enter a position may require more specific conditions to be met. For that reason, the take position event is a separate entity from the trigger-on event.
Therefore, the take position event is defined with its own set of situations and conditions.
Once the take position event is triggered, the decision to take a position has been made and there is nothing else to consider in that regard. Therefore, the runtime evaluation of the trading system shifts from the trigger stage to the open stage.