generating-trading-signals

# Generating Trading Signals

## Overview

Multi-indicator signal generation system that analyzes price action using 7 technical indicators and produces composite BUY/SELL signals with confidence scores and risk management levels.

**Indicators Used:**
- RSI (Relative Strength Index) - Overbought/oversold
- MACD (Moving Average Convergence Divergence) - Trend and momentum
- Bollinger Bands - Mean reversion and volatility
- Trend (SMA 20/50/200 crossovers) - Trend direction
- Volume - Confirmation of moves
- Stochastic Oscillator - Short-term momentum
- ADX (Average Directional Index) - Trend strength

## Prerequisites

Install required dependencies:

```bash
pip install yfinance pandas numpy
```

Optional for visualization:
```bash
pip install matplotlib
```

## Instructions

### Step 1: Quick Signal Scan

Scan multiple assets for trading opportunities:

```bash
python {baseDir}/scripts/scanner.py --watchlist crypto_top10 --period 6m
```

Output shows signal type (STRONG_BUY/BUY/NEUTRAL/SELL/STRONG_SELL) and confidence for each asset.

### Step 2: Detailed Signal Analysis

Get full indicator breakdown for a specific symbol:

```bash
python {baseDir}/scripts/scanner.py --symbols BTC-USD --detail
```

Shows each indicator's contribution:
- Individual signal (BUY/SELL/NEUTRAL)
- Indicator value
- Reasoning (e.g., "RSI oversold at 28.5")

### Step 3: Filter and Rank Signals

Find the best opportunities:

```bash
# Only buy signals with 70%+ confidence
python {baseDir}/scripts/scanner.py --filter buy --min-confidence 70 --rank confidence

# Rank by most bullish
python {baseDir}/scripts/scanner.py --rank bullish

# Save results to JSON
python {baseDir}/scripts/scanner.py --output signals.json
```

### Step 4: Use Custom Watchlists

Available predefined watchlists:

```bash
python {baseDir}/scripts/scanner.py --list-watchlists
python {baseDir}/scripts/scanner.py --watchlist crypto_defi
```

Watchlists: `crypto_top10`, `crypto_defi`, `crypto_layer2`, `stocks_tech`, `etfs_major`

## Output

### Signal Summary Table

```
================================================================================
  SIGNAL SCANNER RESULTS
================================================================================

  Symbol       Signal         Confidence          Price    Stop Loss
--------------------------------------------------------------------------------
  BTC-USD      STRONG_BUY          78.5%     $67,234.00  $64,890.00
  ETH-USD      BUY                 62.3%      $3,456.00   $3,312.00
  SOL-USD      NEUTRAL             45.0%        $142.50         N/A
--------------------------------------------------------------------------------

  Summary: 2 Buy | 1 Neutral | 0 Sell
  Scanned: 3 assets | [timestamp]
================================================================================
```

### Detailed Signal Output

```
======================================================================
  BTC-USD - STRONG_BUY
  Confidence: 78.5% | Price: $67,234.00
======================================================================

  Risk Management:
    Stop Loss:   $64,890.00
    Take Profit: $71,922.00
    Risk/Reward: 1:2.0

  Signal Components:
----------------------------------------------------------------------
    RSI              | STRONG_BUY   | Oversold at 28.5 (< 30)
    MACD             | BUY          | MACD above signal, positive momentum
    Bollinger Bands  | BUY          | Price near lower band (%B = 0.15)
    Trend            | BUY          | Uptrend: price above key MAs
    Volume           | STRONG_BUY   | High volume (2.3x) on up move
    Stochastic       | STRONG_BUY   | Oversold (%K=18.2, %D=21.5)
    ADX              | BUY          | Strong uptrend (ADX=32.1)
----------------------------------------------------------------------
```

### Signal Types

| Signal | Score | Meaning |
|--------|-------|---------|
| STRONG_BUY | +2 | Multiple strong buy signals aligned |
| BUY | +1 | Moderate buy signals |
| NEUTRAL | 0 | No clear direction |
| SELL | -1 | Moderate sell signals |
| STRONG_SELL | -2 | Multiple strong sell signals aligned |

### Confidence Interpretation

| Confidence | Interpretation |
|------------|----------------|
| 70-100% | High conviction, strong signal |
| 50-70% | Moderate conviction |
| 30-50% | Weak signal, mixed indicators |
| 0-30% | No clear direction, avoid trading |

## Configuration

Edit `{baseDir}/config/settings.yaml`:

```yaml
indicators:
  rsi:
    period: 14
    overbought: 70
    oversold: 30

signals:
  weights:
    rsi: 1.0
    macd: 1.0
    bollinger: 1.0
    trend: 1.0
    volume: 0.5
```

## Error Handling

See `{baseDir}/references/errors.md` for common issues:
- API rate limits
- Insufficient data handling
- Network errors

## Examples

See `{baseDir}/references/examples.md` for detailed examples:
- Multi-timeframe analysis
- Custom indicator parameters
- Combining with backtester
- Automated scanning schedules

## Integration with Backtester

Test signals historically:

```bash
# Generate signal
python {baseDir}/scripts/scanner.py --symbols BTC-USD --detail

# Backtest the strategy that generated the signal
python {baseDir}/../trading-strategy-backtester/skills/backtesting-trading-strategies/scripts/backtest.py \
  --strategy rsi_reversal --symbol BTC-USD --period 1y
```

## Files

| File | Purpose |
|------|---------|
| `scripts/scanner.py` | Main signal scanner |
| `scripts/signals.py` | Signal generation logic |
| `scripts/indicators.py` | Technical indicator calculations |
| `config/settings.yaml` | Configuration |

## Resources

- yfinance for price data
- pandas/numpy for calculations
- Compatible with trading-strategy-backtester plugin