Published: April 20, 2026.

Last Update: July 20, 2026.

Build a Signal Study

The Build a Signal Study tool allows you to create a custom indicator-based condition and analyze how a stock has historically performed after that condition occurs. The tool identifies past occurrences and calculates average and typical (median) returns across multiple timeframes, helping you evaluate the consistency, risk, and potential of a trading setup.

Screenshot taken from a Platinum account on Jul. 16, 2026.

Quick Reference

A quick look at every indicator available in each tab:

• Momentum: RSI, Rate of Change (ROC), Stochastic, Stochastic RSI, Williams %R, CCI, Momentum, Chande Momentum Oscillator (CMO), Awesome Oscillator (AO), PPO, TRIX
• Trend: Crossover, ADX, Aroon, DMI, Linear Regression Slope
• Volatility: ATR, Normalized ATR, VQ
• Price Action: Consecutive Closes

How It Works

Step 1: Choose your prompt (Top Section)

You build a rule using momentum, trend, and price action prompts.

Momentum

• RSI: The Relative Strength Index is a momentum oscillator that gauges whether a stock is overbought or oversold based on recent price movements.
• • Traditionally, an RSI above 70 suggests a stock may be overbought (potentially due for a pullback), while an RSI below 30 suggests it may be oversold (potentially due for a bounce).
• Rate of Change (ROC): Measures a stock's percentage price change over a selected period. Use it in a Signal Study to find historical instances of strong positive or negative momentum and evaluate how the stock performed afterward.
• Stochastic — Compares a stock's closing price to its price range over a set period to gauge momentum. Use it in a Signal Study to identify when a stock was historically overbought or oversold, and analyze what typically followed.
• Stochastic RSI — Applies the Stochastic formula to RSI values rather than price, making it more sensitive to momentum shifts. Use it in a Signal Study to pinpoint extreme RSI readings and examine how the stock historically behaved after those conditions.
• Williams %R — Measures where a stock's closing price falls within its high-low range over a given period, similar to Stochastic but inverted. Use it in a Signal Study to study what has historically happened after a stock reached overbought or oversold extremes.
• CCI (Commodity Channel Index) measures how far a price has moved above or below its typical level. High readings may indicate overbought conditions, while low readings may indicate oversold conditions. Traders often use CCI to identify momentum shifts and potential trend reversals.
• Momentum measures the raw rate of price change over a specified period by the current price to the price a set number of periods ago.
• Chande Momentum Oscillator (CMO) measures the strength of price momentum. Like RSI, it helps identify overbought and oversold conditions, but its calculation makes it more sensitive to price changes. Values range from -100 to +100, and moves above or below zero may indicate a change in momentum.
• Awesome Oscillator (AO) compares a short-term (5-period) midpoint average to a longer-term (34-period) one. It's designed to capture market momentum across different timeframes. Zero-line crossovers and "saucer" patterns are common signals.
• The PPO (Percentage Price Oscillator) is similar to MACD but expresses momentum as a percentage rather than an absolute value. Because it is normalized, PPO makes it easier to compare momentum across stocks trading at very different price levels — a 2% price move has the same meaning whether a stock trades at $10 or $500. Positive readings suggest upward momentum, while negative readings suggest downward momentum.
• TRIX is a momentum indicator designed to reduce market noise and highlight the underlying trend. Its triple-smoothed calculation helps generate cleaner signals than many momentum indicators, but the added smoothing can cause it to lag behind rapid price moves.

Trend

• Crossover: tests when one indicator or price series crosses another line - which could be a moving average, a fixed value, or another indicator - rather than being limited to just comparing two moving averages of price.
• ADX (Average Directional Index): Measures the trend strength on a scale of 0–100. Stronger trends have higher ADX readings, but the ADX value provides no information about the trend's direction. Many traders combine DMI with ADX to assess both the strength and the direction of the trend. As general guidelines, ADX readings below 20 = weak/no trend; between 20 and 30 = strong trend; above 50 = very strong.
• • ADX may tell you whether a trend is worth trading, not which direction you should trade.
• Aroon: measures how recently the highest high and lowest low occurred within a defined lookback period, expressing that recency as a percentage. Aroon Up tracks how far back the period's highest high occurred, while Aroon Down tracks how far back the lowest low occurred — both scaled from 0 to 100. A reading near 100 means the extreme occurred recently; a reading near 0 means it occurred closer to the beginning of the lookback period.
  
  When Aroon Up is high, and Aroon Down is low, the market is making recent highs without making recent lows — a sign of a strong uptrend. The reverse signals a strong downtrend. When both lines move together at similar levels, the market is consolidating without a clear directional bias. Crossovers between the two lines can signal trend reversals.
• DMI (Directional Movement Index): DMI measures the strength and direction of price movement by comparing the current period's high and low to the previous period's. This measurement produces two lines: +DI, which captures upward directional movement, and -DI, which captures downward directional movement.
  
  When +DI is above -DI, price movement is predominantly upward; when -DI is above +DI, it is predominantly downward. When +DI crosses above -DI while ADX is rising and above a threshold — typically 25 — it signals a confirmed uptrend worth acting on. The reverse signals a confirmed downtrend. A crossover without ADX confirmation is likely noise.
• Linear Regression Slope: Fits a straight line to price over a lookback period and measures its slope.
• • A positive slope = uptrend; a negative slope = downtrend. The steeper the slope, the greater the momentum.

Volatility

• ATR (Average True Range): a rolling average of a security's daily trading range, accounting for gaps, that measures how much a security typically moves per day in absolute price terms.
• Normalized ATR: ATR expressed as a percentage of a security's price rather than a raw dollar amount, allowing volatility to be compared consistently across securities at different price levels.
• VQ (Volatility Quotient): TradeSmith's proprietary measure of a security's normal risk or price movement, calculated by historical price data.

Price Action

• Consecutive Closes: is a price action indicator that counts how many days in a row a stock has closed in the same direction - either consecutively up (each close higher than the prior close) or consecutively down (each close lower than the prior close).

Example #1: RSI Prompt

In the last 5 years, what happens after ticker NVDA has an RSI(14) less than 30?

Screenshot taken from a Platinum test account on Jul. 1, 2026.

The system scans historical data and finds every time the RSI(14) for Nvidia (NVDA) was less than 30. Then it tracks what happened after each occurrence.

Step 2: Run the Study

Click Run Study, and the system:

• Identifies all past occurrences of your condition
• Calculates forward returns over different timeframes

Step 3: Review the Results (Bottom Section)

You will see two sections: the Bar Chart (left) and the Performance Table (right).

Screenshot taken from a Platinum test account on Jul. 1, 2026.

The Bar Chart shows average returns and positive percentages over time:

• 1 month
• 3 months
• 6 months
• 12 months

Screenshot taken from a Platinum test account on Jul. 1, 2026.

This gives you a quick visual of whether the setup tends to be bullish or bearish over time.

The Performance table breaks down the results in detail:

• # of Occurrences – How many times the condition happened
• Avg Return – Average return across all occurrences
• Typical Return – Median return
• % Positive – Win rate (how often returns were positive)
• Avg Max Drawdown – Average worst decline after the signal

Screenshot taken from a Platinum test account on Jul. 1, 2026.

Example #2: Consecutive Closes Prompt

In the last 1 year, what happens after ticker NVDA closes down for equal to 5 consecutive days?

Screenshot taken from a Platinum test account on Jul. 1, 2026.

The Consecutive Closes Prompt is a way to examine what has historically happened after a stock moves in the same direction for several days in a row.

Screenshot taken from a Platinum test account on Jul. 1, 2026.

What the tool does behind the scenes

The tool scans history to find every instance where the ticker NVDA had 5 straight down days. Then it marks each of those moments as a starting point and examines how the stock performed after the condition occurred.

For example, once NVDA hits 5 consecutive down days, that moment becomes the starting point.

• From there, the tool checks:
• • Where the price is 1 month later
  • 3 months later
  • 6 months later, etc.

How to read the results table

For each time period (1M, 3M, etc.), it shows:

• # of Occurrences → How many times this pattern happened
• Avg Return → Average return after the streak
• Typical Return → Median return
• % Positive → Win rate (how often returns were positive)
• Avg Max Drawdown → Worst downside during that period

In your example, the data suggests:

• After 5 down days, NVDA has historically bounced back well in the near term - but with a small sample, it's worth treating this as one data point rather than a definitive pattern.

Example #3: Crossover Prompt

In the last 5 years, what happens after NVDA's RSI(14) crosses above its Simple MA (100-day)?

Screenshot taken from a Platinum test account on Jul. 1, 2026.

Aside from the RSI (14-day), you can select the RSI (2-day), MACD Histogram, Closing Price, Simple MA, and Exponential MA.

The last occurrence of this signal was 12/07/2023.

Screenshots taken from a Platinum test account on Jul. 1, 2026.

What This Condition Means

The RSI (Relative Strength Index) crossing above its own Simple Moving Average is a momentum shift signal — it suggests that short-term buying pressure is gaining strength relative to recent trends, often interpreted as a bullish trigger.

Every time NVDA's RSI crossed above its 100-day Simple MA over the past 5 years, it produced massive gains at the 3, 6, and 12-month marks with a 100% positive rate.

Screenshot taken from a Platinum test account on Jul. 1, 2026.

Example #4: Momentum Prompt

In the last 1 year, what happens after ticker NVDA has Momentum(10) greater than 0?

This condition tests every historical instance where NVDA's 10-day Momentum turned positive, meaning the price moved higher than it was 10 trading days earlier. Unlike RSI, Momentum is unbounded, so a "greater than 0" condition is really asking: how has NVDA historically performed just after its momentum turned upward?

Running the study produces the same Bar Chart and Performance Table breakdown as in any other condition — occurrences, average and typical returns, win rate, and average max drawdown across the 1-, 3-, 6-, and 12-month windows.

Screenshot taken from a Platinum test account on Jul. 1, 2026.

Example #5: VQ Prompt

In the last 5 years, what happened after ticker NVDA had a VQ greater than 35%?

This condition tests every historical instance in which NVDA's Volatility Quotient (VQ) climbed above 35%.

Running the study over the last 5 years produced the following results:

• 1 Month (1,233 occurrences): Avg Return +5.2%, Median Return +3.4%, % Positive 60.9%, Avg Max Drawdown -11.6%
• 3 Month (1,191 occurrences): Avg Return +16.5%, Median Return +13.5%, % Positive 68.5%, Avg Max Drawdown -19.5%
• 6 Month (1,130 occurrences): Avg Return +36.1%, Median Return +21.7%, % Positive 77.1%, Avg Max Drawdown -26.8%
• 12 Month (1,002 occurrences): Avg Return +95.8%, Median Return +62.1%, % Positive 83.5%, Avg Max Drawdown -34.8%

Last Occurrence: 07/15/2026.

Historically, elevated VQ readings in NVDA have been followed by strong forward returns and rising win rates over longer horizons — though the deepening average max drawdown at longer windows is a reminder that high-volatility setups can also carry more downside risk along the way.

Screenshot taken from a Platinum test account on Jul. 16, 2026.

Need Help?

Our Customer Success team is ready to assist:

• Phone: 1-866-385-2076 (toll-free)
• Email: [email protected]

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