Setup

Traders talk about a setup the way a chess player talks about a position: not a move, but the arrangement that makes a move possible. A trend rule’s setup might be “the price is above its 20-day average and volume is picking up”; a dip buyer’s might be “the price has fallen a little under its average but the longer trend is still up”. When those conditions are lining up, the setup is forming. When they all hold at once, the rule fires and the setup has become a signal.

In BotStock, every rule scores its setup between 0 and 1 on every look, and the On deck panel on Trading lists the ones closest to firing. For example: a dip buyer scoring AMD at 0.72 has most of its conditions met and is waiting on the price to dip a little further; at 0.95 it’s one tick from a buy. A rule at 0.20 has barely started.

The word is worth knowing because it separates two questions people run together: “did the engine trade?” and “was there anything to trade?”. A day with no fills and nothing above 0.5 on deck was a day the market gave your rules nothing to do — which is a different thing from a day your rules missed.