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The buy indicator tells you whether to buy the current security or not based on an indicator previous performance.
For each bar, this indicator will calculate the performance of another indicator for the past bars. It will simulate a buy and sell after n-bars when the provided indicator gives a signal.
Example: let us say we are in bar number 1200. We provide the buy indicator with the following indicator: rsi(14) > 70, with 20 as holding period and 500 as lookback period.
The buy indicator will now calculate, for the bar number 1200 minus 500 (800) to bar number 1200 minus 20 (1180), the performance of a strategy that buys the current symbol when rsi(14) > 70 and sells it after 20 bars.
This strategy return or performance will be used as the buy indicator value for the bar number 1200. We repeat then the above steps for the following bars.
The buy indicator will tells you whether a specific indicator is profitable or not and allows you to create dynamic trading rules that generate signals based on other indicators signals and their profitability over time.
Graph Interpretation: if the buy indicator rise over time then it means that the tested indicator is becoming more profitable, while a decrease in the buy indicator value means that the indicator is becoming less profitable.
When the buy indicator value is zero, it means that the tested indicator didn't generate any signal during the lookback period or that its average performance is zero.