📈 Using Signals in Backtesting Tool

Signals play a crucial role in controlling entry timing within your strategies. In Allasso, signals help determine when a position should be opened during the backtest. This guide walks you through the process of configuring and using signal logic effectively.

🧠 What Are Signals?

Signals tell the backtester when to initiate a trade. If no signal is selected, the system will attempt to enter a position automatically on the last business day of each year by default and roll according to configuration. When you select a signal, you're instructing the system to only enter trades when that signal condition is met.

🔽 Signal Type Dropdown

In the "Select Signal" dropdown, you’ll find several built-in signal types, from the following categories:

🚫 1. No Signal

• No Signals – The backtester will attempt to maintain constant exposure by entering and holding positions without needing a trigger.

This is ideal for benchmarking or strategies that aim to maintain continuous investment.

🗓️ 2. Regular Calendar Signals

These are time-based signals that follow simple calendar logic:

• Week End – Enter trades at the end of each week (roll at the end of the next one)
• Month End – Enter trades at the end of each month (roll at the end of the next one)
• FAF (Fire and Forget) – Pre-set intervals like 1D, 3D, 5D, Week, Month - Enter trades every specified frequency and keep options to expiry.
• Roll Days - Enter trades every X calendar days (roll at the end of the next one)

Use these when you want time-based rotation or periodic re-entry.

📈 3. Technical Analysis Signals

These are simple momentum or trend-based signals, such as:

• SMA – Simple Moving Average crossover. Exposed to selected options structure when fast MA is below/above slow MA.
• MACD – Moving Average Convergence Divergence, with configurable fast/slow/signal smoothing. Exposed to options structure when the signal is above/below the MACD line.
• SOS – Swing point of swing point. Choose to initiate trades on the SOS Highs / Lows. 

These are helpful if you're testing momentum or trend-following entry logic.

📤 4. Upload Signal (Custom)

• Upload Signals – Let's you upload a custom CSV / Excel file with your entry points (e.g., dates or conditional flags).
  This is powerful for testing signals based on proprietary models, external indicators, or machine learning outputs.

📄 Details on the support file formats

🧮 Signal Source

In addition to selecting the signal type, you can also define the source used to calculate the signal. Options include:

• Front Future / Spot – Uses the front-month futures contract
• (Coming soon: IV sources like ATM, 25D, etc.)

This gives you flexibility to generate signals based on either market prices or volatility data, depending on your strategy design.

⚙️ Signal Parameters (Example: MACD)

When using technical signals like MACD, additional fields will appear:

• Fast Length – Short-term EMA window (e.g., 12)
• Slow Length – Long-term EMA window (e.g., 26)
• Signal Smooth. – EMA used to smooth the MACD line (e.g., 9)

The signal is triggered when the MACD line crosses above (for long) or below (for short) the smoothed signal line.

🌍 Multi-Asset Backtests

In multi-asset backtests, signals are calculated based on the spot price of the underlying asset in the first leg of each structure.

💡Tips

• If you want to hold positions all year, select “No Signals” and control exits via DTE or trade duration.
• Combine signals with hedging and roll settings for advanced portfolio behavior.