Calculate The Result, Then Reverse It

Rules evaluate to either true or false. Line 1 is either above Line 2 or it isn't. True/False. Yes/No. Go/Stop. Using the "calculate the result of this rule, then reverse it" option does exactly as it says. The reverse of true is false; of false is true. No real reason for a lengthy explanation.

But it does need a little explanatory section like this because of a particular scenario. Read on.

Instead of this option, you could always just use a rule which is the opposite. These are opposites:

1. Line 1 is above Line 2
2. Line 1 is below Line 2

So what's the difference between these?

1. Line 1 is below Line 2
2. Line 1 is above Line 2, and use the "reverse it" option

When Line 1 is below Line 2, both option #1 and #2 are true.

When Line 1 is above Line 2, both option #1 and #2 are false.

When Line 1 equals Line 2, option #1 is false, while option #2 is true.

Using the "reverse it" option, ATM calculates the result of the rule as if you did not use this option, then it takes the opposite of that result.

So when Line 1 equals Line 2, no, Line 1 is not above Line 2 so the normal result is false, then taking the reverse, the result becomes true.

Here's one example to consider - the MACD Histogram cross from below zero to above zero.

For this one, you choose the following entry rules:

1. Line 1 is below X (zero), use the MACD Histogram indicator, and use a bar offset of 1 (meaning you want the rule to have been true 1 bar ago)
2. Line 1 is above X (zero), again using the MACD Histogram indicator

These two rules combine to allow an order to be placed only when the MACD Histogram crossed from below zero to above zero.

But what if the value of the MACD Histogram 1 bar ago was exactly zero? In this case the MACD Histogram is neither below zero, nor above zero. So while the MACD Histogram has legitimately crossed from below to above zero, ATM will disallow the trade because it thinks the MACD Histogram was not below zero 1 bar ago.

(Remembering that ATM is in fact doing exactly as you told it to do).

This situation is not going to happen very often. If it did, all that happens is you miss a trade (you can't lose money by not trading). But if you're worried about it, set the entry rules to this:

1. Line 1 is above X (zero), use the MACD Histogram indicator, a bar offset of 1, and the "reverse it" option.
2. Line 1 is above X (zero), again using the MACD Histogram indicator

Doing it this way effectively changes the entry rule from being "enter when the MACD Histogram crosses from below to above zero" to "enter when the MACD Histogram goes from not above zero to above zero". There's a subtle difference.