Often a set of investment rules will generate conflicting signals. For instance, it might call for an Enter Long trade on the same bar as an Enter Short trade. What is to be done in those cases? The governing directives are often called the Order of Execution. The Genetic System Search for Technical Analysis program, Equis MetaStock and others use the following rules to resolve any signal conflicts.
Initial Position
All system tests begin with the investor out of the market.
Entry to Long or Short Trades
In the case of conflicting Enter signals at the same bar, the Enter Long signal will be executed and the Enter Short signal ignored.
Signals Received During an Active Trade
All redundant Enter Long signals are ignored while the investor is in a long trade. All Enter Short signals are ignored while in a short trade. If the user has specified Long Trades Only, all short trade signals are ignored. If the user specifies Short Trades Only, all long trade signals are ignored. If the system is in a short position and an Enter Long signal is generated, the short position is exited and a long trade is entered. An Enter Short trade signal will close an active long trade and the short trade will be entered.