Getting Started

Welcome to x3Algo! This guide will help you understand the algorithm builder and create your first trading algorithm in minutes.

What is the Algorithm Builder?

The x3Algo Algorithm Builder is a powerful tool that lets you create, backtest, and deploy automated trading strategies without writing code. Whether you're a beginner or an experienced trader, the builder provides a structured approach to algorithmic trading.

The 5-Step Algorithm Creation Process

Creating a trading algorithm in x3Algo follows a simple 5-step process:

graph LR
    A[1. Basic Info] --> B[2. Position Sizing]
    B --> C[3. Entry Conditions]
    C --> D[4. Exit Conditions]
    D --> E[5. Risk Parameters]
    E --> F[Complete & Deploy]

Step 1: Basic Information

Define your strategy's foundation:

• Strategy Type: Choose from scalping, swing, position, momentum, mean reversion, arbitrage, or market making
• Timeframe: Select execution frequency (1m, 5m, 15m, 30m, 1h, 4h, 1d, 1w)
• Trading Symbols: Specify which instruments to trade (e.g., NSE:RELIANCE, MCX:CRUDEOIL)
• Name & Description: Give your algorithm a meaningful name

Step 2: Position Sizing

Determine how much capital to allocate per trade:

• Percentage-based: Risk a fixed percentage of your capital (1-5% recommended)
• Fixed quantity: Trade a consistent number of shares/contracts
• Risk-based: Calculate position size based on stop loss distance
• Volatility-adjusted: Use ATR to adapt to market conditions
• Kelly Criterion: Optimize position size based on win rate and profit factor

Step 3: Entry Conditions

Define when to open positions:

• Indicator comparisons: Use technical indicators (SMA, EMA, RSI, MACD, Bollinger Bands)
• Price patterns: Detect candlestick patterns (hammer, engulfing, doji)
• Logical operators: Combine multiple conditions with AND/OR logic
• Confirmation candles: Wait for signal confirmation (0-10 candles)
• Time filters: Trade only during specific hours or days

Step 4: Exit Conditions

Protect profits and limit losses:

• Stop Loss: Fixed, percentage, ATR-based, or indicator-based
• Take Profit: Fixed, percentage, risk-reward ratio, or multiple targets
• Trailing Stops: Lock in profits as price moves in your favor
• Partial Exits: Scale out at different profit levels
• Time-based exits: Close positions after a maximum hold time

Step 5: Risk Parameters

Set portfolio-level risk controls:

• Maximum position size: Limit exposure per trade (2-10% of capital)
• Daily loss limit: Circuit breaker to pause trading after losses (1-5% of account)
• Maximum open positions: Control how many trades run simultaneously (3-10)
• Risk-reward ratio: Ensure favorable profit potential (minimum 1:2)

Algorithm Lifecycle States

Your algorithm moves through different states during its lifecycle:

stateDiagram-v2
    [*] --> Draft: Create
    Draft --> Stopped: Complete
    Stopped --> Active: Start
    Active --> Paused: Pause
    Paused --> Active: Resume
    Active --> Stopped: Stop
    Stopped --> Archived: Archive
    Active --> Error: Error
    Error --> Stopped: Fix & Restart

State Descriptions

• Draft: Algorithm is being configured, validation is relaxed
• Stopped: Configuration is complete but algorithm is not running
• Active: Algorithm is running and can generate signals
• Paused: Temporarily suspended, can be resumed quickly
• Error: Encountered an issue, requires attention
• Archived: Soft-deleted, preserved for historical reference

Complete Working Example

Here's a simple moving average crossover strategy you can copy and test immediately:

{
  "name": "Simple MA Crossover",
  "description": "Buy when fast MA crosses above slow MA, sell on opposite",
  "strategyType": "momentum",
  "timeframe": "15m",
  "symbols": ["NSE:RELIANCE"],
  
  "positionSizing": {
    "method": "percentage",
    "percentage": 2
  },
  
  "entryConditions": {
    "positionType": "both",
    "logicalOperator": "AND",
    "conditions": [
      {
        "type": "indicator_indicator",
        "indicator1": "SMA",
        "period1": 20,
        "indicator2": "SMA",
        "period2": 50,
        "operator": "crosses_above"
      }
    ]
  },
  
  "exitConditions": {
    "stopLoss": {
      "type": "percentage",
      "percentage": 2
    },
    "takeProfit": {
      "type": "risk_reward",
      "ratio": 2
    }
  },
  
  "riskParameters": {
    "maxPositionSize": 10,
    "maxDailyLoss": 5,
    "maxOpenPositions": 3
  }
}

Glossary of Key Terms

• Algorithm: A set of rules that automatically executes trades based on market conditions
• Backtesting: Testing a strategy against historical data to evaluate performance
• Paper Trading: Simulated trading with real market data but no real money
• Live Trading: Executing real trades with actual capital through broker integration
• Position Sizing: Method for determining how much capital to allocate per trade
• Entry Condition: Rule that must be satisfied to open a new position
• Exit Condition: Rule that triggers closing an open position
• Stop Loss: Automatic exit to limit losses if price moves against you
• Take Profit: Automatic exit to lock in gains at a target price
• Trailing Stop: Stop loss that moves with price to protect profits
• Risk-Reward Ratio: Relationship between potential profit and potential loss (e.g., 1:2 means risk $1 to make $2)
• Drawdown: Peak-to-trough decline in account value
• Win Rate: Percentage of profitable trades
• Profit Factor: Ratio of gross profit to gross loss (>1.5 is good)

Next Steps

Now that you understand the basics, choose your learning path:

For Beginners

1. Build Your First Algorithm in 10 Minutes - Step-by-step guide for complete beginners
2. Backtesting Basics - Learn to validate your strategy
3. Paper to Live Trading Transition - Go live safely

For Intermediate Traders

1. EMA Crossover Strategy - Build a trend-following system
2. RSI Divergence Strategy - Implement reversal detection
3. Multi-Timeframe Strategy - Add higher timeframe confirmation

For Advanced Users

1. Strategy Optimization Walkthrough - Optimize parameters and avoid overfitting
2. How-To Guides - Task-oriented guides for specific features
3. API Reference - Programmatic algorithm management

Getting Help

• Documentation: Browse How-To Guides for specific tasks
• Troubleshooting: Check common issues and solutions
• Support: Contact support@x3algo.com for assistance

Ready to build your first algorithm? Let's get started with the 10-minute tutorial!