Examples of Fuzzy Logic

In advanced software trading models, systems can use programmable fuzzy sets to analyze thousands of securities in real-time and present the investor with the best available opportunity. Fuzzy logic is often used when a trader seeks to make use of multiple factors for consideration. This can result in a narrowed analysis for trading decisions. Traders may also have the capability to program a variety of rules for enacting trades. Two examples include the following:

• Rule 1: If the moving average is low and the Relative Strength Index (RSI) is low, then sell.

• Rule 2: If the moving average is high and the Relative Strength Index (RSI) is high, then buy.

Fuzzy logic allows a trader to program their own subjective inferences on low and high in these basic examples to arrive at their own automated trading signals.