Basically, a Fuzzy Indicator should be used in a trading strategy as a buy rule, buying when the current bar displays enough strength of the "buy" pattern in recent bars. Likewise, you should sell when the current bar displays enough strength of the "sell" pattern in recent bars. You put one Fuzzy Indicator in as a long entry condition using the relational indicator (A>B), where A is the Fuzzy Indicator, and B is a numeric threshold. Then you put another one in as a long exit (or short entry) condition, with A>B, again where A is the Fuzzy Indicator, and B is a numeric threshold. Then the genetic algorithm optimizer in the NeuroShell Trader Pro or DayTrader Pro finds fuzzy logic engine parameters and threshold values that optimize the profit.

Note 1: The numeric threshold B should vary from 0 to 1 during optimization.

Note 2: The relational indicator A>B is used both with a buy rule and a sell rule. We do NOT use A<B.

Note 3: If you have a Fuzzy Indicator for a long entry, a long exit, a short entry, and a short exit, they are all optimized independently. Therefore, there are really four fuzzy logic engines being determined, which is appropriate.

The Fuzzy Indicators are not predicting any value into the future. They are simply showing how close the current price series matches your pattern. The "output" of the Fuzzy Indicator is a number from 0 to 1 which is the probability that the pattern under consideration matches the pattern described by the parameters of the indicator.