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When traders want to know if it’s a good time to buy or sell securities, trading signals sends them in the right direction. Trade signals change constantly, and like day trading in particular, require prompt action. The wrong signals, or “alerts,” or misunderstood signals can cost you a great deal of money. The right, lightning fast trading signals can put you in the catbird seat. That’s why it’s crucial to use not only top trading signals, but the types of alerts that suit your trading style.
Utilizing trading signals also depends on individual investment strategies. Contrarian investors might consider a general “sell” signal as a good time to bottom fish for stocks other investors are dumping. When traditional investors flee, that’s a possible market bottom.
Trading signals are primarily based on technical analysis. Sometimes, a buy or sell signal is triggered by world events or company announcements, but indicators provide the majority of trading signals. On charts, the following include trade signals:
Also known as a trigger line, a signal line consists of a moving average used with an indicator to denote buy or sell signals. Traders look for an indicator moving above the signal line when purchasing securities and sell securities when the signal line moves below the indicator. While various tools are used for generating signal lines, two of best known are the stochastics oscillator and the Moving Average Convergence Divergence (MACD). The former is a basic momentum indicator, comparing the closing price of a particular security over specific time periods. For example, it may take into account the current closing price, and highest and lowest closing prices over a 14 day period. Oscillators measure percentages, on a scale of 0 to 100. These percentages, based on market trading ranges, indicate buy or sell conditions and opportunities.
The MACD compares two types of price moving averages. This involves the Exponential Moving Average (EMA), which is similar to a simple moving average except later data counts more heavily. The most used EMAs are the 12 and 26-day indicators, and the MACD calculates the difference between the 26 and 12 day EMAs. The nine day EMA calculated by the MACD becomes the signal line. When plotted against the MACD, that signal line triggers the buy or sell signals.
Traders use different schools of thought with particular trading signals. As with any such schools of thoughts, they are based on both trading history and specific goals. For example, with pennant formations, one trader may prefer to enter a trade at the breakout point while placing a stop-loss order just above the opposing trend line. Another trader may enter the trade prior to the breakout point, before it finishes forming. The stop-loss is placed outside the trend line, opposite to where they expect the breakout. Such traders rely on the lower risk of early pennant trading.
If you don’t day trade as a full-time job, your ability to keep track of the markets is limited. Even if you do day trade professionally, you’re still human and may miss an opportunity since the market moves so quickly. Trading signals automatically appear on your charts, as well notifying your phone or email so you’re always on top of your game.
At SureTrader, we provide clients with the top technical analysis tools necessary for utilizing trading signals. Our simulator allows you to research these tools, become familiar with them and decide which types of trading signals works best for you. Customize these tools for your needs. With leverage at a 6:1 ratio and competitive commission rates and account fees, we help our clients succeed no matter what type of trading strategy they prefer. That’s just part of the SureTrader advantage.
Disclaimer: This web site is for informational purposes only and does not constitute an offer or solicitation for brokerage services, investment advisory services, or other products or services in any jurisdiction where we are not authorized to conduct investment business or where such offer or solicitation would be contrary to the securities or local laws and regulations of that jurisdiction. System response, trade executions and account access may be affected by market conditions, system performance, quote delays and other factors. The risk of loss in electronic trading can be substantial. You should therefore consider whether such trading is suitable for you in light of your financial resources and circumstances. All trades are executed in a principal capacity, our clients do not have direct market access. All transactions are executed against Swiss America Securities, Ltd. in a principal capacity. Swiss America Securities, Ltd. may profit as your counter-party. You should consider this conflict of interest before placing any trades.