Trading signals are trading ideas or suggestions for financial instruments that are used to identify the right trading opportunities at the right time.
There are different ways traders can receive trading signals, often they will be sent through SMS, email, or push notifications. It is also possible to install platform add-ons that generate trading signals directly on the platform. Using trading signals can save you a lot of time and energy and they can also be used to help teach you new trading strategies, especially if you are new to trading. Signals also help you decide where to place a take profit and [stop loss] to ensure you lock in some profit or close a position to limit your losses.
Trading signal examples:
- Manual trading signals - generated by professional, seasoned traders, market analysts, or strategy providers.
- Computer-generated signals - software that tracks, and analyzes market price action based on algorithms.
- Paid trading signals – provided by a signal service provider, usually a company that charges a one-time fee or a subscription model.
- Free trading signals – some companies offer free signals or offer free trials for their signals package.
Key takeaways:
- Trading signals are alerts that inform traders of new trading opportunities.
- Implementing trading signals in your trading strategy is a good way to try new strategies and see how other traders make their decisions.
- A trading signal can be human-generated using technical indicators, or using mathematical algorithms.