If an extremely experienced trader told you they would personally tell you when to buy a stock and when to sell it, most people would leap at the opportunity. Believe it or not, trading signals can accomplish this exact effect for a fraction of the price that it would cost to get the same advice from an investment firm. You just have to know how to use them.
Would you like to be one of a trader that makes quit-your-day-job money? Keep reading to learn more about stock trading signals.
Trading Signals 101
Whether you’re dealing with options trading signals or swing trading ones, trading signals are indicators that let you know when to enter or exit a position.
The specific signals will often depend on the trading timeframe. So, for instance, many short-term traders will have a set of specific day trading entry and exit signals while long-term traders may rely on a different set of indicators altogether.
This is important because the adage of selling high and buying low is a necessary part of trading. But if you don’t know what to look for, you could find yourself buying against the trend — or worse, panic selling. Trading signals give you a systematic trigger that takes the guesswork out of trading.
How Can You Use Trading Signals?
Many traders learn about the power of trading signals and immediately start looking for a list of the best trading signals out there. The only problem is that although it’s possible to create a system that will let you know when to buy and sell, it’s on you to develop and establish those rules.
Some helpful rules to consider include:
- Making sure you don’t have too many indicators
- Testing and paper trading before making real-time trades
- Establishing a reliable alert system
It’s also important to understand that although technical indicators can be extremely useful, they aren’t infallible. For this reason, it’s a good idea to make sure you understand what the indicator is doing as well as what it means when your trading signals are doing certain things. This ability to do basic fundamental analysis will allow you to enter and exit positions with more confidence.
Where Can You Find Trading Signals?
For many people, free trading signals can be found directly through their brokers. And depending on the timeframe and the stocks you’re following, this might be the easiest and most efficient way to find stocks you might be interested in.
To that end, the Yahoo Stock Screener is an invaluable resource.
If you’re dealing with the foreign exchange or some other niche market, however, these general resources might not be enough. You may need to get your signals from the experts. If you’re interested in exploring the precious metals market, for instance, you can read more about this here.
Boost Your Stock Market Returns With Trading Signals
Trading signals don’t just make it possible for you to decode the market. They allow you to establish rules for yourself that will help you become a more disciplined trader overall. And this, in turn, should make it easier for you to be the kind of trader that makes consistent profits every year.
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