Trade Signal
Posted on February 7th, 2009 by Tom Flora under Trade Signal.
Trade Signal
A trade signal can be generated by your own criteria or from a third party source. Some people prefer to buy the trade signal and enter the trades themselves. I started out trading commodities that way many years ago. I used the service for just over a year until I learned how to find a profitable signal on my own.
You can also create your own simple trade signal based on criteria you set up. You can set your Meta-trader platform to give you an audible or visual trade signal when, for example, the 4 period moving average crosses over the 8 period MA.
Another trade signal can be a candlestick formation like a hammer candle showing a turning place in a trend.
A common trade signal is the head and shoulders formation.
This type of formation even shows where to put your stop and limit. This is one I briefly talk about in my beginner class DVD.
For new traders a trade signal can be generated by the MACD or slow stochastic. But after some time and losing trades a trader is back on the quest for a better trade signal. The problem is that we always think there is a better trade signal just around the corner. The key to any trade signal is test it, know what to expect and don't throw it out until you have figured out just how much to expect including how often it will fail. We will never find the perfect trade signal that works every time.
There are many different ways to generate a signal but each one needs to have a specific target and a defined risk. We don't just take a trade and then hope for the best. Each signal should be tested on a demo account for a few weeks before trading real money. Finding a trade signal is not the difficult part. Finding one that makes consistent profits takes a little more work. Don't give up though. Find the one that works for you and your trading style. If I can help then please let me know.
Risk Warning