by LegacyFX
Trading signals are a way for investors to indicate that the market is moving in a specific direction. However, because signals typically only show market opportunities, it is up to each individual trader to examine the signal, weigh the risks, and decide whether to implement it on their trades. So, arguments whether to use or not use signals in one’s financial trading portfolio both exist. To help us differentiate each argument, we will discuss some key points about trading signals including what they are and how they work, how they are generated, what sources LegacyFX uses to provide such signals to our clients, and how traders can benefit from incorporating them into their trading strategies.
To begin, lets define what trading signals are. Signals are triggers for investors to take specific actions while trading. With them, traders have a mechanical method that can direct them to either buy or sell an asset. Thus, they can be used to determine when it is the right time to modify one’s portfolio by buying more or selling out of a particular asset or sector. Additionally, bond traders use signals to buy one maturity and sell another, adjusting the duration and range of their portfolio.
Two technical indicators, the RSI and the Stochastic Indicator are examples of trading signals. The Relative Strength Index (RSI) generates entry and exit signals. When a stock is overbought or oversold, this indicator measures its price movements. RSI is most effective when combined with well-understood and developed candlestick patterns, along with other indicators. Similar to RSI, a Stochastic indicator is also a price momentum indicator that generates trading signals for overbought and oversold conditions. Generally, it performs better on consistent trading ranges than the RSI, which tracks overbought or oversold levels by measuring price movement velocity. The latter assumes that the closing price will follow the current trend.
Signals are typically generated in one of two ways. One method relies a human-created analysis that employs technical indicators like overlays (where future prices are marked based on other prices on a chart) or oscillators (prices that are plotted over or below a price chart, indicating fluctuating minimum and maximum levels). The other option is to use mathematical algorithms based on market actions combined with other market factors like economic indicators.
Since signals necessitate technical indicators and can greatly improve a trader’s outcome and portfolio, LegacyFX provides these analysis tools to our clients free of charge. We sometimes generate trading signals through our dedicated in-house technical analysis team, who meticulously review the market, charts, news updates, and other information to create numerous market reports and ideas. Such reports and ideas are then directly relayed to our clientele via numerous communication methods, such as email, pop-ups, social media, Telegram, WhatsApp, etc.
Autochartist–a third-party, licensed, and trustworthy signal provider–is LegacyFX’s other source for generating trading signals. Their advanced computerized systems filter large amounts of data analytics to identify chart patterns and critical price levels, across a wide range of tradable instruments. Autochartist’s Volatility Analyses, for example, provides traders with insight into relative movements in the Forex market by storing information on pip movements over time. Based on an asset’s history, this volatility analysis predicts the likelihood of upside or downside momentum and can forecast maximum expected price movements. Such analysis is helpful for traders as they can set limit orders–like stop losses or take profits–based on empirical data instead of manually determining such levels. This signal provider also supplies three daily reports that traders can review whilst trading. Such reports save time for traders by providing an overview of potential hot opportunities in the market or an expected reaction to an incoming economic event.
By incorporating trading signals into your strategy, you will gain access to tools for market analysis, which will save you time and serve as an additional source of information. Also, because signals can act as alerts for new ideas, you can jump on new trading trends easily instead of scouring the market for additional opportunities. The only argument against using trading signals is that to do so relies heavily on trusting the information provided.
The usage of signals is not necessarily a guarantee for profitable trades, but if they come from reliable sources, they can significantly increase one’s chance for success. Since LegacyFX is a regulated, professional, and transparent broker, our in-house technical analyses and provided signals are thus regarded by many as being top-notch and reliable. Therefore, many who use our trading signals feel they make trading less complex and risky.
Join us here to improve your trading strategy by using our signals!
