Trade Signals
As a trader one of the courses you must learn when it comes to trading the stock market is how to generate trade signals. A signal is just a set of rules which explain when to buy or when to sell indices.
For example, the simplest stock system is moving average cross over system which generates signals once 2 MAs cross-over each other.
- Buy signal - MAs cross over pointing upwards
- Sell signal - MAs cross over pointing downwards
Trade System
To confirm the signals generated one will need to come up with a stock system and a set of trade rules for this stock system.
A trading system is a combination of 2 or more indicators & a set of written trading rules that are used to generate these signals with.
How to Create a Trading Systems
How to Write Stock Index Trade Journals.
From the above trade system a trader can generate stock signals using the trade rules below
Buy signal
- Both MAs pointing upwards
- RSI is above 50
- Both Stochastics moving upwards
Sell signal
- Both MAs pointing downwards
- RSI is below 50
- Both Stochastics heading downward
An exit signal is given/generated when MAs give an in the opposite market trend or RSI Indicator gives an in the opposite trend signal: A signal in the opposite direction.
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