Trade Signals
As a trader one of the courses you must learn when it comes to trading the stock trading 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 two MAs cross-over each other.
- Buy signal - Moving Averages 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 & a set of trade rules for this stock system.
A system is a combination of two 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 Indices Trading Journals.
From the above trade system a trader can generate stock signals using the trade rules below
Buy signal
- Both Moving averages pointing upwards
- RSI above 50
- Both Stochastics moving upwards
Sell signal
- Both Moving averages pointing downwards
- RSI below 50
- Both Stochastics heading downward
An exit signal is given when MAs give an opposite or RSI Indicator gives an opposite signal: A signal in opposite trend direction.
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