TRADING SIGNAL
Trading signals follow a specific methodology of swing trading through price action analysis. Signals are categorized into time frames. Each time frame acts as an independent virtual trader that follows through the signals displayed. Multiple time frame trading can be achieved by following all signals in all time frames for each instrument.
Signals can be used to outline possible trading scenarios and are an example of a trading methodology executed in live market conditions. According to their own preference, traders can decide in which time frame to trade. Lower time frames require longer hours for monitoring active positions in the market. The lower the time frame traded, the higher the frequency of possible trades. The higher the time frame the signal is presented in, the longer it will take for the trading scenario to develop and conclude. Multiple time frame trading can be achieved by following all signals across all time frames on each instrument. In each case, the execution of trading signals must be accompanied by money management techniques in order to control active exposure.
Trading signals can also be used as a way to view an analysis of the market, identify the direction of each time frame and see where targets are outlined, along with extreme price conditions, and recognize trends. The trending characteristics of all time frames on a given instrument can give traders an outlook for the state of the market and on how aligned trends are over multiple time frames.
During signal output times, trading scenarios with entry levels prepared are outlined in the morning and afternoon calls. Once a previously outlined signal has been activated, the next report will continue to follow through the existing trade, managing exit levels along the way, until the trading scenario has reached exit levels. After a trading scenario has ended, the specific time frame searches for the next trading scenario.
Following through a specific methodology, in some cases, entry levels are formed and activated between signal output times. In these cases, the activated signal or next opportunity to enter will be outlined in the next report. Each time frame acts as a separate virtual trader, however less volatile results can be achieved by using money management to follow all signals on all time frames and on all instruments.
Each trading scenario is outlined with 2 take profit targets, where ongoing positions are closed 50% at the first target and 50% at the second target. This can be achieved by manually closing 50% of the position at the time the market reaches the first target or by entering 2 trade orders from the beginning but outlining different profit targets. Both positions use the same stop-loss, and a trail of a stop-loss towards entry level implies both stops to be moved in case both halves of the positions are still active.
Quantified trading signals can be based on different types of strategies. Some buy high in the hopes of selling higher, while others try to create a great risk/reward ratio by buying low hoping to sell on rebounds or reversals in price action. Here are four different types of trading signals.
Momentum signals are based on buying strength. Momentum traders wait for a strong move in a stock and then buy and get on-board for a short amount of time. Momentum traders usually trade short time frames of days. These work primarily in bull markets.
Breakout signals are based on buying all-time highs or 52 week highs, trying to buy high and sell higher. Breakouts are bought trying to catch a parabolic move where a stock could double or even triple over weeks and months. These work primarily in strong bull markets when indexes break to all- time highs.
Buying oversold dips are based on buying a long term price support level or an oversold oscillator like the 30 RSI, a price extension far from the 10 day EMA, or a -80 to -100 $NYMO. This signal tries to create a great risk/reward ratio based on buying a deep dip of a historical price range. These work best in range-bound markets.
Trend following signals try to go in the direction of the long term trend by using long term moving averages like the 200 day SMA breaks as buy or sell signals, or all-time highs or lows to enter longs or shorts. These work in trends with higher highs or lower lows.
