Using Stock Trading Signals to your Advantage

By: Adamheist

Signals are the indications of market conditions. These are extremely beneficial for an investor who wishes to remain in the market with an investment for only a short period of time. Obviously the market would fluctuate with each passing day. Sometimes the market would be favorable, while other times it would not be. Hence signals are required which would enable the investor to act upon them, as per certain conditions of the market.

For long term investors the signals may not be very important, since all changes that take place in the market are remedied in the long run. But these signals could spell life and death for investors who treat investing as a fulltime job. They mostly use the signals that are provided online, or are assimilated into software. Knowing these signals, the investor is in a position to pass some order.

Software signals are provided by most reputed brokers in the investment market. One would have to subscribe to avail of its benefits, and the subscription fee would run up to hundreds of dollars. However the choice that these programs offer is commendable. The investor him/herself can choose which signal to act upon, and which signal to block.

Signals are also helpful for those who cannot remain on their computers for a long period of time. These signals could be customized to be received on a daily or hourly basis. All signals are fully automated, so the transmission is fast and accurate. But different agencies could charges differently for the same kind of job. Hence it is in your best interests to shop around before shelling out for the signal service.

When a third party is involved in providing the signals, then it is important to know what the criteria for producing the signals are. Sometimes, the signals could become confusing as different kinds of market data could clash with each other. This would send out even wrong and unwise signals to the investor.

How accurate the signals are would depend on the prevalent market conditions of that time. If the market is favorable, then the trend signal would be to buy. However, the long-term oscillator indicators would caution that the market could become overbought and hence send out a sell signal. Now both of these things would be wise to do; trends could be more justifiable during short-term fad conditions and oscillator signals are best when the market is undergoing a state of transition. Both signals would often have conflict each other.

Therefore it is necessary to work on the principle of averages. A wise investor would not rely on a signal that judges with one factor, but that one which uses at least three different market indicators for its verification. Such signals would cover more aspects of the market and hence could be thought to be more accurate. It is also advisable to consider signals applicable in different timeframes. This would help to understand variations in the market better.

There are different ways in which signals can be delivered over to the investor. Daily emails are the most popularly used, or they could also be displayed on the broker's website. If so, they could be integrated into the trading software, so that the investor would get pop-up alerts from time to time.

The fees to be paid for getting a signal facility are generally on a monthly basis. These could be very expensive - something like several hundreds of dollars per month - but then they are designed for the hardcore investor who looks upon investment as a business.

The investor must make research on the competition in the market. Signals could save the investor's time, but they could compound the carelessness of the investor about the market. The signal should be used as a tool only, and the calculations should be personally done in order to achieve the maximum benefits on the investment.

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