Trading signals: from indicators to algorithms
Category : Uncategorized
How do you make a decision to buy or sell a financial asset? Probably, you have an algorithm that helps you make the right choice, haven’t you? That strategy, which indicates the time of entering the market, what volume you need to enter the transaction, and also how long to hold it. To put it simply, the trading strategy should tell you where exactly you need to open a long position, and where to open a short one. Usually,these “instructions” are called trading signals.
Trading signals are the final filters in the trading strategy that indicate the triggering of all necessary conditions in your trading strategy and notify you of the best investment opportunities. They can be implemented with the help of alerts, warning systems to the mobile device or special programs.
Trading signals, as I wrote above, can be realized with the help of automatic systems. If your trading strategy is based on technical indicators, itwill not be very difficult to realize the signal in the form of an automatic panel. In that case, all the signals of the fix api trader will be displaied in one place and if desired he can filter them for reliability based on the current trend.
Panels for displaying signals are very popular today in the market, because it allows you to look at it and in a matter of a few seconds to understand what is the situation on the market and where to open deals. There is also a possibility of automatic operation of some panels. Thus, they will work as trading robots, making trading operations in the fix apiforex market without additional intervention of the trader.
However, in order to compose a trading panel or form an effective methodology for a trading strategy, you should know what trading signals exist, with what tools they are identified and how they should be interpreted for effective trading.
For this purpose,I propose you to review several key trading signals that the absolute majority of players use in their fix api trading:
- Reversal signals. As a rule, this group is formed with the help of patterns to which both reversal bars and combinations in the form of harami can refer http://www.onlinetradingconcepts.com/TechnicalAnalysis/Candlesticks/Harami.html). I recommend these signals to be taken into account when opening deals with a minimum amount. If after the opening the deals on the basis of reversal combinations, other signals are generated that confirm their dynamics, it is possible to search for additional signals for entering the market.
- Divergence. Quite a popular trading signal, which helps the manager to determine correctional zones within the trend, in order to fix profits and in the future to re-open the position. This signal is formed on the basis of the indicator’s values (the main ones are: MACD, Awesome Oscillator, RSI), as well as the quotes of the asset. So, if the quotes increase, and the indicator’svalue decreases, then this is a signal to possible correction down. If, on the contrary, the quotations are reduced and the indicator’svalue grows, we should expect correction upwards.
- Level breakdown. Breakdown is one of the strategies for working in the fix apiforex market using level analysis. This signal indicates the trader that the market is set to follow the trend and also goes into a new phase. Therefore, with such signals, I recommend you to find another 2-3 signals confirming the trend and enter when the breakdown of the local maximum/minimum or fractal zone is repeated (http://www.traderslaboratory.com/forums/forex/19287-trading-forex-fractal-strategies.html).
- Signals from the indicators. Here, you can list a lot of different combinations and groups of indicators. But I think you can cope with this task independently checking the Internet. I isolated these signals in a separate block, since they can be the same confirming filters for other trading signals.
Undoubtedly, it is impossible to unite all the trading signals that I brought above into a single trading strategy. However, if you can expand your strategy by logical continuation in the form of data for trading signals, this will enable you to avoid false entries into the market and increase the investment capital.