What exactly is trade signal?

External question — Personal Finance Stack Exchange Author: stochasticmrfox Original post: https://money.stackexchange.com/questions/102277 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I understand that a trade signal is something that basically tells you to buy/ sell something after doing some analysis but what exactly is it? Would it be a figure that one would calculate? What is it exactly? Could you walk me through a simple yet realistic example please?

External answer — Personal Finance Stack Exchange Author: Bob Baerker Original post: https://money.stackexchange.com/a/102281 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. As an example, a simple trading system indicator is a moving average crossover. A buy signal occurs when the shorter (faster) moving average crosses above the longer (slower) moving average. A sell signal occurs when the shorter moving average crosses below the longer moving average (a popular combination is a 50-day and a 200 day moving average pairing). Shorter moving average systems are more timely, generate more trade signals and have more false signals than systems with longer moving averages. Longer term pairings will have fewer false signals but will be late in and late out. A system like this works well in a trend but poorly when in a trading range. Don't get excited by the prospect of this or almost any other technical analysis indicator. They predict nothing.