How to find the best day trading signals

Table of Contents

Can anyone use trading signals

Once upon a time, active trading was on the exclusive list for people who were working for financial institutions, trading houses, and brokerages.

Thanks to the internet and advancement in technology, trading has become more accessible to virtually everyone who fancies trading and will love to trade.

Today, anybody can trade stocks, commodities, futures, and indices, among other financial instruments, from anywhere in the world and turn out profitable trades with the right tools and strategies.

Speaking of strategy, there are people who cease tiny movements in the market and accumulate profits over time—day traders.

options trading signals

What does it mean to be a day trader?

To trade in the stock market or any other securities, all you need to do is understand your chosen market’s basic concepts and principles.

As a day trader, your primary goal is to enter into strategic valuable trades and close all your positions before the trading day’s close. And because trading sessions overlap, day traders are arguably the most active participants in the market.

Interestingly, you can make a living or a lucrative career out of day trading. It may not come as easy as you will expect, but with the right day trading plan and strategies, you can lock in a good number of profitable trades.

Remember, day trading or any other type of training is not a get-rich-quick scheme. Even experienced traders do have their bad days and rough patches. So, day trading is not a guarantee that you will make all the money in the world within the blink of an eye.

Having described what day trading entails, have you thought about using day trading signals?

What is a trade signal?

Unless you are new around the block, the chances are that you have the words trading signals and are yet to wrap your mind around it.

You can think of trading signals as an indicator for selling and buying assets or other securities in the financial market. And they are often generated through either manual or automated technical analysis.

Before we talk more about technical analysis, let’s quickly mention that trading signals do not just alert you receive from trading signal providers. Day trading signals can also be gotten through technical analysis when stocks meet certain criteria based on technical indicators.

Having mentioned technical analysis, you have to familiarize yourself with technical indicators. Having knowledge of trading indicators will help you determine the market trend and be prepared for opportunities that might pop up in the market.

You will spot market trends, reversals, market volume, relative strength, and momentum with the right choice of indicators. So, you have to invest enough time understanding how to maneuver trading indicators and make the right choice of indicators for your trading strategy.

The right choice and combination of indicators will boost your chances of catching profitable trades. In contrast, the wrong choice of indicators will hinder your success in speculating market activities as a day trader.

Understanding trading strategies

As we mentioned earlier, technical indicators are an excellent source of day trading signals. If you make time to understand how they work, you will be amazed at how you can generate profitable signals for your trades.

Before we dive deeper into trading strategies, let’s quickly mention that technical indicators can be classified into five broad categories:

  • Trend
  • Relative strength
  • Volume
  • Momentum
  • Relative strength

You have probably heard of lagging and leading indicators. Here is the distinction between them. Lagging indicators give you historical information about the current trends of activities happening in the market — it tells you what led to the recent price action.

On the other hand, leading indicators attempt to speculate or predict future price actions based on previous price actions. Popular technical indicators include the simple moving averages (SMAs), Bollinger bands, exponential moving averages (EMAs), and stochastic. You have probably come across these names while surfing the net or in trading chat rooms.

options trading signals

What are trend indicators?

Just as the name implies, trend indicators show you where the market is at any given time. These indicators tell you if the market is up, down, or sideways (in a range). And they are lagging indicators.

• Mean reversion indicators

These are also lagging indicators, and they tell you how far price will swing in a trend before a corrective wave counters an impulse wave — think retracement.

• Relative strength indicators

Relative strength indicators, or RSI for short, tells you the buying and selling pressure in the market. In technical terms, we can say that RSIs measure price oscillations. They are arguably the most up used indicators on the list of leading indicators.

• What do momentum indicators do?

As you can imagine, momentum indicators are designed to measure the speed of changes in price over a period of time. And they are leading indicators as well.

• Volume indicators

If you want to know who is in charge of the market in the market (the bulls or the bears), you can tell by simply pulling up volume indicators.

Volume indicators accumulate and quantify trades over a given time and tell who is running the market. These indicators reaffirm the market trend and prevent you from trading the wrong side of the charts.

Technical indicators are intended to make your analysis simple

While indicators offer essential information to help you make informed decisions during technical analysis, you must be careful not to clump your chart with indicators. Having too many indicators often confuse traders and make them miss out on opportunities in the market. Another scenario is that you could end up taking false signals from your indicators.

To be on the safe side and make the most of technical indicators, it is always best to keep your trading strategies simple and use fewer indicators. Choose indicators that aid your trading strategy and make analysis simple.

Indicators are intended to help you see through the “noise” and focus on true trend and momentum. As such, improving your market (entry and exit) timing.

Using technical indicators to generate day trading signals

As a day trader, you’re always looking out for whatever will make your analysis simple and help you catch every profitable movement in the market is your friend. If you use technical indicators correctly, you will be amazed at the incredible quality of trading signals you will be getting.

For instance, the moving averages crossover strategy has proven to be effective in generating reliable signals. It may not win all the time, but it has recorded more wins than losses. If you invest more time learning how to use technical indicators, you will see for yourself how many opportunities have been passing you by.

Enroll in day trading education programs to improve your trading knowledge

It would help a lot if you signed up for education and mentorship programs and will help you develop profitable trading strategies. With the right trading signals education and expert guidance, you won’t have to depend on “trade gurus” or some “wall-street wolf” for trading signals.

While you are at it, recall that no combination of indicators can guarantee 100% wins or can predict where the market is headed at all times. Too many indicators or incorrect use indicators can mislead your thoughts and blur your view of the market.

To boost your chances of winning more trades, always trade high probability set up and use technical indicators to confirm your analysis before taking any trades.

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