Making informed decisions is a must in trading; no one really wants to lose or risk a significant amount of investment. So how do professionals wing it? With the help of trading signals.
What are trading signals and how you can benefit from them? Risk is something that comes with trading. However, there are systems and algorithms that can help us determine the best time to buy or sell stocks or commodities and one of them is trading signals. "Trading Signals are based on the idea that buy/sell signals are generated when the price crosses above and below a trendline," says financial expert James Maggio on his website.
The most obvious factor that affects a particular trading signal is the price of the commodity in question. Gold, for instance, has always been seen as a good asset in a portfolio. Supply and demand are the main factors that affect the price of any commodity. Learning about the trends in the price of gold can help give a good signal for the commodity. Is the supply of the commodity enough to satisfy the demand?
"Although there have been advancements in technology and equipment, only a single ounce of gold can be produced with ten tons of raw ore. This shortage affects the value of gold. Man always wanted to have something rare and gold is one of them. Today, it is still being mined anywhere in the world but the demand for gold is greater than supply," Empower Network explains.
So is this a good thing or a bad thing?
"The number of Bullion Vault users starting or adding to their gold holding increased slightly last month from September. But it was a 15pc fall in the number of net sellers which pushed the Gold Investor Index higher. Overall, net buyers outnumbered sellers better than two-to-one," Bullion Vault Head of Research Adrian Ash said in an interview.
There are two important things present on a signals chart: the current price and the quality of the buy or sell signal. The latter will tell you if it is profitable to buy or sell, and will also warn you if it's not.
Since the world of stock, futures, and commodity exchange is unpredictable, using trading signals and other risk management algorithms and strategies are quite beneficial for traders, especially novice ones.