STOCK SIGNALS

 What are stock trading signals? The solution is going to depend on who you ask.

Like dyed-in-the-wool contrarians might feel that an investment trading signal to market stocks might be when Time Magazine runs an image of a bull on its cover. A dyed-in-the-wool technical analyst on one other hand may look for certain stochastic numbers on a 30 minute bar chart to indicate when to buy a particular stock. And finally a dyed-in-the-wool 'fundamental' investor may consider certain financial amounts of the underlying business to be always a trading signal STOCK SIGNALS.

So to the mix i'd like to now add what I think is really a true and usable definition of an investment trading signal. Let me offer you a typical example of the kind of signal I like.

Take any given stock and look at all of the daily bars for the past 10 days. Next subtract all of the highs from all of the lows to have all of the daily ranges for each of the 10 daily bars and then calculate the typical range for those ten days. Let's call this AVERAGE DAILY RANGE. Next divide each daily range by two to have the midpoint for every day. Now find the typical midpoint for the 10 days. Let's call this AVERAGE MIDPOINT. Next take 125 % of the AVERAGE DAILY RANGE and add it to the AVERAGE MIDPOINT and that becomes our trading signal to buy tomorrow.

Thus we have created a sign using only two parameters, AVERAGE DAILY RANGE and AVERAGE MIDPOINT.

There are any amounts of methods to exit this trade, but again we want to keep it simple and limit our parameters. Like we might wish to put an end loss on the typical low and take profits on the typical high plus 150% of the AVERAGE DAILY RANGE.

Whatever the case I've created trading signals from the simplest ideas of market momentum theory and utilizing the most limited amount of parameters. And because of this this little trading system will most likely tame the randomness of short-term stock market movements and it will most likely make some money.

But in this short article I'm not trying to style a trading system. What I want to do here is simply to demonstrate my ideas of what is really a valid trading signal. Within my view an investment trading signal should embody the following:

1) An investment signal must be mathematical and precise in nature.
2) An investment signal must be programmable in to a computer so the computer and not the trader can track the relevant markets and alert the trader to when the trading signal has been hit. This permits the trader to diversify and to trade many markets simultaneously.
3) Finally the trading signal must be of this kind of nature that it may be tested in all sorts of markets and in all sorts of market environments to ascertain its accuracy and validity.

Used in this manner objective stock trading signals form the backbone of our trading system development and become indispensable tools for profitable stock trading.

Short Term Stock Trading, short-term stock trading is really a unique real time stock trading site geared to any or all investors and short-term traders thinking about high investment yields and limited risks. Real-time trades and some market commentary by "Trader Bob" are posted at the least twice daily every market day STOCK SIGNALS.

Robert or "Bob" Buran is writer of the book, "How I Quit My Job and turned $6,000 In to a Half Million Trading." He has been trading and currently talking about markets for over 15 years.