Trading signals are recommendations delivered by traders or generated by trading systems or indicators. These trading signals could be classified into four categories:
Buy signals are recommendations to buy a particular asset.
Sell signals are recommendations to sell a particular asset.
Short signals are recommendations to short a particular asset. To short a stock means to sell a stock that you do not own.
Cover signals are recommendation to buy-back a shorted asset.
Example of trading signals generated by a technical analysis indicator:
The Relative Strength Index generates a buy signal when it is in an oversold area and it generates a sell signal when it is in an overbought area.
Trading financial instruments, including foreign exchange on margin, carries a high level of risk and is not suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in financial instruments or foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading and seek advice from an independent financial advisor if you have any doubts.
