DEFINITION of 'Trade Signal'

A sign, usually based on technical indicators, that it is a good time to buy or sell a particular security. Trade signals come in a variety of forms, including bull or bear pennants, rectangles, triangles and wedges, as well as head-and-shoulders chart patterns. Trade signals may also bring attention to abnormal volumes, options activity and short interest.

BREAKING DOWN 'Trade Signal'

Trade signals can also be combined with fundamental analysis to give investors another weapon in their stock trading arsenal. In volatile markets and/or with high-beta stocks, using trade signals can be invaluable to investors - not only to point out promising opportunities as they appear, but also to signal when they may disappear.

RELATED TERMS
  1. Signal Line

    A moving average plotted alongside a technical indicator and ...
  2. Rectangles

    A technical trading pattern in which a security's value ranges ...
  3. Rectangle

    A pattern formed on a chart where the price of a security is ...
  4. Pennant

    A continuation pattern in technical analysis formed when there ...
  5. Sell Signal

    An event or condition that alerts investors to dispose of a particular ...
  6. Flag

    A technical charting pattern that looks like a flag with a mast ...
Related Articles
  1. Investing

    The Rectangle Formation

    Find out how this technical pattern can be useful in your trading arsenal.
  2. Trading

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  3. Trading

    Continuation Patterns: Rectangles and Pennants

    Flags and pennants indicate direction of activity of the prevailing trend. Learn how.
  4. Trading

    Triangles: A Short Study In Continuation Patterns

    Learn how to read these formations of horizontal trading patterns.
  5. Investing

    Introduction To Technical Analysis Price Patterns

    To "find your game" in technical analysis, you need to be able to recognize reversals and continuations as they form.
  6. Trading

    Continuation Patterns - Part 2

    Take a closer look at triangles, which appear in ascending, descending and symmetrical forms.
RELATED FAQS
  1. What are the most common continuation candlestick patterns?

    Learn about the four most common types of continuation patterns found in candlestick charts: triangles, rectangles, flags ... Read Answer >>
  2. How are pennant patterns interpret by analysts and traders?

    Understand the basics of the pennant pattern, how it predicts trend continuation, and how analysts and traders identify and ... Read Answer >>
  3. What are the main differences between a Symmetrical Triangle pattern and a pennant?

    Understand the key differences between the symmetrical triangle and pennant patterns, including how they differ in formation, ... Read Answer >>
  4. How effective is creating trade entries after spotting a rectangle pattern?

    Understand the basics of the rectangle chart pattern, and learn how effective it is as a basis for short- and long-term trading ... Read Answer >>
  5. What are the fundamental differences between a pennant pattern and a flag pattern?

    Understand the basics of both the flag and pennant continuation patterns, their similarities and differences, and how each ... Read Answer >>
  6. How effective is creating trade entries after spotting a pennant pattern?

    Learn the basics of the pennant pattern and how it is used to create an effective trade strategy, including which factors ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center