Trading signal
Family V · Platforms
Not to be confused with expert advisor, signal.
Trading signal is a notification that a particular instrument should be bought or sold, usually with an entry price, a stop-loss and a take-profit level attached. Signals are produced by human analysts, algorithmic systems or a combination of both, and are distributed through trading platforms, mobile apps, email or messaging channels. The signal itself is information; acting on it requires a separate order placed with a broker.
What a signal contains
A complete signal typically specifies the instrument, the direction (long or short), the entry price or range, a stop-loss level, one or more take-profit levels, and a time frame or expiry. Some providers add position-sizing guidance or a confidence rating. Signals may be discretionary, based on a human analyst's reading of the market, or systematic, produced by rules or models that scan price, volume or other data.
Delivery methods vary by provider and platform: in-platform alerts, push notifications, email, webhooks or chat groups. Because formats, latency and reliability differ, a signal is not a standardised instrument and its terms should be read before use.
Worked example
The figures are illustrative. Actual pip values, spreads and execution prices depend on the broker, account type and market conditions.
Limits and risks
A signal is not a guarantee of outcome. Signals can arrive late relative to the price move, can be based on incomplete data, and can be wrong. Following a signal without independent verification means accepting someone else's risk parameters, which may not match the follower's account size, leverage or objectives. Regulatory treatment of signal providers varies by country; in some jurisdictions providers must be authorised to give investment advice, while in others the activity is largely unregulated. Past performance of a signal service does not indicate future results.
Often confused with
- expert advisor
- An expert advisor is executable software that runs inside a trading platform and places orders automatically, whereas a trading signal is a notification that a human or system may choose to act on; the visible sign is that an expert advisor has code, parameters and a running process, while a signal is a message with an instrument, direction and price levels.
- signal
- A signal is the notification itself, while a trading signal is the same concept described as a trading instruction with entry, stop and target; the visible sign is that 'signal' can refer to any alert or indicator output, whereas 'trading signal' specifically names a buy or sell instruction for an instrument.