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How to use trading signals correctly

Automated signals are assisting the trader in deciding when to enter into a trade. They help to track many assets simultaneously. It allows the trader do not trace the market permanently, jumping from one asset to another and looking for the asset suitable for a trade. At present time the system is tracing the following assets: AUD/USD, EUR/USD, GBP/USD, USD/CAD, USD/JPY, AUD/JPY, USD/NOK and XAG/USD. Let us know, if you want us to add other assets.

However, it does not release a trader from study of the market with technical analysis methods.

How to use the automated signals

One should take into account the column “Active”. It could be one of a two possible values there:

  • Countdown means the signal is still active and there is possible to use it for trading.

countdown

  • “In progress”. It appears after countdown and it means that some time had passed since signal issue. It is not recommended to trade using this signal when countdown is finished and status “in progress” appears.

 In_progress

Recommendation: Use the auto signals with technical analysis methods, particularly, in combination with resistance and support lines and trading indicators.

Signal generation

The signals are generated on the basis of candlestick analysis. Analysis is made for the four timeframes – 1, 5, 15 and 60 minutes. After close of the corresponding candle, the system makes analysis of the previous candles using the predetermined algorithms. In case a structure of candles is corresponding to the prescribed pattern, the system will generate a signal. So, the 60-minutes signal could be generated only once per hour (at 00 minutes), 15-minutes signal – 4 times per hour (00, 15, 30 and 45) and 1-minute signal – 60 times per minute (at the end of each minute). Signal that appear in auto signal section contain necessary information on how to enter an option, including time validity, during which the signal considered reliable.

For the construction of candlesticks we get the prices (quotes) from our partner broker Dukascopy Bank SA.

Patterns

BullishEngulfingOne of the patterns used for signal creation is pattern with name “Engulfing”.

A bullish engulfing pattern usually appears at the end of bearish trend and indicating the reversal of the market into bullish. This candlestick pattern forms when a black candlestick is followed by a bigger white candlestick that engulfs the previous black candlestick. Engulfing candlestick pattern is considered by many traders as one of the most reliable. On the other hand it should be used with caution for small timeframes.

 

The same idea lies behind the Bearish Engulfing pattern. With the only difference: in most cases it appears at the end of bullish trend and indicating the reversal of the bullish market into bearish.