How do you read trading signals?

As an overview, when prices reach a low level (in the case of stocks) or a sell point (in the case of commodities), they stop falling and start to rise until they reach the high end of their trading range.

The same principle applies when prices reach a high level—they stop rising and begin to fall, eventually returning to their original price levels.

Possible trades could be taking long positions in stocks if they hit lows and shorting them when they are at highs as a form of insurance.

In other words, you'll make money whether it goes up or down with your long position, while you only lose money with your short position if it goes up instead of down.

Every investor, whether a professional or a novice, needs to rely on trading signals to identify trends, know when to enter or exit a position, and determine to stay the course.

But knowing how to read trading signals is imperative to being a successful trader.

A trading signal is just a trigger to buy or sell an investment using predetermined criteria.

Now, the most common trade signals are:

• Moving Averages (MA): A calculation to understand data points and update the average price.
• Moving Average Convergence Divergence (MACD): A momentum indicator identifies the direction of a stock's price trend, be it strong or tepid.
• Relative Strength Index (RSI): A measurement of the size of recent price changes to learn if the asset is overbought or oversold.
• On-Balance Volume (OBV): A technical indicator employing volume changes that can forecast prices and bullish or bearish performances.

It is challenging at first, but, with enough trading practice, you can easily read these signals.

The best thing you can do is begin with a demo account, take a few trading signals, and practice with your trading tactics.