Buy Signal
Buy signals aren't necessarily set signals...they are events or conditions that act as alerts to investors that it might be a good time to buy shares.
These signals can include most anything...large portions of a particular share being sold, the price dipping to a certain range, etc. Software can monitor and chart the prices in real-time, saving the investor from having to check and compare prices manually.
For instance, you could set your program to chart the prices and show when the stock breaks out of its resistance area. (The resistance area is the range the stock has been hovering at with no real loss or improvement.) When it breaks out of that area, the software could send you a notice.
It's not just numbers on a chart, though. Some analysts rely on more, well, casual indicators...such as when you hear a particular company in the news. Assuming they're in the media for a good reason, often the most visible company in media will be the most visible in the stock market. This is because people hear the name on the news, research the company a bit further, find more good coverage from recent days, and buy it because this company is the belle of the ball and everyone likes to be on the bandwagon.
Related or Semi-related Video
Finance: What is a Chartist?26 Views
Finance allah shmoop What is a chartist Well here's a
chart and here's a chart and here's a chart All
right Well these are pages from the investing bible of
a chartist A chartist is an investor really a traitor
as they tend to own stocks for a much shorter
period of time than a longer term Really invest or
type person a chartist relies solely on the patterns The
pattern's right there These are all patterns imputed by the
charts that they you know sitting poor threw for hours
and hours So check out this chart see how the
plotted data closely follows the characteristic line there The characteristic
line basically is plodded through all those dots Yes So
they're going to stare at that try to figure out
where that line is going in the future right Get
the crystal ball or all right Well let's look at
this one where the data forms what looks like Well
the head and shoulders of someone who you know doesn't
have a neck that's Just common pattern in trading And
you know if you stopped looking at it and two
thirds of the way through there it's heading down Well
Maybe you'd be short the stock for a few days
and then you see it bottoming and then you'd be
long and try to make money that way Good luck
All right len look at this chart Where is right
here where the data appears to We'll break away from
the established pattern which was all just kind of boring
Lee along down here And then suddenly everything goes up
Yeah start doing its own thing Well maybe the company
reported a good quarter or ah you know the government
cut taxes again Everything went up So these were the
tools of the chartist The chart's a chartist is the
opposite of a fundamental investor meaning that she doesn't know
or care what the company does for a living Really
she doesn't care about their p e ratio nor their
profit margins nor their debt levels on their balance sheet
nor much of anything fundamental about how their business runs
Chartist just care about the pattern they glean from the
charts and all the charts always work until they don't
And what happens when the meteor hits that is that 00:02:06.0 --> [endTime] predictable on a chart Ah
Up Next
Technical analysts don't care how companies make their money or how they run their business; they're just interested in the numbers. The data. Yeah...