Signals are a call to action to either buy or sell an asset.
What Is a Signal?
A signal is a suggestion or call to action to either buy or sell an asset, or even to not engage with a particular or group of assets. A signal can be generated through human or artificial intelligence analysis through historical data and trading patterns, as well as conclusions derived from technical, fundamental and sentiment analysis.
A signal can come from a variety of sources, including but not limited to:
- individual investors/traders;
- research groups;
- investment/trading funds.
The complexity of the signals may vary, but they are provided mostly in simple to-do format. It must be noted that nearly all signals are extremely time-sensitive or based on low-time preference; hence their information dissemination and execution must be rapid for effective results.
Generally, signals are provided free-of-cost, but people often pay for signals from experienced investors/traders with a proven track record. There are countless Telegram groups that have offered crypto signal services over the years.
Some are free, while others require you to do simple tasks before becoming a member, such as inviting a certain number of other users to help grow the group. There are also other signal groups that seek payment, whether that be a one-time fee or on a subscription basis.
However, due to the dynamic and random nature of the market, any past performance isn’t a guarantee of future results. Hence, signals are understood more as guidelines open to interpretation, rather than being of factual nature.
Furthermore, some notorious pump-and-dump (P&D) groups are known to hide behind the veil of signal groups. With some of these groups numbering in tens of thousands of members, their coordinated trading often provides them the ability to manipulate prices thanks to their collective influence. Unfortunately, by the time group members get the buy signal, the asset has already been “pre-pumped” by insiders, leading members to buy the cryptocurrency at an inflated price that leaves it vulnerable to a swift and steep correction. Hence, it is recommended to always be cautious when joining signal groups.