How do signal trading bots generate and interpret buy/sell signals?

[aanaethan]

Signal trading bots produce and analyze buy/sell signals by combining technical analysis, algorithmic rules, and, in certain cases, artificial intelligence models. This is how the procedure works:

1. Market Monitoring: Bots monitor price charts, order books, and volume data in real time.
2. Technical indicators: They identify trends using methods such as RSI, MACD, Bollinger Bands, and moving averages.
3. Signal Generation: When certain criteria are satisfied (e.g., RSI < 30 indicates oversold), the bot generates a buy or sell signal.
4. Strategy Logic: The Signal Bots compares the signal to your customized strategy, such as trend following, scalping, or swing trading.
5. Execution: If the signal satisfies the rules, the bot will automatically execute a transaction on the associated exchange.
6. Risk Filters: Some bots also employ stop-loss, take-profit, and trailing methods before executing.