One of Benzinga Pro’s most popular tools is the Signals tool. The Signals tool is a way to heavily filter for price and/or volume related events in the market. This blog will breakdown the tool, how to use it, and a few examples of how you could incorporate it into your own trading strategy.
What Is the Signals Tool?
The Signals tool is a powerful tool that alerts you to price or volume Signals in the markets. These real-time Signals will alert you to unusual activity in the market, based on your filters selected. You can also set up different types of notifications.
Currently, the tool has 7 main types of Signals:
- Price Spike – Alerts you if a stock is spiking up or down in price
- Options Activity* – Alerts for large, unusual options trades that occurred
- Block Trade – Alerts to large purchases or sells of a particular stock.
- Halt/Resume – Alerts when a stock is halted, and when it resumed trading. This signal will let you know if there is a reason, too.als t
- Opening Gaps – Alerts you to stocks with large opening gaps.
- Highs – Select if you want the session, day, or 52-week high for a stock.
- Lows – Select if you want the session, day, or 52-week low for a stock.
*Note: Due to extra data costs, the Options Activity is an additional in-platform purchase.
How to Use the Signals Tool?
To any workspace, add the Signals tool, and select which Signals you want to see. You can choose as many, or as few, as you’d like.
Next, you can click on the filters tab to refine the Signals tool. Some ways you can filter the Signals tool include:
- Shares outstanding
- Share Float
- Price/Earnings Ratio
- Market Cap
- Change %
- Average Volume
- And more!
Here are a few examples of how you could set up your Signals tool:
- Options Activity by a specific ticker
- Price Spikes, Option Activity and Block Trades by your current Watchlist
- Price Spikes, Option Activity, Block Trade, Halt/Resume, and Opening Gaps for all stocks with a market cap over 2 billion.
You can also set up desktop, sound, and/or synthesized voice notifications.
How Do I Trade with the Signals Tool?
There are numerous ways you can trade with the Signals tool. It all comes down to how it fits in with your unique trading strategy.
Depending on the data or type of stocks you’re after, this will affect the way you use the Signals tool to trade. The best advice is to get into the tool yourself and play around with the filters to see what matches your needs. However, if you need a few ideas, here are a few examples.
Example Setup #1
One way to use the Signals tool is to select Option Activity and Halt/Resume Signals, then filter by your main Watchlist.
This will show you only Option Activity and Halt/Resume alerts on stock that you care about.
You can then scan through the list and see if anything grabs your attention. For example, one Signal in the past read:
Jan 17 $165 Calls Sweep (25) near the Ask: 692 @ 0.391 v 30542 OI; Earnings 1/29 After Close [est] Ref=$159.73
This is telling you someone is very bullish on the stock, they are trying to fill an order fast.
Here’s how to break it down:
First, the call sweep tells us it was routed 25 ways to complete the order. The trader is likely saying, “Just get me whatever contracts you can.”
Next, the trader ordered 692 contracts. Since this is not a round number, such as 700, this is telling you that the trader likely wanted to get as many contracts as possible. Sometimes, if you don’t see a rounded number of contracts, it could be because the trader was looking for a specific monetary value, but this was likely placed to get as many contracts as they could.
You could determine that this call sweep is bullish and that you may want to trade, or continuing holding onto the stock.
Read More: How to Understand Option Alerts
You may not see too many halts/resumes on your stocks, but it’s nice to keep it on so you know when the stocks you’re interested in have trading halts because that can affect the price.
If your stock is halted, you may need to ask questions like:
- Do I have a position in this stock?
- How does this affect my trading plan?
- Should I sell once trading resumes? Should I continue to hold?
- Why was the stock halted?
Trading halts mean that no trading can occur on that stock for a period of time, so it’s important to know if you have a position in it, or you think you can use it as an opportunity for trades once trading resumes.
Example Signals Setup #2
Another way you can include the Signals tool uses the common strategy of “buying low, selling high.”
Turn on the 52-week lows Signal (you can keep your Watchlist on or off). This setup will alert you when a stock reaches a new 52-week low.
When you see a stock appear on this list, one of two things can happen:
- it will continue to trade lower
- it will bounce and start to pick back up in stock price
From here, you can look further into the stock and analyze whether or not the stock will bounce or not. Is there news? Insider trades? Is there some other catalyst that is causing temporary price movement? You’ll have to put in the research, but there could be an opportunity to capture opportunities.
Additionally, if you aren’t looking to “buy low, sell high,” you could use this Signal to short a stock if you think it will continue to trade lower.
Read More: What is Short Selling?
There are multiple ways you can set up Signals to fit your unique trading strategy. Take some time to use the tool, try different setups, and see how it can work for you.
If you’re looking to get signaled to a specific type of stock market signal, the Signals tool in Benzinga Pro is the tool for you. Highly customizable for a variety of trading strategies, this tool alerts you to price and volume-related events.
Set up your free, two-week trial by clicking here, no credit card required!
Disclaimer: Benzinga is a news organization and does not provide financial advice and does not issue stock recommendations or offers to buy stock or sell any security. Benzinga Pro is for informational purposes and should not be viewed as recommendations. Benzinga Pro will never tell you whether to buy or sell a stock. It will only inform your trading decisions. You can find our full disclaimer located here.