Mastering Entries: Signal vs. Trigger Bars

A Clear Approach to Trade Execution

Ready for the trading day?

Good 🙂

I remember reading a comment from Al Brooks (Listen to my conversation with Al here) where he talked about a signal bar and a trigger bar.

It’s not revolutionary… but the way he put it, was just so very succinct.

He considers the signal bar to be very different from the trigger bar.

eg:

The signal bar is the bar or candle that gives you the green light to take the trade.

The trigger bar is the bar or candle that pinpoints the moment to enter.

Let’s look at a few examples:

Intraday double top on the S&P 500

You get the prior high break
The signal bar is formed on a close back under the high
The trigger bar fires once there’s a close below the signal bar

Now the trigger and signal bars could be anything, and as aggressive as you like…

But they are separate bars.

Let’s look at a trend.

Big move higher in the NAS and you’re looking to jump on board.

A first pullback to the 20MA is what you are looking for.

So in this example, the signal bar is the touch of the 20MA.

But perhaps you don’t want to take the long there right on the touch, we know price can just fall through that like a knife through butter sometimes.

So you decide to wait for a trigger bar…

I’ve highlighted two trigger options here:

1: A break of the signal bar high (aggressive)
2: A break of the prior swing high

Both are valid, it just depends on your style and strategy.

Ultimately the whole point of a signal plus trigger is to separate the two.

One tells you the conditions are met, and the ‘safety is off’ so to speak…

The other gives you the binary ‘yes or no’ to execute the deal.

It’s a neat idea that adds some nice structure to your setups.

Maybe worth thinking about how the signal + trigger bar concept can apply to your own playbook.