What is the difference between setups and signals?

<p id="isPasted">In the context of trading, a setup is a potential trading opportunity based on a combination of market conditions, while a signal is a specific event or indicator that triggers a trade within that setup. Think of a setup as the overall context, and a signal as the specific "go" command within that context.&nbsp;</p><p>Setups:</p><p>Represent a broader market context or potential trading opportunity.</p><p>Involve a combination of factors like trend, volume, volatility, and technical patterns.</p><p>A setup is like identifying a good location for a picnic (e.g., a sunny spot with a nice view). It's the overall situation that looks promising.</p><p>Signals:</p><p>Are specific, actionable events that trigger a trade within a pre-existing setup.</p><p>Examples include a breakout above resistance, a price crossing a moving average, or a candlestick pattern indicating a reversal.</p><p>A signal is like the specific moment you decide to spread out your blanket and unpack the food (you've already chosen the location, the signal is the actual action of starting the picnic).</p><p><br></p>