What is an example of an exogenous signal system?

The correct response highlights that an exogenous signal system is one that relies on signals received from outside markets. This means that the information or cues informing the trading decisions come from external sources, which can include market indices, economic reports, geopolitical events, or other asset classes that can influence the price movements of the market being analyzed.

In the context of trading strategies, this approach recognizes the interconnectedness of markets, where shifts in one market can create ripple effects in another. By leveraging exogenous signals, traders can gain insights that might not be captured solely through internal market behaviors or historical data, leading to more informed decision-making.

The other options focus on systems that either rely on specific algorithms, emotional trading patterns, or historical data alone, which do not align with the definition of exogenous signals. While these methods can certainly contribute to trading strategies, they do not embody the concept of utilizing outside market influences to drive decisions.