Improve Your Chance of Success with Forex Signals Trading
Forex trading is a complex and often confusing form of investment, especially in the beginning. Foreign currency markets are ever changing and it can be difficult keeping up, even if you’re a more experienced trader. Making the best possible trading decisions requires hours of time, watching prices go up and down, looking back to uncover trends, keeping abreast of news events and developing strategies. All of which mean it can be a full time job. Many modern traders already have a full time job which means a popular tool used are Forex signals. You might be wondering whether Forex signals are for you, and indeed how they actually work. We’ll fill you in on the pertinent details and leave it up to you to decide.
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Forex trading signals – What are they and how do they work?
Forex signals trading involve using a series of online trading alerts which can help to discover any upcoming trading opportunities. The alerts make use of a set of analyses which determine the right time to buy or sell a particular currency pair. There are different types of systems available which can be either based on technical analysis charting tools or news events. The signals system can be one that executes orders automatically or one that sends the trader an alert leaving it up to them to decide whether to place the trade or not. Forex signals can be provided free of charge, but there are also a number of Forex signals providers that provide the service for a fee. Traders are also able to devise their own set of signals if they are proficient in this area.
When it comes to Forex trading there are a number of useful tools any trader should consider having in their toolbox. But, possibly one of the most important is a Forex trade signal system. Forex signals are used by thousands of traders, both beginners and those with more experience, all over the world. And have helped traders to make some very good decisions on a regular basis. Forex signals providers send their advice either by email or SMS, which is perfect if you want to react quickly. It also means that any trading opportunities are less likely to be missed, and you can make your trading decisions wherever you might be and whatever you are doing. No wonder Forex signals trading has become so popular.
How FX trading signals work
There are a number of different signals to choose from, and a range of Forex signals providers but they are all slightly different and use a different set of analyses in order to make trading decisions. However, it is possible generalize the various systems, and we’ll do this by dividing them according to the methods used to produce the signals. One way is known as technical analysis and involves looking at historical information relating to prices and trends. The other method is known as fundamental analysis and is based on watching current events and analyzing whether these events are going to affect prices. Not just in the short term but the long term too.
What an FX signal will tell you
A trading signal can be received in a number of different ways, but the most popular is via email. It is, however, becoming increasingly popular to be sent signals by text or instant message. The alert is sent as soon as the signal decides a trading opportunity is about to happen and then it’s down to the individual trader to interpret what has been sent. There are a number of things a signal will tell a trader.
- The currency pair to trade – Let’s be honest, if it doesn’t give you this vital piece of information it’s pretty much useless.
- Whether to buy or sell – Once you know what currency pair is involved you need to know whether you should be buying or selling. Some trading signals will also tell you whether to go long or go short and if it is advisable to place a pending order or a live trade. A pending order instructs the order to be executed when the currency pair reaches a specified price.
- Stop loss and take profit values – Generally, this piece of information is given in the following way: t/p 20 pips, s/l 20 pips.
Forex signals providers can rely on a computer to automatically analyze the market or a real live human could be employed to do it instead. The benefit of using an automated trading robot is that it won’t be bogged down by human emotion and will be able to react much quicker to any changes in the market. However, looking at it from another angle, the lack of human judgement means a computer system is very inflexible.
The benefits of Forex signals trading
For so many traders to choose the services of Forex signals providers there have to be at least a few benefits. Ask any number of traders why they choose to trade in such a way and you’ll likely get a number of different answers. There are, however, a number of general benefits we can share with you.
- Beginners love them because they help to fill in any knowledge gaps and can also help to increase Forex trading skills. The best FX signals providers don’t just tell traders the right time to trade, but also include stop loss and take profit values.
- Forex trading with the help of signals allow a trader to be accurate, because the signals are based on real-time data. As opposed to outdated or misinterpreted data. There is no danger of human error, because let’s face it none of us are perfect.
- Signals give traders the opportunity to trade 24 hours a day, even when they might be getting some shut eye. An automated robot using information provided by signals never needs to take a rest. It will be actively looking for profitable trades day and night.
- Signals don’t need to take a day off, or take care of another commitment. The only commitment they have is to stay active, analyzing the markets and providing alerts when necessary.
- Signals service providers can provide a trader with some very useful statistics. These will include detailed history, which doesn’t necessarily mean a trade has to be made, but can help a trader in making their own decisions.
As you can see, there are a number of valid reasons why a trader would choose to use Forex signals. So how do you go about finding the best Forex trading signals provider for your needs?
Picking the best Forex trading signals isn’t as hard as you might think
We’re not denying it’s going to be a challenge. After all, there are so many to choose from and it can be difficult weeding out the best from the crowd. For the beginner it can be very off putting, especially when you consider a number of them are going to be scams. There are, however, a few simple steps you can follow that will make the task much easier.
- Step 1 – Find a trading signal that matches your trading style
There are all kinds of trading signals. Some work better when the conditions are working in a certain way, while there are going to be others that are far more efficient when used with certain currency pairs. Some signals will feature trades with a high level of risk, while there will also be those designed to keep risk at a minimum and only choose the safest trades Every trader has their own trading style, habits and strategy they follow and there is bound to be one that fits perfectly.
- Step 2 – Check the trading signals results
There is no point in using a trading signal system if it isn’t going to provide some results. And it’s most definitely not worth paying for one if there isn’t going to be a return on your investment. Getting a signal online isn’t the hardest thing to do and can be done by anyone without any real investment. It doesn’t require any kind of level of personal success either. Which means you have to be certain that for any signals you pay money for there are verifiable results.
- Step 3 – Test drive any Forex signals you like the look of
You wouldn’t buy a car without taking it for a test drive, so why should it be any different if you’re considering paying a Forex signals provider? It’s very likely there will be signals included with the trading platform you’re using so it makes sense to try them and see if they are useful. MetaTrader 4 has a number of inbuilt signals and many traders have found these are all they need. If you try them and find them a little lacking you may have to pay a signals service provider. Ideally, you should pick a provider that is offering a free trial period. You’d be mad to hand over any money before you’ve seen some results in a trial run.
We’ve already mentioned there is the option to pay a signals provider or use ones that are free. But are free Forex trading signals worth bothering with?
Free Forex trading signals vs paid signals service
We’ve said before that you get what you pay for in the world of Forex trading but this doesn’t necessarily apply with Forex trading signals. On the whole, the people who provide Forex signals are expert traders. And the reason they are offering their signals is because they want to share their experience and help others to be successful traders. It is usual for this type of signals service to be given in exchange for a fee. Someone else is doing all the legwork and you are getting the benefit, so nobody is going to blame them for charging for such a service. But not all Forex signals come at a price, some are offered for free. Which doesn’t necessarily mean they are worthless.
Free signals can be provided for a limited time period, which could be a few weeks or a few months. The main reason for offering them is to generate interest in a signals service provider and is a marketing ploy that works very successfully. After using a signals service for a period of time, a percentage of those users will see its value and be prepared to pay and keep receiving the signals.
Free signals can also be offered in order to gather information, so another product or service can be offered. The best way to use this type of free signal is with the help of a demo account. This allows you to see the value of the service without risking any money.
Important criteria to consider when looking for the best Forex signals provider
Whether you’re paying for a signals service or taking advantage of a free service it’s vital to pick the best one you can, and thereby gain the maximum benefit. The provider should be one with a good reputation and be reliable. As soon as you start taking an interest in Forex trading you’ll find yourself bombarded with online advertisements from brokers and signals providers. It can be very difficult deciding whether the offer is legitimate or simply a scam. There are a number of sites online you can visit that have gone to the trouble of compiling a very useful list. They tend to rank legitimate signals providers according to average pips. You will also be able to read a selection of other helpful information, making them an excellent place to start searching. Other factors to consider include:
- Swift transmission of signals
- Offer of a free trial period
- Proven results
- Cost of the service
- Additional features
So many traders already make use of Forex trading signals that there is no real need for us to keep going over the value of such a service. Our advice is not whether you should use one, but to make sure you find the right one and not be taken in by a scam. We’ve given you plenty of information to reduce the chance of this happening and now it’s all down to you. Good luck and enjoy everything there is on offer.