Using Forex Signals: A Comprehensive Guide
If you’re a foreign-exchange novice, you may feel a little overwhelmed by all the knowledge you’ve been given. You aren’t alone. Many people want to take advantage of the foreign exchange market, but simply have no time to study the market to establish a successful trading strategy.
That’s why forex signals are preferred by many traders. They offer an investor the opportunity to use more experienced traders’ skills while maintaining control over their investment. In this guide you will learn all there is to know about forex signals, how to use them and their benefits.
What is Forex ?
The place where currencies are traded is called foreign exchange. Whether you realise it or not, currencies are important to people worldwide and currencies are needed to conduct all global business. The daily need for currency exchange makes the forex market the largest market with the highest liquidity in the world, dwarfing the stock market, and forex trading averages about $6,000 billion a day.
Oddly, there is no single central marketplace for this exchange. Instead, currency is traded online through traders around the world. Trades take place five-and-a-half days a week, 24 hours a day at major financial centres in Singapore, Paris, Sydney, Frankfurt, Zurich, London, Hong Kong, Tokyo, New York and across time zones. This means that forex is always open around the globe.
What are Forex Signals ?
If you’re an average individual investor, you’re unlikely to have extensive knowledge of the forex market, and there is a really good reason. Until recently, forex was a trading market for large financial institutions, businesses, hedge funds, central banks, and very wealthy individuals. Fortunately, exploiting Internet resources and secure online brokerage accounts to buy and sell currencies with a click of a mouse, it is now much easier for the average investor to take part in forex.
Forex signals came as a natural innovation of the financial industry. Forex signals effectively solve every trader’s most challenging task: finding the right trading opportunities at the right time.
A forex signal is a trade idea or suggestion on a given financial asset to be executed at a predetermined price and time. Regardless of your trading skills and experience, forex signals will help improve your trading activities.
Additionally, experienced traders can extend the scope of their productivity and expertise using forex signals.
Forex signals are helpful for new traders as traders can make money while still learning about the markets and trading profitably. Signals can also help to minimise their learning process, as they can gain full insight into the trading options on which the signal is based as they attempt to understand the reasoning behind any trade suggestion they obtain.
It is important to note that in a fast and competitive market such as online forex trading, a trading signal is only as useful as it is timely. That’s because if it is received too late by a trader, a signal can become untenable.
Providers send them to traders via easy channels of communication, such as push notifications, email and SMS, to ensure that traders receive sufficient trading signals at the right time.
Although foreign exchange trading can be extremely profitable, use the most reliable forex tools available to you to avoid hours of tracking and waiting for potential entry and exit points. That’s where forex signals can help. They’re available to anyone who doesn’t have the time to scrutinise the market extensively, enabling you to set your trade limits and stop prices. Pre-setting this information removes profiteering opportunities.
Forex signals can help your income prospects and free your time. They are essentially buying and selling indicators, used to let traders know about coming good market entry or exit points. There’s a wide range of live forex signals provided by FX signal services that monitor the market, sending recommendations to traders ‘ computers and cell phones suggesting that there’s positive trade.
What is the Basic Terminology you Need to Understand Before Using Forex Signals ?
Before looking to use forex signals in your business, it helps to understand some basic terminology.
- Leverage: Borrowed money used to raise the potential return of an investment.
- Currency pair: Trades are carried out in forex market trades when one currency is valued against another, with the “foundation currency” being the first of the package and the quota currency is the second. Currency pair demonstrates the buying power of the quote currency against the base currency.
- Forward market: Over-the-counter (OTC) market binding contract, setting the price of the financial instruments for future distribution.
- Liquidity: How easily an asset can be sold or bought without changing the market price of the asset.
- Futures market: Participants are buying and selling futures distribution contracts. This is an auction market.
- Position: A trade currently opened by an investor.
- Spot market: Market where the contracts are immediately effective and the goods are sold with immediate delivery for cash.
Currency fluctuations are small on a daily basis, often reflecting a 1% shift between currency pairs, making FX trading one of the least competitive financial markets. Since the market is so liquid, traders rely on leverage as high as 250:1 to make currency traders’ movements as important as possible in order to increase the value of future moves.
Currency rates are based on supply and demand, which are highly empirical and the market is broad enough that even the biggest central banks or individuals cannot control it. With the ability to open and close positions in minutes, or hold positions for several months, savvy investors have plenty of options, but understanding the dynamics behind currency movements is critical to success.
What are the Types of Forex Signals ?
There are essentially three forex trading signals classifications.
Entry versus Exit Forex Signals
That often depends on the level of detail of a trade recommendation. Some signal providers can only provide entry signals, which is a signal to open up a marketplace, while others only send exit signals, which is a signal to close any potential open trade spot you may have on your trading account. This is often the case with long-term trading signals of financial assets which trend over long periods of time. A trade definition will usually include both entry and exit signals on the intraday trading signals for the short term.
Paid versus Free Forex Signals
That is often based on the signal service scale of the provider. Several providers offer free signals whilst others need payment. Paid signals can be charged either as a one-time subscription fee or on a regular basis.
Manual versus Automated Forex Signals
This is a description based on how they produce trading signals. An individual who can be an experienced/professional trader can generate the manual forex signals.
On the other hand, computer software generates automated trade signals, which monitor and analyse market price action based on coded algorithms.
How are Live Forex Trading Signals Created ?
Forex trading signals are generated using technical analysis of the foreign exchange market, using indicator points to identify market trends. By analysing these patterns, master and software traders are able to identify favourable entry and exit points; and this information is transmitted to signal services that allow traders to keep up to date.
Some of the common signalling markers used include:
- Bollinger Bands: Strengthening bandwidth for a pair of similar currencies also precedes volatile exchange prices.
- Volume: Used as an indication of market interest in specific currency pairs, the volume indicator movement could start a new trend.
- SMA (Simple Moving Average): SMA is determined directly from currency maps. Buy signals are generated when the price of a currency moves above the average line; when the reverse happens, the signal is sent to sell.
- MACD (Moving Average Convergence Divergence): The EMA indicator is characterised by the relationship between the 26-day EMA and the 12-day EMA, with the 9-day EMA serving as a “signal line” trigger.
An effective day trading strategy depends on receiving live forex signals at all times of the day or night, so working with a trusted exchange partner is important.
Who are Forex Signal Providers ?
As mentioned above, signals can be manual or automated. Manual indicators can be strategic providers, market analysts, seasoned and/or professional traders, market analysts, and strategic providers. They produce trading signals based on their knowledge, experience, fundamental and/or technical analytical skills or proven strategy.
Automated signal providers, on the other hand, are computer software coded to produce trading instructions when certain criteria or conditions are met on the market. Automated signal providers, such as Expert Advisors (EAs) and other types of trading bots, often apply technical analytical methods that rely on statistical predictive indicators such as Moving Averages, Fibonacci rates and Stochastics. Some are designed to incorporate simple analytical techniques, such as monitoring economic news releases and consumer feelings.
Depending on your trading needs, either manual or automated signal providers or both will support you. AvaTrade has agreements with third-party providers to offer free-of-charge trading signals to traders daily and weekly via market feedback and analysis.
Traders can search for other providers separately, but the MQL5’s signals page is the main source for traders using common MetaTrader 4 or 5 trading platforms.
Anyone with an MT4 or MT5 network can connect and subscribe to any on-page signal provider.
MQL5 allows almost anyone to become a signal provider, but there are many safeguards to ensure you can connect to a provider that fits your trading needs. The MQL5 group reviews and scores all signal providers’ checked trading performance. Different sorting and filtering options allow each trader to select their preferred signal provider based on their manual or algorithmic trading, maximum and minimum drawdown, and percentage growth.
MQL5 will display a warning sign on any signal provider that has yet to produce an acceptable number of signals to assess the trading quality or a new provider whose results may be random.
Why Choose a Forex Signals Provider ?
Using the right signal company is important as it will make the difference between receiving the FX signals quickly enough to take action and making the signals as accurate as possible. While a day trading strategy had as much to do with the temperament of an individual as anything else in the past, forex trading today is much more organised in many respects. Avoid missing a big opportunity by choosing a provider you trust.
There are a number of providers of forex signals to consider, many good for first-time buyers.
How can you Receive Forex Signals ?
A full-day forex signal service will control the market. A winning strategy must be consistent. The forex signal service will constantly send you signals and it will be your duty to join these signals.
Signal providers can send various signals:
- Web platforms: Web platforms have become very popular as they are compatible with any device: tablets, printers, desktop PCs, and smartphones. Normally, with a web signalling program, a person signs into the platform and the platform loads trades as they join. The benefit is that it’s highly accessible, but the downside is that trades can easily be missed. You’ll need to watch the web regularly.
- Desktop platforms: Desktop trading services run on your machine, displaying key pairs and indicators. The advantage of a desktop platform is that it is often more user-friendly and stable, but the downside is that you need to be on your Mac.
- Mobile platforms: There are many foreign exchange trading devices nowadays that can also come with live forex signals. There are also other options for those who want to embrace forex trading signals on their devices, such as setting up email account alerts and checking the phone when appropriate. To start trades, many forex signals can come in as text-based emails and other notifications.
Finding a Trading Platform that is Accessible
The MetaTrader 4 app is probably the best platform choice for any new trader. It is used by millions around the globe and its sophisticated, but user-friendly interface and functionality help you to trade with all types of forex signals and all apps.
You can use a range of systems, not just one. You can use a desktop platform while on the phone, and then turn to a smartphone alert system while on-the-go. Anyway, the main goal is to have quick access to position the trade when your live forex signals are received. The better the forex signal provider, the greater the likelihood of sending notifications and communications.
How to Read Your Forex Signal
A trading signal is typically a pair, response, stop loss, and benefit. This trading signal may also include an optional status that will mention timing. The trading pair will be the currency pair exchanged, such as AUD/USD. The action will be either “BUY” or “SELL.” The stop loss will automatically close the exchange if it loses some amount, while the take benefit will automatically take profit after some amount. These are critical for using forex signals.
A complex day trading strategy may not use stop losses or profit at all; the trader simply knows when to stop their trade and relies on their knowledge and experience. But in a forex signal, stop loss and profit is incredibly important. They are used to build a consistency that a new or beginning investor simply won’t have. New traders should not change on-the-fly losses and take profits, as this will interfere with the trading strategy technique.
A trailing stop-loss, used by some forex signals, follows a certain sum behind the most current price point, creating a situation where trade will be stopped only if it dropped sharply from where it was. A trailing stop is an advanced strategy, used to maximise profits and minimise losses, but when using forex signals, it can trigger a stop too often in volatile currencies.
The rate at which the transaction ends automatically is known as the take profit rate. A profit goal is incredibly important: too often, new investors will seek to “rock” a trade out too long, hoping to capture as much as possible. This can lead to a winning trade being milked for too long and becoming a losing trade. Usually, the optional “rank” in a forex signal informs you when to join trading, or whether trading is active or pending.
How to Place Your Trade using the Signals
Hundreds of forex trading platforms are available, from web-based to iOS devices. If you deal in forex, you need to be incredibly precise. Overall, locating the currency pair is advised, making the move to buy and sell it, and then simply copying the stop loss and bringing benefit boxes into the trading platform itself. Some forex signals will automate your accounts, and some platforms have their own signals to suit. Such integration can make the process simpler, especially for a new investor.
Most forex trading platforms concentrate on big pairs such as AUD/USD or USD/JPY. But some trading signals can benefit from unusual pairs such as AUD/CHF. If so, such currency pairs will find a platform that facilitates trades.
Once you’re sure you’ve copied the correct information, you can activate the trade. Because of the way the forex market is run, the trade will occur in real-time, directly after your purchase or sale.
Sometimes you may miss a trade, but see that it was later reported. For this, all trading signal platforms have different rules, but most allow you to trade as long as it remains active on the network. The trading strategy must follow as many trades as possible.
Now you’ve put your transaction using the recommended trading signals, your trading order will stop by itself. You shouldn’t have to do anything else. The transaction will either close when it’s lost too much money or when it’s earned plenty.
Though, there may be times when your live signal service offers more information or changes the trade. If so, you may need to adjust or gain your stop loss. This can happen if something changes dramatically on the market or new trends are uncovered. Trades may also be cancelled early if deemed to be too risky or if the situation has changed by using forex signals.
Copy Trading and Forex Trading Signals
The predecessor to copy trading was forex trading. Traders may determine whether or not to conduct a trade suggestion with forex signals, while traders in their own trading account effectively duplicate a good trader’s trades with copy trading.
Copy trading is automated: you select a trader, and your trading account mirrors their positions. Of course, there are variations where you can configure trade size, assets, as well as a stop loss and take benefit orders.
Copy trading is a valuable trading tool enabling traders to gain market profits, even with minimal trading awareness. It also lets traders free their time and diversify their overall portfolio. It also helps traders to choose a trading style that suits their risk tolerance and their trading goals.
Should You Use Forex Signals in Trading ?
That will rely on your goals and ambitions for trading. The key reason for this is that the risk of forex signals is that a third party makes the trading decisions without taking full responsibility for the business outcome. That is, if your transaction ends successfully, you’ll enjoy the full profits; yet if you lose a deal, all the loss is yours, not the loss of the signal provider.
To take advantage of the lucrative ability to use forex signals, make sure you use the following tips.
Choose the Right Broker
A good broker will provide a secure platform with new, state-of-the-art trading platforms for seamless execution of forex signals.
Find a Good Signals Provider
It’s the hardest part to use forex signals. A good signal provider will have over 60% success rate to ensure steady account growth with minimal drawdowns. It means companies with some experience would usually be more accurate than new ones with biased trading results.
A signal provider may not have the same investment priorities as yourself, which may mean that your trading portfolio may not be suitable for the signals given. A signal provider must have strong flexibility capabilities to ensure that, with fair risk, you can match a competitive signal provider with your trading goals and ambitions.
Until committing to a signal provider, make sure you can determine their trading results. Some providers offer a trial period that guarantees you only start if your success impresses you. For automated approaches, you should be able to perform backtesting to see how the algorithm worked under different market conditions. It is also smart to try the signal provider on a demo account until putting real money on the line.
What are the Advantages of Forex Signals ?
Seamless Trading Process
Analysis and research in forex trading are very important and can take effort and time, but forex signals traders don’t need to spend much time analysing charts, graphs and patterns before making their decision.
Using forex trading signals effectively reduces the risks that a new trader may experience during trading, making it easier during trading to make wise choices.
Forex signals enable traders to get a good understanding of how market movements impact their investment. A trader can grasp how these signals relate to their trade with the help of reverse math, and also give them the opportunity to explore how to get to these signals.
Daily forex signals are published at a given time daily, depending on the trader’s preference. That means you don’t have to sit down to get your data all day, the signals are sent to you at a specific time, so you can make your trade decisions easily.
You can Start Trading Immediately
Traders can start their career immediately with the aid of forex signals, the first few months of trading career being the most critical. Forex signals can help you improve your trading experience.
Advice and Support
Forex signals provides support services that can be used by traders. You can get info regarding the current signals and any other things you don’t understand.
Forex Trading Signals Tips
- When getting a signal, you should only enter trade if it has reached the entry level.
- It is only when it reaches take profit or stop loss rates that a signal is marked as over.
- Based on our signals, putting take benefit and stop loss orders is a must!
- “Did not occur” implies that trade did not reach its point of entry and that you were not allowed to exchange it.
- Typically, most signals are accurate for no more than 1 hour, they will be classified as exceeding once they are finished.
- A signal need not surpass the point of Take Profit. Each trader will be able to set his own stop loss.
- The time signals shown are based on the configuration of your mobile time zone.
- Make sure to use our recommended brokers for high spread provided by your forex broker impact your winning ratio.
- If a signal does not reach the level of profit and returns to the level of entry, you can use it to close the transaction with a minimal loss.
- The use of the signals as pending orders is highly recommended, rather than waiting for the entry point.
Although forex signals trading has a risk associated with it, the risks are much lower if you choose a provider that can provide you with reliable signals, but remember once again that you are fully responsible for the transaction of the signals on a live account, as a forex signals service is for information purposes only. Forex trading can be very profitable for the right investors, and even the newest investors can easily enter the exciting market by supplying signals.
All trading comes with risk, but using forex signals would dramatically reduce the risk for starting investors, thereby allowing them to pick up some forex trading tips from experienced professionals as well. That said, forex signals are not just “training wheels” for real trading. Even professional traders use forex signals and are often quite advanced.
Forex signals offer reliable, calculated returns rather than higher risk approaches in a market as fraught with volatility and changes as the foreign-currency market. Just make sure you always read the signal service provider’s terms and conditions before you pay.
Forex signals provide you with vital details about the best trade to do, suggested stop-loss, expiry dates, and everything else you need to know to do a good trade. Charting tools, special software and real-life service providers can provide these signals, plus they can come to you in the form of special features on your trading platform, text message, and email or text message.
An indicator is a technical solution which can be applied to your specific chart solution. It is a kind of program which can be used to produce and signal trades. Indicators inform a potential investor when there is a good chance that an investment will be profitable.
Usually, forex broker signals are only available after depositing money. If possible, use an independent provider because making a deposit with a signal service means that your money is no longer under your control, and if you’re not careful, you can give your money to fraudsters. Also, independent signal providers are usually run by responsible, reliable trading veterans who know what they’re doing and, most importantly, have no reason to try and steal your money.
Forex is a good way to make money, especially as a recent host of regulations made it very safe. A good signal service and forex broker definitely help you make money, even at an average ITM rate of 70%. Always know that the risk of loss comes with trading. There’s always a chance to lose your money, but there’s also a good chance to make a profit.
Many free indicators can be found in charting solutions. Many indicators will give you plenty of customisable technical indications to help you make trades.
The simple fact is, getting free signals is almost impossible. Some companies providing signals would require a minimum deposit with a broker, or if the signals are free, it’s probably a scam.