Forex signals provide ideas for trading by analyzing real-time market trends. It contains information on the currency pair to be traded and generated by experts or an automated robot. Further, it is supplied to the forex signal service. The forex signal services provide these short messages and alerts to beginners and professional traders. The signals are sent to the traders via SMS, and email, etc., and somewhat looks as follows:
BUY GBP/USD @ 1.2350
SL @ 1.2330, TP @ 1.2380
The signal starts by position type or action to be taken, i.e., buy or sell; after that, it shows the currency pair to be traded and, at last, shows the price quotation.
The real-time forex trading signals help the trader to earn a significant profit.
How Do They Work?
Forex trading signals can be further divided based on fundamental analysis or technical analysis. In fundamental analysis, the signal is generated by the experts keeping in mind the factors that can influence the market price, for example, market news and economic announcements such as repo rate or interest rates. While in technical analysis, emotional factor does not participate and simply relies on the previous statistics on how the market has behaved in the past and using algorithms. It can also predict future trends. Depending on the signal’s quality, it can be provided to the trader free of cost, and sometimes the trader has to pay for the better quality signals.
Why Do Traders Use Forex Signals?
The forex trading signals are quite beneficial for traders, especially beginners. The signal suppliers provide various services to the traders, and some of them are listed below:
- Information on when to enter the market, when to exit to make a profit, or avoid losing your money.
- Statistics in the form of graphs for easy understanding of the market trend.
- The previous history of how the market has behaved in the past so that you are well aware of the risk/reward ratio before investing your money.
- An interactive platform for further queries, available 24/7, and provide educational resources as well.
Types of Forex Trading Signals
The type of signal is decided by the elemental role that it might have and how it functions in general. The two types of forex trading signals available permanently in the market are :
- Manual Forex signals
- Automated Forex signals
Manual Forex Signals
In manual signals, the trader has to manually look for the signal, which consumes the majority of the time. The final decision on the action to buy or sell is based on traders’ interpretation of these available signals. Sometimes trading with manual forex signals can help the trader utilize his experience and skills to assess the market trend’s unpredictability, which the codes certainly cannot do.
Automated Forex Signals
In automated signals, the trader simply tells the software to look for certain signals only. It does not take a long time and reduces the trader’s stress as well. The software automatically interprets the currency pair’s action to buy or sell by processing the complete set of data available for the particular currency pair. As a consequence, trading in this manner becomes quite accurate, which mostly guarantees you the winning trade.
Nevertheless, the experts recommend using the hybrid signal of both, i.e., manual and automated forex signals, for making a winning trade.
Types of Forex Signal Services
There are four kinds of forex signal services provided by the suppliers
- Free signals.
- Paid signals either by fundamental analysis or technical analysis
- Paid signals combined from various signal sources.
- Directly from the service provider’s computer, generally called an Expert Advisor or forex robot.
What to Look for When Choosing Forex Signals Services?
The things you need to pay attention to while choosing a forex signals service are:
Look for the number:
You need to check the previous growth, profit, equity, deposits, and withdrawals with numbers.
Look for the number of position:
Typically it is recommended for the signal service to be under 100 positions.
Look for the statistics:
It is crucial to check the previous history of the trading days, how much trade per week is happening, what is the average holding time, the number of subscribers the signal service has.
Rate of success:
Sometimes, signal services show a few of their successful trades. You need to check how often they win their trades.
Do Forex Signals Really Work or Not?
Yes, the forex signals do work. The correct forex signals depend on the timely implementation of the real-time market analysis. However, the top forex signal providers are based on expert opinion and sometimes may get wrong. The traders need to understand the value of the signal and implement it at their own discretion. If the signal source is a professional trading firm, you can make a profit by following the enter and exit number.
There are various free signal services you may encounter. But be cautious before approaching these signals as they may not be that accurate as the paid ones. Though sometimes you can earn profit from these free signals but still do not rely solely on these signals.
For successful forex trading, you need to work hard and invest your time in market research before making any investment.