Forex signals are best illustrated with detailed trading recommendations or ideas. The best forex signal sources are usually experienced traders. A number of online entities offer forex trading signals for a fee or for free.
Because forex signals are essentially small bundles of text-based information, they can be transmitted through a variety of channels. Forex signal providers offer their “products” via live messaging, email, Skype, and various dedicated apps. There is also a forex signals telegram channel.
The trading signals ecosystem has also created a dedicated, full-featured trading environment. These signal-based trading solutions allow signal providers to stream videos and monetize their activity using interactive charts.
Profitable trading is the Holy Grail of many people. For most traders, the most direct route to these profits is through forex signals.
Introduction to forex signals
A forex signal system is one of the most important tools in a profitable trader’s arsenal. It is used by beginners and experienced traders alike.
In fact, entire industries are built around trading signals and various trading recommendations.
As with most commodities, quality should always trump quantity when it comes to forex signals.
Quality forex signals don’t tell you when to jump into a particular trade and which direction that trade should take. It also includes detailed information on stop-loss and take-profit configurations.
The best way to deal with quality trading signals is through free options in a demo account. In this way, you will not lose real money if the signal turns out to be inadequate.
Timezone
You should also pay attention to the time frame. By their nature, trading signals are not suitable for strategies such as scalping. By the time you get the signal, scalping opportunities have already come and gone.
That said, there are scalpers that still use signal services.
All FX signal systems reflect the signals provider’s individual methods and preferences. So all those systems are different.
Nonetheless, there are two broad categories.
- based on technical analysis
- Focused on basic analytics.
TA-based forex signal system derives trading ideas from past price movements along with various mathematical artifacts.
Signal providers who analyze current events and derive trading opportunities from the impact these events may have on asset prices fall into the second category.
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Finding the best forex signals
The quality of your forex trading signals will make or break your profitability. As there really isn’t much skill in applying these signals, the only variable in the equation is your choice of forex signal service.
You should always go through this simple checklist before making any moves in this regard.
- Time Zone – Before you start, look at your provider’s time zone. You want your trading signals to shed while you are awake. Otherwise it won’t be of much use. Sign up for a free account if there is no other way to learn this important information.
- Free Trial – Sign up for a free taste/trial period. This will be a clue to the quality of your service without paying the “tuition” in the form of losses due to bad signals.
- Compare – Don’t stick with the first service you like. Continue to find and compare FX signal services that fit your trading style. Pick the best one in the end.
- Track record – take a good look at the forex signal provider’s track record. This will tell you everything you need to know about your setup’s performance. You should only consider tracking history verified by third parties. One such verification service is MyFxBook.com.
- Full Analysis – Go to the complete package. You should ignore entry-price and low-effort signal providers like those that only offer SL/TP. You need to know why the signal is working. To do that, you need an FX signal provider to provide you with charts and proper market analysis.
- Focus on you – make sure the style of signals suits your trading needs. Apart from the two basic types mentioned, Forex signals work in many different styles. There are short- and long-term signals, signals focused on intraday breakouts, and more. Profitability should always be your top priority. But it’s easier and more enjoyable to use signals that fit your personal style.
- Other – If possible, choose a signal provider that offers additional services. These services may be educational or social transaction oriented. If you are dealing with quality trading signals, these perks can add great value to your setup.
Finding MT4 forex signals is a different story. The Terminal window has a Signals tab. This section features numerous trading signal providers with useful graphs of your trading performance.
Comparing signal providers
Comparing forex signal providers can be a bit work intensive. It will produce a decent dividend because all the value it discovers through this process adds to its profitability.
Run your search on Forex Signals Rank. There are numerous websites comparing signal services. Choose a few from the top and take a closer look.
Read the forex signals reviews provided by the above comparison sites.
Sign up for the trial they offer and use the checklist above to see how well you stack up. Consider the communication channels used by your provider. Do you deliver “products” via Skype, Email, SMS or Telegram? Do they use special platforms?
Go to the one showing the most marks in the list.
- Forexsignals.com – Live streaming and promotional cash giveaways, forexsignals.com offers signals and education in equal measure.
Signal Usage
Opening a position based on Forex trading signals is a simple exercise. Once you learn how to “read” these signals, you can start using them by walking in the park.
- – The first step is to log into your signal provider’s channel. This could be a web page, a Telegram channel, a Skype chat, etc.
- – Grab the data provided by your signal provider and copy it to your account.
- – Wait for the transaction to close before you receive your proceeds.
What is included in the best signals?
More precisely, the signal tells us:
- Commodity/Currency Pair to Trade (EUR/USD, BTC/USD, Gold, Silver, etc.)
- Transaction direction. You will see a BUY or SELL action next to the actual asset price.
- Signal status. Regarding status, forex signals can be active, ready and closed.
- Active signals can be used as-is. The Get Ready signal hasn’t been activated yet, but it may appear soon. It may also disappear. Keep an eye out and don’t act unless you become active.
- The closed signal has expired.
- The admission fee is self-explanatory. This is the price level that the provider recommends entering into a transaction.
- Stop-loss is where your trade is automatically closed if the market is against you. This is a loss control function, so it is critical to long-term profitability. Don’t forget to set as recommended by FX signal.
- Take Profit is the price level at which your trades will automatically close if they go through. Taking profits at the right time is just as important as protecting yourself through Stop Loss.
- Comments, charts and explanations of recommended trading setups.
You should be aware that trades can be closed in three different ways. In addition to automatic closures triggered by SL or TP, providers can also close manually.
If the connection is deemed appropriate, the Provider will recommend closing the transaction. In this case, a comment is provided along with the closing price in the comments section.
In certain circumstances, signal providers may also recommend a TP extension to increase profit margins.
How to use different types of trading signals
Interestingly, sometimes, to maximize the potential of trading signals, you simply have to disobey them. Or rather: you have to tweak some of the variables that make up them.
Moving take profits is a surefire way to expand your profit potential. Most forex signal services use a fixed amount of pips when setting a profit loss level and stop loss. As trades unfold, few jump in to adjust these variables.
Take profit and stop loss
If you feel the trading potential is better than your profit level allows, feel free to move. In some cases, it is important to completely eliminate take profits. If the bold text backfires, make sure you don’t take responsibility for the signal service.
Moving a stop loss can save a doomed trade in some cases. Like Profit, Stop Loss is set at a fixed number of pips. It also sometimes lands just below a moving average or resistance level. In these cases, it is recommended to move above the critical level.
The entry price is also not set in stone. Even in this case, the signal service prefers to make errors on the safe side. As the price rises, a better entry price may occur.
Manually closing trades can be the right course of action when a sudden real-world event weakens an asset’s price. Signal providers have no way to predict such events. If one rolls up, the bet is obviously off.
Trade Size
Tinkering with lot size is another signal optimization method. Some of the FX signals offered by the service are more likely than others.
As you gain experience, you will know which trades are which trades. Increasing the traded lot size on high probability signals makes perfect sense. The same goes for reducing your trading volume on low probability signals.
Correlation
It often makes sense to keep an eye on correlated FX pairs. For example, if you receive a signal for AUD/USD, the same signal could be applied to the NZD/USD pair. Often, trades “guided” through this method turn out to be more profitable than those suggested by the signals.
Traders sometimes forget to consider the spread when setting a stop loss and taking profit. Don’t make this mistake. Adjust the auto close point accordingly. Spreads are different for each FX pair.
Free Forex Signals
Signal service providers usually use free forex signals for promotional purposes. They provide an opportunity to sell some kind of service or product.
As a promotional vehicle, free forex signals really cannot be inferior in quality. But sometimes that’s exactly what happens.
A premium signal service should be offered in the first place. These premium forex signals are usually of outstanding quality as they represent the bread and butter offered by service providers.
Don’t lose sight of the fact that signal providers do not guarantee a winner. No one is going to pick only winners.
Live / daily signals
Live/Daily trading signals are essentially top-notch forex signals and are delivered with a higher frequency. As such, these signals are better suited for day trading.
Copying trades and social trades
Social trading or replica trading is the use of trading signals provided by more successful traders.
As mentioned, MT4 offers a Signals section that displays trades and stats from those who decide to share this section with the community.
The system rewards those traders for their “signal delivery service” through a fee paid by subscribers.
Signals page displays the most successful forex signal providers at the top. In this way, it more or less handles the selection of signaling services for users.
There are some pretty similar (and better) copy trading services out there. eToro is a good example in this regard.
Forex signals for technical analysis traders
For traders focused on technical analysis, using forex signals will give you a much more complete trading experience. The most appropriate forex signals also consider fundamental factors. Using these signals, TA traders will expose their trades to fundamentals.
TA is generally suitable for short-term, price fluctuations due to supply and demand inefficiencies. Fundamentals, on the other hand, are much better for long-term, long-term trading.
Price Action
Forex signal providers provide most tips/ideas based on price patterns. Most of these patterns consist of support and resistance levels. Other technical indicators and price structures/patterns may also be used.
This is actually the definition of TA based forex signal generation.
Forex signals for scaling
Long-term trading signals target profits of hundreds and even thousands of pips, but there are FX signal providers that will settle a few pips at a time. This provider offers short-term forex trading signals that are right under your scalp.
What are the main applications of signal-based scalping?
In times of uncertainty, when long-term trading signals don’t seem to be cutting through, we offer an alternative approach. Sometimes traders simply can’t figure out the market. In these cases, tripping over the scalp is sound reasoning.
However, using these signals requires spending a lot of time in front of a computer screen.
Some forex markets are large markets that are linked over long periods of time. Markets move during these periods, but very slowly. These impatient people can again move on to forex signal based scalping. In this way, they will cash in on the weekly price fluctuations.
Volatility markets are not particularly suitable for long-term trading. Under these conditions, scalping is once again the right option.
Despite their short-term nature, scalping signals are not exclusively based on technical analysis. They certainly incorporate a fair bit of the basics. In this way, it combines indicators such as trend lines, support and resistance levels, and stochastic oscillators with economic news, data releases and announcements.
Scams
The pseudoscience in the forex signals industry is by no means accurate. So it helps with morale.
Crooked manipulators have plenty of room to maneuver in this vertical. We have already filtered out fraudulent and suspicious services, but you can check the forex signals scam yourself.
- A service with an unrealistically good (and unverified) track record is almost guaranteed to be a scam.
- Fx signal providers offer to trade with your money instead, which is a scam at best. These setups are no longer signal-based trades, but automatic trades on stolen accounts.
- It is also suspicious when providers use various overpowering and moist promotional methods.
If you think there is nothing wrong with your signal provider, forget about it and move on to the next step.
Conclusion
We’ve covered everything you need to know about how to select and use forex trading signals.
A good signal service has a huge impact on your profitability.
