Forex trading by design requires the application of technical, fundamental and sentimental analysis to reach any degree of success as a trader. Unlike the stock market, the number of factors influencing the forex market are far higher and may often seem abstract or even perfectly random to many. However a trader with the proper tools and analysis can develop a level of understanding of the market forces that enable them to make profitable trades. One such tool is forex signal.
Forex signals are a form of suggestions or ‘signals’ to traders on what time and price to enter or exit a position on the market. Essentially, a forex signal vendor performs their own technical and fundamental analysis, takes in to account the market sentiments, uses an algorithm or any combination of these to provide traders with a sort of ‘heads-up’ on when to open or close a trade for a given currency pair or even multiple pairs.
Signals can help make trading decisions or act as confirmation to a traders own analysis. Vendors provide signals in various forms, including manual or automated signals. This allows the trader to manually enter or exit a trade after receiving the signal or use an automated system to do it for them – essentially removing the decision making step altogether. Understandably, it is up to the trader’s own sensibilities to asses the pros and cons of an automated system.
Entry and Exit Signals
An entry signal is a signal to enter a position, or in simpler terms to open a trade, may it be a buy or a sell position. This is how we take advantage of the major pairs and minor pairs. Likewise, an exit signal is one that suggest exiting a position, meaning close a trade. Many vendors provide only entry or only exit signals, while others provide both entry and exit signals.
Anyone willing to use a forex signal service must perform their own research on the historical performance and strategies implemented by the vendor of their choice. This is crucial in choosing a vendor who is reliable and has grown a reputation on the marketplace.
Advantages of Forex Signals
Although at first glance, choosing a forex signal provider may seem like a rather daunting task, and should involve great scrutiny, once a trader chooses a suitable vendor, forex signals can be quite advantageous.
While use of forex signals comes with its own set of risks and do not guarantee positive returns, the advantages are certainly undeniable. Beginners or hobby traders can use signals to do the decision making and over time, allow them to grow a deeper understanding of the forex market. For traders with more knowledge and experience, signals can act as supports, reinforcing their own analysis, or strategies that they have developed over time. For such traders, forex signals perform the role of reducing risk rather than ensuring profits and taking advantages of forex signals.
Professional and experienced traders tend to incorporate signals into their own strategies, allowing them to enter and exit positions on their own terms. Such traders allow themselves the liberty to choose their own trade volumes, take profits and stop losses. This also lets them capitalize on small price movements, sudden market shifts or changes in trends all the while maximizing profits.
Conclusion
As we have discussed, forex signals come in many forms and vendors are always developing better and more convenient methods of delivering signals. Ranging from sms, rss feeds, messages on social media groups to platform integrations like what is found the metatrader platform, traders have an extremely wide range of choices when it comes to choosing a forex signal service. From novice to highly experienced traders, anyone can utilize forex trading signals to improve their profitability scope and reduce risks and even widening their trading portfolio. However, it is vital for any trader to keep in mind that signals do not guarantee profits or eliminate losses. It must also be taken into account that not all signal vendors have the same degree of reliability or reputation. Ultimately it is up to the trader to invest wisely and responsibly while practicing proper risk management.
