Are you a forex trader and you want to have profitable trades? Forex trading signals are possibly the answer. They will ensure that you place the correct orders at the right price and at the right time. Consider signals as one of your constant advisors allowing you to be able to focus more on your trading and less on the research.
At the core, trading signals are simply suggestions of the perfect quote price and time at which you should place a trade. Each signal will always result from some sort of technical market analysis and will, in most cases, result in profitable trades. Each signal provider will publicise the win % they have.
The most important thing to take into account when trading using forex trading signals is time. You should be very cautious about the time of the execution of the trade suggested by the trading signal. A delay in execution may result in reduced profit margins or total losses.
As an example, when a trading signal suggests that you place a sell on the EURUSD currency pair at the ask price of 0.8011 and you delay in placing the sell order, the exchange rate will definitely change and you may place the order at a price when the condition that had been used to generate the trading signal has already reversed.
Types of forex trading signals
Trading signals can largely be grouped into two categories depending on their monetary value; paid forex trading signals and free forex trading signals. The paid forex signals are those that you as a trader will have to pay for so that you may get them. The free trading signals on the other hand, are those forex trading signals that the trader gets without giving any cent in exchange but in my experience, they are often not as good.
Both the free and paid forex trading signals are obtained from forex trading signal providers, and if you sign up for a funded account at a broker, you will often get paid signals for free as a part of the agreement.
The forex trading signals can also be grouped into the following categories:
- Forex trading signals from one provider (using personal analysis or algorithmic analysis)
- Forex trading signals obtained from several signal sources or ‘systems’
- Signals supplied by trading software (Forex trading robots/ Expert Advisors) on the trader’s computer.
Ways by which forex trading signals are communicated
The effectiveness of any forex trading signal will depend on the timeliness of the communication of the trading signal. This means the time lapse between when the signal was generated and when the signal gets to the destined trader (the trader using the signal to trade), as discussed above.
There are various ways of communicating forex trading signals which include: email, website, SMS, RSS and tweet.
You should always go for a forex trading signal provider with a fast means of communicating their signals, and if you can find one that imports directly into your trading platform you will need even less time to take advantage of the trade.