Essentials of Forex Trading Signals - Types of Trade Signals

What are forex signals? What is its purpose? And why is it important that investors master them? Hang on let me restructure the questions; what are road signs? What is its purpose? And why is it important that drivers master them? All these questions have the same answer, for the same reason that drivers need to understand road signs in order to avoid accidents and get to their destination smoothly; investors need to have a full understanding of forex signals in order to minimise losses and reach their trading goals.

Information is an invaluable commodity, and the more a trader has of it, the better they can feel about the choice they make

What are Forex Signals?

Forex signals are suggestions given by trading software, human analyst or a trading robot on what moves to make on a specific currency, when and how. Signals have the information you need to enter a solid trade on a particular currency pair with a firm price and time. Forex signal notification is usually via websites, twitter, SMS, RSS or email; this is because they run in real-time. Forex signals come in all kinds of shapes and designs, from geometric shapes to bear/bull designs; and they can help point out some important currency details that you may have not noticed yourself.

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Investors use forex trading signals to help them make decisions about their trades. Therefore using forex trading signals wisely has a massive impact as they guarantee you in attaining your profit. These trading signals are developed either by an automated machine or by a human trading analyst.

Forex trading signals are available online and can be for a fee or for free, both can be useful. Forex signals are tools used by traders to help them make the best possible decision on their trades.

How do Forex Trading Signals Work?

Forex signals are not all the same in the way they work. Each signal’s system is different from the next and is determined by results derived from different ways of analysing the market. However, market experts who create and provide these signals are guided by two main methods of analysis. Those two methods are as follows;

Technical Analysis

Technically analysing the market involves the inclusion of all data concerning the price and trend history that is available.

Analysis of Current Events

This is the analysis of ongoing events and their effect on price action, whether it be long term or short term.

Other forex signals are based on a computer-automated market analysis. The automated system is programmed by an experienced trader to react a certain way towards certain events; therefore, producing its own signals. Nevertheless, there are some positives and negatives to this system. The positive aspect is that it eliminates the negative influence of human psychology, which could result in bad decisions being made. On the other hand, the absence of human input can also be a disadvantage as computer systems aren’t as flexible.

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Current trading signals are considered to be far more technical than buying and selling ideas. The fx trading signals help to reduce the disparity between gain and loss. These trading signals also become a saving grace for traders that are looking for a slight edge in the markets.

It is essential to invest in a good signal provider because this instrument will allow you to get interesting results from the beginning of their use (if applied properly).

You must consider several factors to make sure that your system is in line with the trader you are. Some even allow their clients to build their own portfolio, incorporating the principle of social trading based on the replication of the positions taken by the traders they want to follow.

They can fully define the trading parameters, including the size of the trade, and monitor trades losses/profits in real-time. Trading signals are typically received by email or through charts displayed in each trading room in real-time.

There are also Manual Trading Signals and Robot or AI signals.

Performance Quality and Time to Follow the Signals

The length of the trading time is all factors that you must analyze to find out what is best for you. Thus, some trading signals provide information on the points of entry and exit of the market, the assets to be monitored and it also allows you to place stop-loss orders.

Customers of high-end automatic trading providers can take advantage of enriched trading signals giving them the right to a wide range of indications for the management of their own funds. Thus, they have at their disposal many tools to control the level of risk.

Some of the users that offer Signals Services have managed to develop their own strategy through years of experience.

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This knowledge, gained by trading forex is normally available for a fee and It would be wise for new users to study these signals in advance in order to avoid any scams.

In general, the more information you get about the signal trading provider you choose, the better off you are. Once you have selected the right fx trading signal, try to make the most of it.

After all, this instrument can help you achieve quite spectacular results in the foreign exchange market if applied properly.

The trading signals given by Forex brokers are, for the most part, enriched in technical analysis.

Commentaries in the Foreign Exchange

Commentaries by specialists in the foreign exchange market can vary depending on what markets are analyzed. Therefore, the human factor also has its place in the creation of this tool. There are Forex Brokers that offer both Signals and Social Trading such as Zulu.

These type of technical analysis or comments may support or challenge the signals. Probably, you will be advised not to follow signals if major fundamental events are occurring. It is better to stay off the markets if big events are taking place, as the volatility of the fx market increases dramatically and could wipe out your account if you are not careful.

Trading Signals

How to Find the Best Forex Signals

It is very important to choose the best forex signals because this ultimately determines whether you will be profitable or not in using them. Not much expertise is required in using forex signals, therefore, the most important step is that of choosing the best forex signal. Following are some tips on the things you need to consider when choosing a forex signal service.

Free Trial

This is a direct indication of what type of service you will be receiving. Offering you a free trial and not requesting payment to cater for any losses is a good sign.

Track Record

You should always analyse the track record of the forex signal provider as this can tell you so much about how they function and what their performance quality is. However, if their track record is not verified by a third party, then that is also a red flag.

The Time Zones

The time zone of the signal provider is very important because you don’t want the signals to come in when you are sleeping. If the time zone is not in line with yours or you cannot receive them when you are available, then they are useless.

Trading Signals

Comparison is Important

You might see one service that really gets you excited the first time but, guess what, there could be better; so always make sure you compare with another service first before you can pick the perfect one for your trading style.

Fulfil Your Needs

Whatever signal provider you choose to keep in mind that the style of the signals should fit well with your trading needs. Besides the ones mentioned above, there are many more forex signal styles and even though profitability is the main priority, choosing something the goes with your personal style of trading can be more enjoyable; which is also important.

The More Services the Better

Given the chance always go for signal providers that have extra services that can either be educational or social trading-based. Depending on the quality of the signal, additional services can come with additional benefits.

Ways that a Trader can Receive Forex Trading Signal

Nowadays, with the technological advances we have all experienced, there are several ways in which a Forex Trader can receive fx signals.

Clear/Paid SMS or Alerts

This is a good way in which traders can receive forex trading signals. These SMS are sent straight to mobile cellphones or come in an email to traders. Sending forex trading signals via SMS is one of the easiest and fastest ways of sending messages to subscribers. Therefore, this service notifies you only when a good forex trade prevails in the market in real-time.

A significant advantage of SMS trades is that you do not need to have an internet connection at all times. Your data might be running low; you might be on the train with a weak signal, or your internet is just not working at that time.

Once you receive the SMS, if you are interested in that Forex signal, turn on your internet, log in to your MT4 and place the trade!

Trading Signals

Web Messenger

This is another option in which a trader can receive notifications or alerts signals on a continued basis. Web messengers are also a specialised tool that “traders” use for forex signals. It offers users real-time quotes, charts and signals notifications – Reliable Corporations do not normally use this one, it is generally used by private traders with Facebook groups (be aware of those, as a certain amount of “traders’ have sprouted and many are not real professional traders) – Also, do NEVER let anybody manage your account.

Telegram

The Telegram application is an excellent way to receive forex signals because it is secure, fast and user-friendly. It is an excellent app with a focus on speed and security. Telegram is being widely used for ICO groups, Forex Signals groups. Along with Whatsapp, these would be the most used apps and funnels through which Traders might and will receive forex trading signals.

Do have in mind, that any of the above will require YOU to input the trade in your MT4. Some services open the trade for you, but EaglesInvestors is against it. Why? You have zero control over what trades are being opened, and you never know what security breach might take place.

Types of Forex Trading Signals

There are two main types of forex trading signals which guide the market professionals who produce the market signals. These are:

1. Automated Forex Trading Signals

The first one is a computerised forex signal which mainly focuses on a programmed computer analysis of the market. A trader has to be in front of the computer over an extended period. The trader can choose to buy or sell a specific currency. An experienced trader will create the software that will come up with the trades. The expert trader programmes the system to react to different events, and the system produces the signals on its own.

Trading in this particular way can be accurate as long as a forex expert programmes the software. This type of signal is more efficient as it monitors the trends of all the trading charts 24/7. Therefore, the chances of missing important signals are minimal.

Automated forex signals software process much more information compared to a human forex trader. Consequently, they can execute a trade far much faster than a human being.

Forex Trading SignalsForex Trading Signals

Advantages of Automated Forex Trading Signals

Automated trading signals have good execution of speed. They can execute a trade far much faster than a human being. This creates a good chance for a trader to be filled at a good price.

Forex signals reduce the market role by updating traders in real-time about the market trend. Therefore, signals help new and inexperienced traders to trade confidently.

Another advantage of automated forex trading signals is that machines do not have feelings, they do not panic, they do not rush, they do not get scared or tired. They will keep calculating all the trades following the same mathematical calculations.

There are many forex trading signals on the internet. Therefore some of them are accessible for free, and some are accessible for a fee defined by a signal provider.

Disadvantages

Automated forex trading signals consist of massive breakdowns. These trading signals are easily affected by technical failures which may be caused by viruses.

These viruses cause the malfunctioning of the software, and this could be fatal to your account. Unlike human beings, they cannot factor in fundamental factors and market sentiments.

Also, the software needs to be continuously updated for them to function correctly.

2. Human Forex Trading Signals

Human forex trading system consists of a trader sitting in front of a computer. The trader will search and interpret signals on whether to sell or buy forex.

Human trading signals is an essential tool which a trader should also use. They allow you to be in charge of your account so that you can choose the ones that favour your line of analysis.

In addition to the above, most experienced traders have a good understanding of the market. Therefore they can depict good selling and buying opportunities. Expert analysts suggest focused signals which concentrate on in-depth fundamental analysis which offers an excellent reward.

Fundamental analysis is a key driving factor in trading; therefore, one should consider it. Most Automated robots do not normally take Fundamental Analysis into consideration.

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Advantages of Human FX Signals

Unlike robots and machines, humans (regardless of their good or bad management of emotions), do have a capacity to “understand” the market. There are traders, with years of experience, that makes decisions, not only based on the numbers and technical analysis, but also on “the feel” of the market.

Also in Forex but mostly in Stock CFD trading the market, as anything in life, is mostly driven by sociology and psychology. Imagine, a human being will be able to detect that some bad press might damage the company’s stock price. When a robot or machine might be looking at the underlying numbers of that stock, a human being might see that as a perfect moment to access a trade.

Besides, Trading Signals given by a human will tend to have larger targets. Robot signals are unlikely to be able to calculate long-term trades, as the market can change any time. They are generally based on short-term, and hence, small profit targets. It is better to die a hero than live long enough to become the villain. 

Disadvantages

On the other hand, human psychology also comes with drawbacks when analysing forex trading signals. First and foremost, a human being is undoubtedly more intelligent than most Forex Trading signals robots, but our processing speed is much lower.

The database on our brains is also much more limited than that one of a robot. Meaning, we might have a broader understanding of the market, but we might be lacking in historical data, and speed to process all of the possible outcomes.

Trading Signals

Eagles Investor’s Human Trading Signals – Click here to Join – It’s Free

Safety Precautions

Using forex signals can be a crucial way of improving your trading performance. There are many safety precautions which one has to go through. Below are some of the safety tips we urge you to read and understand:

  • The forex market attracts a huge and diverse amount of traders. Therefore reliance on information to make financial decisions is a crucial asset to investors. Some trading signals providers provide inadequate information at a premium cost to traders. Inadequate information distorts an investor’s ability to make a correct decision in the market.
  • The best traders also make mistakes, therefore, supplementing trading signals with your research is vital. If you do not subscribe to the recommendations by a signal provider, ditch the signal and look for new trading options.
  • Signals providers mostly provide some recommendations into acceptance which suits their ideologies. Therefore as a trader, you must increase/decrease the leverage according to your risk appetite.
  • Money management is the key to having a successful forex trading strategy. Therefore one has to conserve trading capital to ensure that you can stay in the market even if you encounter a loss.

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Comparison Between Forex Trading Signals and Stock Trading Signals

Not many financial markets will be the same. Knowing the primary features of each market is able to help you decide on which market to concentrate your efforts if you are just beginning with trading. The advantages and disadvantages of every market can affect the daily routine as well as the operation of a dealer in the long term. So be sure to realize the principal differences of Forex when compared with the stock exchange outlined within this informative article before making a decision whether to exchange Forex or stocks. Let us begin our Forex trading signals versus stock trading signals battle!

1 – Trading Times and Open Market Hours

Possibly one of the differences between Forex trading signals and stock trading signals is related to those markets’ trading hours. Forex can be an OTC (over the counter ) market, meaning that currencies may be traded across the clock throughout Forex currency trading sessions. The trading sessions from Forex include the Tokyo session, the London session, the NY session, and also the Sydney session. The foreign exchange market is closed during weekends. However, the gap in time zones between your trading sessions that were makes it feasible to exchange monies in the midnight hours if you opt for.

2 – Tradeable Instruments

Next, one of the many significant differences between stock trading signals and Forex trading signals would be that your range of tools. There are eight significant currencies on Forex: the Japanese yen, the euro, the British pound, the Swiss franc, the United States dollar, the Australian dollar, and the New Zealand dollar. When we expand this list to pay most of the monies, for instance, Swedish and Norwegian krona, was still fewer currencies when compared with the stock exchange. It means dealers can concentrate on several currencies rather than many stocks.

3 – Commissions and Transaction Costs – Forex or Commodities for Beginners

The rivalry between Forex agents has reduced trade costs. To start a position on Forex, then you will need to pay for the so-called disperse, which suggests that the gap between the exchanging pace of a currency set. Significant currencies, just such as the one in the list previously, are typically very tight spreads at the assortment of 1 3 pips (the fourth playoff area of a market rate), whereas less liquid currencies along with also exotic monies could possess higher spreads.

Conclusion

Forex trading signals are usually termed as entry and exit signals. Keep in mind that they are only viewed as accurate and active for a short period. More importantly, most traders benefit from these signals as they inform on the best time to buy or sell currency.

As you can see, trading signals are very important to support you when trading in the foreign exchange market. For beginners fx traders, it is a significant help to understand the workings of markets and adjust its first trades. Experienced traders are able to design their own signals depending on the approach and volatility of markets.

Trading Signals

For a better understanding of trading signals, one must be familiar with technical analysis. Being able to make use of all the technical tools and indicators within the platform and predict an accurate trade. The most commonly used indicators in determining demand and supply are RSI (relative straight index) and Stochastic Oscillator.

More on technical analysis and indicators on a featured article where I will explain how to use them and apply their use on your trading platform.

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