A Forex signal can be defined as a suggestion that entails entering a trade on a currency pair. This kind of trade is usually done at a specific price and time. Forex signals can be generated in two ways:
- Manual forex signal system: this is generated by a human analyst sitting behind his or her computer. It involves the analyst looking for the signals and interpreting them.
- Automated forex signal system: this one is generated by Forex robots that look for the signals using a specific software and interpreting them. This is the best way because it is faster and removes the psychological stress involved in interpreting the signals.
Forex Signals are usually communicated through email, SMS, website, RSS or any other method that ensures immediate feedback. This is due to the timely nature of these signals.
Types of services under the Forex signal system
- Paid Forex Signals that originate from one provider through either personal analysis or automatic analysis via algorithms
- Paid Forex signals originating from multiple sources or systems
- Forex Signals originating from a trading software installed on the computer of the trader. This trading software is also known as Forex robot
Typical features offered by Forex signal service providers
- Management of forex account: This is where the account of a subscriber is traded by the forex signal provider on his or her behalf. This is effective way of keeping up to date and reducing time spent.
- Assistance with the analysis of the signals and also provide supporting graphs for further interpretation
- Educational and training resources either through the internet or cell phone
- A trial period for the Forex signal system at a reduced price
- Coaching and extra interaction with the provider on a one-to-one basis through forums and comments
- Approximate loss figures on entry, exit and stop for various trades on several currency pairs
- Trading history – for example the number of profit or loss per month, risks and reward ratio
- Note that not all forex signal providers offer this complete list of services. Some offer just a few of them.
Forex Signal Scams and fraudulent activities.
Some people in the market provide unreliable, fake and questionable Forex signals. They may deceive the trader that it is a get quick rich criteria and if he or she falls in their trap, he or she ends up losing a lot of money.
Forex Signals Methodologies and trading strategies
A large percentage of Forex signal providers are usually focused on supplying the trader with signals based on technical analysis. Only a few of the signal providers focus on the price action or fundamental analysis. Technical analysis like candle stick charting display both short term and long term price trends to the provider thus enabling him or her to be flexible in the supply of a range of trade options. Price action usually gives the provider extremely short term ideas while fundamental analysis gives him or her longer term trade ideas.
Schemes used by signal firms in offering Forex Signals
The initial signal can be sent to the trader for instance at 0930HRS and then it remains actual for a certain length of time for instance till 1330 HRS.
This implies that the trader will get another Forex signal at exactly 1330hrs sharp and it will then remain actual till 1730hrs.
Then the last signal is sent to the trader at exactly 1730hrs.
All transactions are usually given to forex dealers according to the GMT time. This means that the trader should be prepared to follow this time as well. He or she must adjust for local time. The transactions that the trader provides in foresight must be calculated before the signal time expires. This is done to avoid any confusion in the trading pattern and ensure uniformity.
Forex signals that are profitable are usually provided by experts in the trustworthy firms. With the assistance of professional dealers and working with partners who are reliable enable the trader to get forex signals that are timely and of high quality. A trustworthy company will always provide a trade with accurate and new updated ideas. Professional dealers enable the trader to get reliable forex signals before they even appear in a newspaper or online resources. A trader should realize that forex trading is a very competitive business and with all the benefits involved, he or she ought to pay his or her dealer a good monthly fee.
A trader who is new in forex trading business may be wondering how such profitable forex signal can be received. This is not something to worry a trader as the signal provider will offer a few options from which a trader will choose and select the ones he or she thinks are most suitable for his or her needs and schedules. After all these, the trader will then be receiving forex signals via emails or directly on his or her computer screen. This will facilitate his or her participation in the trade.
Key Things a trader should consider when dealing with forex signals
As a trader, there are several things to consider and precautions to take before, during and after selection of a forex signal provider. As mentioned earlier, this kind of business is very competitive and so a trader needs to get the most accurate, timely and up to date signal. These signals should also be accompanied by detailed analysis, explanations and insight. This will enable the trader to be successful in his or her trading pattern as far as profit making is concerned. Some of the most important things to consider include:
- A trader should be aware that there are a lot of hardcore scammers in the market working very hard to feed him or her with fake, low quality and substandard forex signals. Most of these hardcore scammers have no background or training in any financial matters and usually feed the trader with performance statistics that are imaginary but yet convincing to a trader who is not smart enough. The best way a trader can deal with this problem is by spending at least 5 minutes looking at what other traders are saying about this respective signals provider. This will help him or her in making an informed and proper judgment. Another way is by the trader looking at the level of detail contained in the signals provided by the forex signal provider. If he or she realizes that it just entails a few charts with a loss or profitable line, the trader has a reason to think twice before following such signals.
- A trader should look for testimonials about various forex signal providers available in the market. He or she should look at what other players in the industry are saying about the available signal providers. This will enable him to choose the best provider in terms of accuracy, quality, timeliness and affordability of the services offered.
- The trader should check the number of TPs the providers have in one trade.
- The trader should check how the providers put together the performance statistics.
- The trader should also check if the providers have trade by trade statistics.
The bottom line is that any trader who wants to be profitable in the long term should start learning by himself or herself about forex signals though experience and self-training.