If you’re an inexperienced trader, struggling to find your way in the market, or you just have other commitments that keep you from doing the amount of research and analysis that you need to be doing before entering into trades, forex broker trading signals can be a shortcut to profitable trading.
What are Forex Signals?
In a nutshell forex broker signals are suggestions for potential trades that you can enter into. The signals can be made by humans or by sophisticated algorithms and other computer programs. Because they usually need to be acted on quickly, forex trading signals are usually sent via SMS, email, or tweets.
Many brokers offer free forex signals to their traders as part of their services and you can also find some free signal services online. There are also many paid trading signals available, running the gauntlet of a few dollars to hundreds of dollars every month depending on the quality.
What You Get with Forex Signal Services
Forex signal services can give you different services of varying quality depending on how much you pay. For basic signal services, all you will get is phone or email alert to potential trades. With the trades, you should also get supporting graphs and some analysis to show you where the trades came from. You should also receive a trading history, showing the actual profits and losses of the signal service for a set period of time.
The graphs and analysis are important because you can learn from them and the reasoning behind the signal, allowing you to strike out on your own one day. You can also evaluate the signal yourself to see if you agree with the broker and think the trade is good.
More expensive forex signal services can come with some very valuable add-ons. This can include educational materials and even one on one coaching with the analysts that are making the stock predications.
How are Forex Signals Generated?
Services can generate their signals from many possible ways. Usually, signals are determined through technical analysis of charts and graphs of the currency pair in question. Ichimoku and candlestick charting are very popular with services because they let the analyst determine both short term and long term price trends. Price action can also be used for short term trading action, which is technical analysis based on the movement of prices in the market.
Fundamental analysis, or analysis of the qualitative factors involved in the price of the currency pair, can also be used for signals. However, fundamental analysis is usually used for trade ideas over a longer time horizon than most forex traders like to participate in.
Finding Effective Forex Signal Services
While forex signals can help many trades, there are unfortunately a few dishonest services in the market. Before you invest a large amount of money in receiving signals, make sure that you validate their quality.
One way to do this is by reading forex broker reviews. You can also take a look at the backtests that have been run with the trading signals to see how much profit or loss they would have made historically.
The broker should also allow you to sign up for a trial period or to get a few signals for free so you can try out their services without needing to invest a lot of money.
Paid and free forex signals are a great way for traders who don’t have the time or experience to come up with proper analysis on their own to get into the market. You can even learn using the signals what makes good and bad trades. Just make sure to read forex broker reviews before you lay out serious money for the services.