Are Forex Signals Useful in Making Profits?
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There is nothing strange and unnatural in the fact that every forex trader, no matter if a beginner or an advanced one, would like to be able to make a good profit from trading without investing too much efforts and expenses in the process.
At the end of the day, the majority of people entering the forex market as traders are there mainly because they believe they can make a good profit and even enjoy a string of constant income thanks to the opportunities that forex trading offers and by overcoming the risks associated with the market.
In fact, the forex market is a great opportunity for investing money and getting great returns.
However, the likelihood of a trader being able to make profit by trading with foreign exchange is highly determined by a number of factors, many of them associated to a good education and training prior to entering the market, well-developed skills required for you to be a good trader, a bunch of mindful and insightful strategies, planning, organisation, time, money, and risk management, and more.
As you can guess, all that does not come naturally to anyone and it requires time and energy to be acquired.
Unfortunately, the majority of the people starting as forex trading beginners believe that they can make money quickly and absolutely effortlessly, which is not the case for more than 95% of the novices.
However, there are still some ways and even hacks that can turn out to be a reliable helping hand throughout your forex trading experience.
If handled and utilised properly and insightful enough, these “helpers” can easily amplify your chances for success. Are you intrigued? Make sure to stay tuned for more information!
Now, one of the first topics that will pop out in your Google search whenever you are typing and looking for some tips and tricks that can make forex trading more effortless and easy is the question: “Are forex signals useful in making profits?” Even if you don’t come up with the idea of a quick Google search, once you are trading with forex you will soon or later come up with the term “forex signals”, what does it stand for, and finally fall into the rabbit hole of searching: “Are forex signals useful in making profits?”
No matter when and how this questions finally pops out into your head, we feel obligated to help you learn more and make a better decision when choosing whether or not to adopt forex signals and adapt them to your trading strategy and plan.
What are forex signals and how do they work?
Forex signals can be a good tool to assist you in trading currency pairs. Investors use forex trading signals in order to help them make decisions when and how to trade.
In a nutshell, forex signals indicate, suggest, and recommend the trader when to enter a trade on a currency pair.
Sometimes, signals will indicate a specific time and price for the trade.
The more information a signal can give you, the better you will feel and the more confident in your decision.
While forex signals can have a great impact on your trading experience in a positive way if you make sure to use them wisely, it can also happen that the question: “Are forex signals useful in making profits?” could have a negative answer if you don’t know how to use the signals and where to get them from.
There is no doubt that as much as signals can help you fill in your virtual piggybank, they can also cost you a lot of money if you make a mistake. However, forex signals remain one of the most popular tools many forex traders enjoy working with as they can be very helpful in attaining a profit.
Forex signals are developed either by a human trading analyst or an automated machine. They are designed as short messages that are sent to a trader via emails, SMS, and other popular types of online communication.
A forex signal usually includes a pretty short and simple piece of content with only a few key items included: direction of the order (sell or buy), followed by the trading instrument in the form of a currency pair (f. ex. EUR/USD) or alternatively a currency nickname, followed by the price quotation that is normally shown in four or five digits after the dot.
Forex trading signals can also sometimes include the type of order (market order, pending order, or limit order) followed by another two abbreviations and two quotations, which identify the points of stopping your trade due to an occurred loss of profit.
With all that being said, a forex signal you can receive as a message can pretty much look like that:
BUY EUR/USD @1.1240
SL @ 1.1220 TP @ 1.1270 – in this case, SL stands for stop-loss and TP stands for take profit
Forex trading signals are designed to be unique since they are strongly determined by the current market situation and conditions and based on a different analysis of the current market.
Created by trading experts, signals work as recommendations and should be perceived as recommendations or suggestions by the trader, not as clear guidelines on how to trade all the time without analysing the market yourself.
Using forex trading signals does not mean that you should completely and entirely put trust in the provider of these signals and their analysis.
Forex signals are properly and widely used as long as they give you confidence in your own decisions and they can support your own research and market analysis, provide you with a general overview of the direction of the financial asset and the currently prevailing trend of the market.
While forex trading signals can become the saving grace of traders looking for a slight edge in the market, for forex trading beginners, and for traders looking for ways to experience forex as effortlessly as possible, they do not guarantee instant and secure profit.
So are forex signals useful in making profits? Yes, they can be, but they do not substitute the proper forex trading education and training by no means.
We at Trading Education know the importance of a good, up-to-date, tailored to your learning needs and schedule forex trading course.
To make things even better, the world-class forex trading course we offer is completely free if you register on the website.
Who are the authors of forex signals?
There are many online services and providers dedicated to offering forex trading signals for free or for varying prices. Different online platforms and social media make it possible to distribute and share different versions of free and premium forex signals.
However, the three main groups of people responsible for distributing forex signals are the traders, the affiliates, and, unfortunately, the scammers. As you can guess, you would be better off putting your trust in the signals provided by traders and affiliates not the scammers. You can usually easily identify the scammers because they will make you guarantees, often highly attractive and unrealistic. Basically if it sounds too good to be true, it normally isn't, so keep your wits about you when deciding which signal provider to use.
It is not uncommon for a trader to be willing to share their own ideas and analysis in the form of signals.
There are many reasons why a trader will share their ideas with the outside world, they may aim to make a profit, making a good reputation of an experienced and reliable trader, contribute to the forex world and share their knowledge with beginners, and simply help other people out there.
Even if a trader is offering their signals for free, there is nothing suspicious in that fact and in most cases, they are simply offering the exact same information they are using in their own trades. Affiliates are also a group of people you can get free or paid signals from, usually, once you sign up for an account with a broker.
Keep in mind that affiliates can still make a profit out of the commission on the trades you make, albeit, the signals remain free.
See Also: Is Forex Trading a Scam?
Which forex signals to use?
There are people on the forex market that will share their doubts about whether or not forex signals are useful in making profits.
This is mainly a result of an experience with low-quality signals they received from scammers, affiliates looking for ways to make a quick profit only, or simply analytics that is not good at technical and fundamental analysis of the market.
Everyone willing to utilise forex signals in trading is free to caution against the very poor and low quality of signals received by providers.
Some traders have a bad experience with free signals that turn out to be very unreliable and even dangerous for the accounts.
However, this is not the case for all free signals available out there. We at Trading Education are happy to be able to provide you with a high-quality free forex signals service designed by top quality personalised research desks with powerful pattern recognition and a multi-asset research for absolutely free. Make sure to visit our website here and you will be able to learn more about the service.
Advantages and disadvantages of manual forex signals
The manual trading system allows you the full control over your own account. You are the one sitting in front of the computer, searching for signals and incorporating them in your trading routine and the decisions you make.
You are the one interpreting the signals. You are the one choosing the signals that favour your own line of analysis and the ideas you have.
Manual signals usually include five key recommendations to the trader, including the entry point to the transaction, the stop-loss placement point, placement of the order, the percentage of risk from the total trade deposit, when and how to tighten the level of stop-loss (trailing stop).
The advantages of manual forex signals include:
- Signals are often based on an in-depth fundamental analysis along with technical analysis that is a key driving factor in trading.
- Created by humans with real experience and understanding of the market.
- Signals are based not only on analysis of numbers and charts but also on “the feel” of the market. This is important since the forex market is sufficiently driven by sociology and psychology.
- Manual signals tend to have larger targets and able to calculate long-term trades.
Disadvantages of manual forex signals include:
- The drawbacks of human psychology when analysing the market.
- The probability of fraud. The ease of providing manual forex signals means that scammers can easily take advantage of and deceive the trader.
- The speed of the process. Manual forex signals can quickly become out of date and the trader does not have the physical ability to go into the transaction on the terms and recommendations received. Entering the transaction with delay can often lead to bad results.
- You should always be ready to go into a transaction and enter a deal as signals can come to you anytime, anywhere, otherwise, you are missing opportunities. This can be very stressful.
Advantages and disadvantages of automatic forex signals
Created by experienced and knowledgeable traders to come up with trades, analysis, and signals, this software is designed to focus on a programmed computer analysis on the market strongly based on technical analysis. The software is programmed to react to different events and changes and produce the signals in a result. The programming of the software is the main aspect that affects the accuracy of automatic forex signals.
- 24/7 monitoring of trading charts and a minimal risk of missing important information and signals.
- The software processes much more information than a human physically can.
- The software can execute a trade significantly faster than a human.
- Reduce the market role by updating traders in real time about market trend.
- Software does not make rushed and emotional trading decisions.
- The human factor is excluded. You have more free time and everything you need to do it monitoring your account and the monetary balance.
- Easily affected by breakdowns and technical failures caused by viruses.
- The software cannot factor in fundamental factors and market sentiments.
- The software should be updated very often for it to function properly.
How to make the most of forex signals
Are forex signals useful in making profits? Now we know that, yes, indeed they can be. Let’s explore some ways of utilising forex signals and maximising the benefits that are a result of the synergy between your own trading skills and knowledge and trading signals.
- Extend the take profit target – Some trades have a bigger winning potential than the profit target of the signal, so make sure to add some more pips to the take profit of the signal if you feel like this is a good trade.
- Extend the stop-loss – Move the stop-loss above the resistance level provided with the signal or close the open position before it reaches the stop-loss in cases when you feel like this is better to be done.
- Remove the take profit – If you can forecast that a market trend is starting to form, you can use the signal only as an entry point and next remove the take profit target, which means that the trade will run for longer.
- Pick a better entry – Whenever you believe that there is still enough room for the price to move higher when a signal is issued, make sure to wait longer for the best entry price.
- Cut the losing trades short – When unexpected events occur and the market situation turns around in a moment, you can close the deal right there at a small profit or loss instead of taking high risks.
- Scale in and out – Increase the lot size of signals with a high probability of success and scale out the signals with a low probability of success.
- Choose a weaker or stronger correlated currency – Scan the charts daily and check for weaker and stronger pairs.
- Include the spread – When following a forex signal, make sure to calculate the spread when deciding where to place the stop-loss and take profit.
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Should you use forex signals?
So let’s give an answer to the question: “Are forex signals useful in making profits?”- Yes, they can be.
However, expecting that signals only will do all the magic and make you a successful forex trader is pretty much unrealistic.
While signals can be potentially profitable for you, it is not recommended to rely on them only and miss the part where you educate yourself, develop your trading talent, master trading with currencies. It may take a lot of hard work and dedication, but is it definitely worth it because over the long-term your success will be a subject of higher and better chances.
Getting started with forex signals is not a good idea too as you will miss the opportunity to learn and master forex trading yourself. Even if you are using the best forex signals you are still not learning how to analyse and understand the market, you are simply relying on the knowledge and experience of someone else.
So when it is recommended to use forex signals? Once you gain enough knowledge, understanding, experience, and confidence to be a good forex trader, once you are able to analyse the market yourself, draw your own conclusions, make your own predictions, have your own ideas, this is when you can incorporate the helpful power of signals to your trading routine.
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