Trading in the forex market requires a lot of preparation before you step in. One of the requirements to succeed in forex trading is the ability to read the forex signals correctly. If you are looking for more information on forex signal and forex signal providers, read on.
What are Forex Signals?
Forex signals are the entry and exit points on a currency pair sent out by forex signal providers to their clients. A person (analyst) or software continuously monitors and analyses the forex market in search of tradable setups.
When the analyst or the software spots a favourable time to enter the market a signal is given to the clients of the service provider. This will help the traders in capitalising on the opportunities coming their way, without worrying about missing out on any chances.
The idea behind forex signal is that an experienced trader or a specialised program does the hard work for you. You must turn the signal on in your trading account and wait for the signal to profit from it.
As the process happens in real-time, you will receive an SMS, email, or an RSS feed (or even a Twitter update). The analyst or the software will send you the signal at the right time so that you can make informed decisions and profit from it.
Read More: What Are Forex Signals?
Types of Forex Signals
There are various kinds of signals based on functionality. Some providers focus on the long-term setups, while others may be focusing on short-term goals such as scalping. Some signal providers may use fundamental analysis whereas some others may focus on technical analysis. Yet another group of providers analyses the market, while some others use complex algorithms and software to find the perfect time to trade in forex.
In short, their functions determine the types of forex signals. There are just two types of forex signals as follows:
- Manual signals
- Automated signals
Let’s take a closer look into these:
Manual Signals: These are distributed by forex signal providers who employ traders (analysts) to analyse the forex market. Manual signals enjoy several advantages over automated ones as an experienced analyst can fine-tune strategies to accommodate the changing market environment.
Automated Signals: In the case of automated signals, the signals are provided by a program and not a trader or analyst. Trading software and computers use a set of rules to find the optimal trading opportunities in the market. As the programs don’t experience emotions or fatigue, they can work around the clock and offer great advice. However, these signals cannot adjust the trading according to the changes in the market.
Are Forex Signals Legal?
At the outset sending signals to aid trading might sound like something not above board. However, forex signal providers can offer their expert advice to the traders, provided they do it according to the set rules and regulations.
But, just as in any other business, there could be some illegal providers and scammers in forex signaling too. You need to watch out for them. One of the best ways to avoid scammers is by choosing a certified financial advisor as your signal provider.
Many forex signal providers also make it clear that their views shouldn’t be considered as investment advice but as educational information. Apart from that, some companies offer expert market advice and signals for a fee.
In this context, it is worth mentioning that scammers are generally interested in growing their client base without offering any valuable services in return. Hence, they don’t bother to give accurate information and do not care if they lose any client in the process.
Advantages of Using Forex Trading Signals
We have learned what and how of forex signals. Let us now discuss why it is advantageous to use trading signals.
Mastering forex trading needs discipline and continues education. Here is where the expertise of other, experienced traders’ knowledge can pay off. Even if you pay a fixed fee, the returns more than justify the expense. Moreover, the forex signals can take away a lot of worrying and the need to invest more time analysing and studying the market. The analysis provided by the experts is often correct and profitable.
Diversification of risk
If you also trade in other markets, such as equities or commodities, forex signal providers offer you an optimal risk diversification option. Currencies usually exhibit a substantial connection with these markets.
For someone new to trading, forex signals offer the best way to learn something new about the market. You could understand and learn a lot just by looking at the charts prepared by your signal provider.
You will be able to understand why opening a long or short position on a particular currency pair makes sense. If the signal provider delivers market commentary, you will have all the material required to boost your knowledge to become an independent trader.
Receiving Forex Signals
You can receive forex signals from your chosen service provider that suits your needs. You should know how your provider distributes his signals. Signal providers use various channels to communicate with you and here are some of the most popular ones.
Telegram – this messaging app is extensively used by signal service providers to distribute signals to their subscribers. There are hundreds of Telegram channels offering forex signals. Interestingly, most of them are free and public. However, if you subscribe to a provider, you’ll receive an invitation to join a private channel where the signals will be posted. Furthermore, several Telegram groups enable the members to chat with one another and discuss active trades and market developments.
Email – Service providers use email extensively to send forex trading signals owing to its descriptive nature. Emails make it possible to send a detailed description of signals.
SMS – SMSs are another popular means of receiving forex signals. The advantage of SMS is that you don’t need an internet connection and that it can be received anywhere around the world. However, it can only offer you the highlights of the signal such as the most commonly traded pair, stop-loss, and take-profit levels.
WhatsApp/Viber – These are some popular messaging apps used by signal providers. It is possible to receive detailed market commentary, signals, and charts through these. As both are extensively used apps, there is no need to install a new program to access the information.
As you can see there are numerous channels through which the signal providers can offer their services. Often, aid providers use a combination of channels to make sure that you receive the new signals right on time.
Check Out: Top 7 Forex Trading Signal Services
Forex signal providers monitor the market full-time and send you trading opportunities in the form of signals. They can shorten your learning curve significantly if you choose the right provider.
Often, the quality of a signal provider depends on the profitability of the signals, so you need to check for a verified track record before signing up for a monthly subscription or paying a fee. If you choose wisely, you are sure to profit in more ways than one.
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