Forex Signals: What Are They?
Forex signals are used to establish the correct forex trading opportunities, which are available at the correct moment. A Forex signal is referring to a trading objective which is revolving around a specific currency pair and which should be executed at a predetermined price & time.
By using Forex signals, your trading performance can be enhanced, irrespective of a trader’s trading expertise. Thus, professional traders can use Forex signals for the expansion of their experience & profitability scope.
It’s important to take into account that trading signals are only useful, when you utilize them at the correct time, particularly in the Forex market which is volatile. Should the trader get the signal too late, it can become useless easily.
How Do Traders Get Trading Signals?
Providers are sending the signals through various communication channels, including e-mail, SMS & push notifications, to ensure that the trading signals will reach the traders at the correct time.
Downloading platform add-ons is another option, allowing traders to directly receive their trading signals on their platform. Certain traders are using social trading communities to obtain applicable forex signals.
Kinds of Forex Signals
Even though many signal services do share certain features, no universal signal-service exists. Below we discuss the four types of the most regular Forex signal services.
1. Manual versus Automated Forex Signals
Manual opposed to Automated Forex Signals are classified based upon the manner in which these signals are created. In general, an experienced trader or an analyst creates these signals. By using manual signal trading, the final decision must be made by the trader, whilst the factor of human intelligence plays a main role.
In comparison, software or a computer creates the automated trading signals, which analyzes and monitors price action which is based on coded algorithms.
However, the major advantage of automated forex signals is the exclusion of emotion, whilst enhanced trading speed is provided. The disadvantage is the fact that you can rely too much on a system, computer or individual, whilst the process of decision-making is excluded.
2. Paid versus Free Forex Signals
In this classification the price is based upon a signal service controller. The providers offer free forex signals, whilst the providers of paid forex signals require payment for that service, which generally entails monthly subscriptions or one time payments.
3. Entry versus Exit Forex Signals
This category is based upon the extent of detail regarding a trade suggestion. Some signal services only provide entry signals, which inform a forex trader when he/she must enter the market. Other providers just offer exit signals, telling forex traders when their open position must be closed.
Mostly, this concerns extended Forex trading signals regarding financial products which trend for long periods of time. Where short-term trading signals are concerned, a trading idea will in general take into consideration both entry & exit signals.
4. Copy Trading
Copy trading became highly popular during recent years, due to the fact that it allows new traders to gain profit. More and more forex traders are developing ‘people-based’ portfolios, which entails the idea of investing in other investors, conducting your trades for you, rather than trading currencies yourself.
You can conduct copy trading in various ways, based upon your selected platform. Whichever platform you choose, the principal idea remains the same; investing a portion of your portfolio with a particular trader, then you copy their entire trades in a manner which is percentage-based.
Bear in mind that the majority of platforms won’t allow you to invest more than 20 percent of your entire portfolio in one trader, encouraging portfolio diversification.
In actual fact this is an effective policy, because investors may be going through a rough patch or may actually appear more experienced and skillful than they really are.
As far as monitoring graphs & statistics are concerned, copy trading poses to be like normal trading. The principal difference is that with copy trading you will be monitoring real people, rather than observing market moves.
Thus, checking a trader’s portfolio is highly important, before you copy them. Look at their track record, get clued up with their strategy and study the strategies they use regarding risk management.
Copy trading is surely a great way to trade forex for novice traders. This renders an easier gateway into the vast trading world, whilst it allows you to make profit by creating trading possibilities from experienced and successful investors. When you start to lose, be assured you won’t lose everything, due to the policy of portfolio diversification.
Take into account that no kind of trading can guarantee success. However, it is a great trading option for gaining trading experience, since you will be learning from successful & experienced traders.
