What Is A Forex Signal?
Forex signals are typically delivered by signal services which usually charge a monthly fee. Unlike automated trading solutions, such as robots and EA’s, Forex signal services do everything except execute the actual trade.
Forex signals are utilized by both the beginner and professional trader, and they serve as a useful way to get an edge in the markets. No matter a traders experience level or account size, Forex signals are used in one way or another to help investors make critical decisions.
How Do Forex Signals Work?
Forex signal services are composed of experienced, professional traders who use their own trading plan or system for creating trade ideas.
Trade ideas, or signals, can be delivered to subscribers in a number of ways, such as through a live trading room, email, text messaging, chat feature, and more. However their delivery method, any Forex signal service or provider worth the money should provide the following:
- Exact execution price
- Stop Loss level
- Take Profit level
Forex signals should also come with a few words from the provider explaining their decision to take that particular position. This can be done with a few lines of text, a video, or even a simple chart displaying their thought process.
It’s important to know the signal providers justification for taking a trade since their reasoning may not align with your trading style or with what you believe. If a signal service is not automated, then you have the option to place a trade or not take the risk at all.
Quality signal services will give traders a general idea of how they form trade ideas on their website, (i.e. Technical analysis, fundamental analysis, scalping, Elliot Wave, etc.)
How to Choose the Right Forex Signals
Before trading any real money, it is highly advised to open and trade on a demo account using a free Forex signal service. There are tons of free options out there which will allow you to grow familiar with how Forex signals are received and executed. This will help you avoid any costly mistakes in the future when you choose a premium Forex signal provider.
When looking around for the best Forex signals, ask yourself the following questions.
- How long has the provider been in business?
- Do they have a verified track record?
- What do their clients have to say about the signals?
- How do they deliver their signals, will this work for me?
- What form of analysis do they use?
Ask yourself these and similar questions to help you determine if a particular signal provider is the right choice for you.