Forex signals have become increasingly popular in the last recent years as forex trading popularity increased. Today, anyone with a phone, internet and some cash in their bank account can trade in financial markets, including cryptocurrencies, as deposit requirements have been lowered.
But trading can be difficult and the market can be volatile and irrational so not everyone is cut out to be a trader. Here is where forex signals come in handy. Forex signals are trading recommendations that come with a set of instructions as listed below:
Name or symbol of the instrument to trade
Action to execute e.g. buy or sell order
The entry level price
Stop-loss level to limit losses.
Take-profit level to maximise gains
There are many forex signal service providers which you can choose from, offering all types of signals, such as free forex signals, paid signals, manual signals, automatic signals etc.
Free Forex Signals
Forex signals are provided either for free or for a fee. There are signal providers such as FX Leaders that offer a combination of both, with free signals being displayed on the web page, but there are some caveats, such as the entry price not being displayed and traders not getting a notification when the signal is opened.
Free forex signals are a good place to start for new traders who are new to trading or not sure about the performance of the service. Some providers offer free trading signals for a test period as well. Traders can test these signals for a period of time and after witnessing the results, they can decide whether to invest in the service to increase profits.
Paid Forex Signals
When you subscribe with a forex signal provider, the fees can be either a flat monthly or yearly subscription fee or a percentage fee based on the performance. Signal providers can send their information through a variety of forms, depending on the software used and the trader’s preferences.
Subscribers can receive the signals through SMS, email, WhatsApp, Skype, etc. Professional signal services provide detailed information on why the action is the right one at the moment, supporting the trade recommendation with technical and fundamental analysis. Besides that, the most serious providers update their subscribers with information that can be incorporated into the forex trading decisions that followers can make.
Automated Forex Signals
Automated signals are not to be confused with trade copiers; a trade copier automatically executes the trades that other people open, while an automated forex signal is a trade idea that you can decide to follow by executing it yourself or not.
An automated forex signal is generated by a trading robot/algorithm or “Algo trading” as it is often referred to, which experienced traders use as an additional source of market interpretation.
Preserves Trading Discipline – Also trading software doesn’t incorporate the emotions of a human trader. Therefore, the trade decisions are unaffected by human conditions.
Backtesting the Strategy – Usually, the trading algorithm developers will backtest the particular trading strategy using historical market data. Solid backtesting allows the trading strategy to be optimized for better results.
Execution speed – Often the forex market can be very volatile. But automated signals can keep up with fast-changing conditions.
Diversifying Trading – Algo trading can analyze and execute trades across a wide range of markets, while a human trader usually has their preferences, and the trading scope is limited to only a handful of financial instruments, mainly in one category, such as forex. Automated trading doesn’t have preferences and can carry out multiple trades at the same time, thus increasing trade opportunities.
Manual Forex Signals
Manual forex signals are issued by professional traders with an in-depth knowledge of the markets, who conduct technical and fundamental analyses to support their trade recommendations. To some people, manual signals are superior since experienced traders take into account all factors that affect a currency pair, and below is a list of advantages they offer.
Trading the News– While forex bots can trade news such as economic releases, they have problems tracking comments from central banks, politicians, geopolitical events etc. Professional traders specialize in this sort of analysis and can turn them into profit.
Larger Profit Targets – Manual trading strategies usually focus on large timeframes, which reduce the risk of volatility and increase the profit targets. In fact, forex manual signal providers can offer both short term and long term signals which usually target hundreds of pips.
Nursing Trades– While forex signals come with a fixed set of instructions, manual signal providers can adapt to market fluctuations. Such signals are often accompanied by market analysis and comments which instruct traders to move the targets if markets move in the right direction. This can increase profit dramatically since most of the profit in forex is made by letting the winning trades run as far as they can.