Table of contents:
- What are Forex Signals?
- Top factors to consider when choosing a Forex Signal Provider
- Pros and Cons of Trading by Forex Signals
- How does the client receive Forex Signals?
- How to use Forex Trading Signals?
- What kind of trading orders can you receive?
- How to read Forex Signals?
- How to avoid being scammed?
What are Forex Signals?
Forex signals are factual information about a currency pair, including entry, stop-loss, and take profit. The trader can then use that information to assist them with their trading decisions.
Forex signal services are providers of forex signals to traders. Their job is to analyze the market and present opportunities to traders professionally. Some are free, and some require a given fee to be eligible to receive forex signals from them. Forex signals typically get sent out in real-time. These signals are analyzed with technical charts, fundamental news, or are a combination of both.
Top factors to consider when choosing a Forex Signal Provider
Choosing a forex signals provider must not forget about some crucial factors. By doing so, you will make better decisions, which will help you achieve your financial goals in a shorter period. Some important factors include:
- Experience and past statistics of the provider: Getting consistent profits in forex is quite tricky, so one of your priorities should be to check how experienced your signals provider is. You should look for how long he has been offering the service and how much success he has achieved throughout his trading career. You will get a general view of how consistent the provider is over a more extended period by doing a backcheck.
- Prioritize quality over quantity: How many signals a provider offers on a weekly/monthly basis can differ immensely. But you should keep in mind that making more trades doesn’t always mean that you will be earning more since the quality of the trades can be worse. That being said, you should consider every trade that you get sent before just jumping into the market.
- Reliability: You might find finding a reliable forex signals provider quite a challenge since there are many professionals as well as some that don’t care about their clients and are in it just for the money. You should look for a consistent performance record in the long term. Remember that a negative month doesn’t mean that the signal provider is unreliable. You should look at higher periods for signs of consistency.
- Performance: The best way to check a signal provider’s performance is to compare averages of pips earned per trade and pips lost per trade. You can also check the win rate of all their trades. And most importantly, you should check how many months the signal provider has positive results and how many have negative results.
- Reputation: While looking at signal providers, you can see that some are more efficient than others. To ensure that they are trustworthy, you can check their performance record, sign up for their free trial (if they have one), sign up for their news through email (if they provide news), or simply google them and check if they are mentioned in any popular articles and described positively.
- Automation: Different forex signal providers offer different ways to receive their trade opportunities. You can receive them through email, direct messages, members forex signals app, etc. Compared to that, you can also find providers that automate the process entirely or even allow you to copy their deals automatically. That being said, automating the trade doesn’t mean it’s a better option. It’s just a personal preference. The recommended option would be to test everything out on a demo and learn what works for you.
Pros and Cons of Trading by Forex Signals
Pros of Trading by Forex Signals:
- Risk minimization: Using a reliable Forex Signals Provider minimizes risk mainly because these providers present opportunities to you with relatively higher success chances based on them analyzing charts and the vast amount of experience they have.
- Save time: Someone providing you with Forex Signals will help you save a significant amount of time, especially for anyone who enjoys trading but struggles to find the time to fit it in their schedule. Allows you to educate yourself instead of trying to find trading opportunities yourself.
- Improve knowledge: More time is presented to you. Based on the opportunities that you get, you can explore why specific trading forex signals have a relatively higher chance of success through analysis.
- Backchecking of forex providers available: You can request forex providers that you are interested in for their statistics of previous months to see if their risk to reward ratio is acceptable for you.
- A plethora of forex signals: As someone trying to find a forex signal provider for yourself, you have almost infinite choices. The main thing you have to focus on is their sincerity in sharing their history of statistics with you.
Cons of Trading by Forex Signals:
- Scams: There are many forex signal providers available in the market. Having such high numbers means there is also the potential to find scammers that aren’t genuine.
- Unprofessional: You have to be careful when choosing a forex signal provider since most of them aren’t professionals. Ensure that the provider you select offers valuable signals to make you profits.
- Cost: You can find many free forex signal providers, but it’s hazardous to give them a chance since they fail to be valued most of the time. On the other hand, forex signals providers that charge a monthly fee can also be unreliable or even scams, which means you also have to backcheck the provider or look for one who offers a free trial.
- Unreliable trading systems: When looking for trading systems from forex signals providers, be cautious of automated ones with no human involvement. These systems can work from time to time, but in the long run, they are mostly unfavorable.
- Lack of experience gained: Having signals sent to you means that you are losing the experience you could acquire by doing analyses and the research yourself.
How does the client receive Forex Signals?
Forex signals providers can send out alerts to their clients in several ways. The alert methods are email, direct message, private members area, and various forex signal apps. Let’s explain the principle for each alert method individually:
- Email: A popular choice is through email since an individual has constant access to it on his phone even when he isn’t behind his computer screen. A good suggestion would be to make a new email address to have quicker access to the signals sent to you since your inbox is free from other notifications. You significantly reduce the chance of missing a signal or noticing it is too late.
- Direct message: As the email method, getting your signals through direct message is reasonably practical since you have your phone on you most of the day. That being said, the chances of missing a signal are pretty small, and the notification is pretty much instant.
- Private members area: Some forex signals providers have their own private members areas for their subscribers, where their subscribers can communicate with one another and discuss different trading opportunities. You can also access past and present published articles to check how to analyze the signals and learn more about doing so in your spare time.
- Forex signal apps: You also have a chance to find a forex signal provider that sends alerts through his mobile app. They have grown in popularity but are still less preferred than direct messages by most clients.
How to use Forex Trading Signals?
After signing up with your chosen forex signals provider, you will most likely be getting your signals through email and direct messages. Be sure to allow notifications to receive the alert in the fastest time possible. Choosing how to approach the signal you receive is entirely on yourself. You can decide to confirm the suggested signal yourself and initiate the trade only if it is seen in your eyes as suitable. Another choice would be primarily for more experienced traders who analyze and treat received signals as secondary or indicators that confirm initializing the trade.
An example of a forex trading signal would be:
Buy GBP/JPY at 151.400 – SL 151.200 – TP 152.000
Above, you can see an example of a forex trading signal that you can receive from your signals provider. You can see that it indicates buying the GBP/JPY pair at 151.400. You have a listed SL (Stop-Loss) of 151.200 and a TP (Take Profit) of 152.000.
Seeing the forex trading signal for the first time might have been difficult to understand for a beginner, but you can always break it down by the methods above until you get used to them.
What kind of trading orders can you receive?
Since you have started working with your forex signals provider, your next step is to learn what orders you can encounter.
We will break down the five primary time orders:
- Market orders: The most common type of forex order is the market order. It is an instruction to your broker that you want to buy or sell a chosen currency pair at a specific price available at that time. A market order is an instant order since it gets processed instantly.
- Take profit orders: This order serves as a target price order that closes the open position when your target price is reached.
- Stop-loss orders: Stop-loss serves as some kind of protection for your trading account when your prediction is wrong and moves against you. When the Stop-loss order gets hit, your position gets closed, so you prevent additional losses that could occur.
- Limit orders: Limit orders indicate that you are attempting to buy below the current market price or sell at a price above the current market price. These orders get triggered only if the market price reaches the limit order price you set.
- Stop orders: Stop orders indicate that you are attempting to buy above the current market price or sell below the current market price.
How to read Forex Signals?
You should first know what a standard forex signal looks like from the forex trading signals that you receive from your provider.
The essential components of forex signal alerts are:
- Currency pair: A currency pair indicates which pair the forex signal alert is being issued for. Example: GBP/JPY
- Long/Short: Indicates if you should buy or sell the currency pair. Long meaning buying, and Short meaning selling.
- Entry price: Entry price is usually a market order, limit order or stop order, which specifies when to enter the trade.
- Target price: Target price is equal to a take-profit price.
- Stop-loss price: The stop-loss price is a price that indicates when to exit the trade. This happens when the market price goes in a different direction than your intended one. It protects you from acquiring additional losses on your trades.
How to avoid being scammed?
You have a large variety of consistent forex signals providers in the marketplace, but they can be pretty tricky to find. Anyone looking to find a professional signals service should take time with their research to ensure that they will get genuine services provided. You should pay attention to potential scams. So if you encounter something that looks too good to be true, it probably is.
Some indicators of what to look out for are:
- Forex signal providers who are showing 90-100% win rates should most of the time be avoided. They don’t need to be scammers to be unreliable. Most of the time, they take on a more considerable amount of risk that is recommended. That being said, you should preferably stay away from signal providers with misleading win rates to protect yourself from losing all of your funds.
- Signal providers that claim their strategies will guarantee a certain % of returns per month/year of a certain amount of pips per week/month are unreliable. Nobody can guarantee anything in the markets since they are only partially predictable, meaning you should stay away from forex signals providers making these kinds of claims.
- Any forex signal provider who refuses to share their past performance record and claims that they are profitable should not be trusted.
- You should be cautious of forex signal providers who don’t state the risks of forex trading. There is always a chance to make significant profits, but on the other hand, you can also make huge losses if not careful. By that being said, you should only use and trade with the money that you can afford to lose.
- Checking the forex signals providers’ reputation online is always a healthy option for anyone looking for one since you cover the advantages and disadvantages of a provider. You have to consider many fake articles, news, and reviews on the internet, so be careful what you believe.
Now that you know what forex trading signal providers do and what you should be looking for while looking at your available options in the market, you are ready to start looking for a good provider. We would like to thank you for reading the guide and that it will help you find an excellent profitable forex signal provider that will acquire your financial goals.
Finding a reliable and trustworthy forex signal provider will also help you improve your forex trading experience and allow you to learn more by simply getting to know and experience more about forex trading itself. By doing so, you won’t have to spend excessive time in front of your computer screen or phone devices while still making profitable decisions based on the signals that you receive. On the other hand, another bonus is if you are interested in forex trading but simply don’t have enough time because of your job. A forex trading signals provider will allow you to be involved with forex trading despite the lack of time.