Forex Trading Signals Definition and Useful Tips
Break-even Forex trading is a dream, a beautiful slogan in global networks, or is it a pleasant reality? The world of the international currency market is a huge financial system, which for some participants to become the subject of constant profit. For others, unprofitable enterprise eats working capital. Research institutes in the field of Analytics and statistics of trading in the securities market have determined that more than half of the market participants are forced to suffer losses due to which professional traders provide a constant income from transactions.
These disappointing data allow us to take a real look at the international market situation of currency exchanges-the strongest traders, who have not only real knowledge but also important experience, can win in the economically competitive struggle. But what about novice traders, how to survive and earn in the monetary, but competitive environment of the currency world? The answer is simple-trading signals online.
Manual and automated signals
Manual types of Forex signals are distributed over several channels:
Messages with instructions on opening deals to messenger, email, or mobile phone. Not the best channel, because due to communication problems, there may be delays in trading, which will negatively affect the financial result of operations.
Traders often share free signals on public forums, social networks. You can check on historical data their effectiveness and assess the prospects for use, but do not forget that at any time such a signal provider can close the branch or make access paid.
The effectiveness of manual signals is difficult to verify, so few people use them.
Automatic signals are a system for copying trades of some traders to the trading accounts of others for a percentage, a fixed amount, and in some cases, free of charge. Many brokers implement this scheme:
- CopyFX service from Roboforex,
- ForexCopy platform from Instaforex,
- share4you system from Forex4You.
Free and paid types of signals
To attract subscribers and self-promotion, specialists can provide Forex signals for free for a short time. After the user is convinced of the effectiveness of the strategy, he will be offered a paid subscription. The choice of free tools should be approached carefully so as not to fall into the hands of scammers. It is necessary to perform an independent analysis of the information, assess the prospect, and make an independent, informed decision.
Paid signals are considered by beginners to be more effective and informative. The most effective “signal providers” can be found in various ratings. However, you only need to believe the descriptions of official sources. Relying on laudatory reviews on social networks or blogs is not recommended.
Providers of signals
Select the service of transaction auto-copy. Many Forex brokers have such services, and if you have already opened a trading account in one of them, and you trust this broker, then try using its services. However, for comparison, you should look at other services, read reviews about them. This will at least allow you to bypass the fraud. When choosing an auto-copying service, be sure to pay attention to the methods of payment for subscription to signals. Daily or monthly;
- Payment for each open transaction;
- Percentage of profit received by the subscriber to the signals;
- Commission on each closed transaction.
In some services, the Commission is paid only from transactions closed with a profit – free subscription. Choosing the best signal provider in terms of profit and drawdown is important. Of course, this step looks obvious, but there is one small caveat. When choosing, do not forget about the cost of subscription and the number of funds that you are willing to allocate to trade on other people’s signals. Why? Let’s look at an example.
You have decided to subscribe to the signals of a trader who, on average, earns up to 5% of the Deposit per month. The subscription fee is monthly and costs $20. Therefore, you need to invest $400 to recoup the subscription (this is if you are going to trade with the same risks as the signal seller). You understand that without such funds, it makes no sense to subscribe to the signal. Of course, if you choose free signals or signals that are paid only with profitable trades, then such problems will not arise.
Evaluation of the funds’ schedule of the selected signal provider is also critical. Very often, you can see that the balance curve goes up nicely, but the funds’ curve dangles far below it (see the example below). This can mean two things: either the trader trades with large-stop Losses or does not use them at all. In both cases, the deposit drain is inevitable. You should not subscribe to the signals of such a provider.
The role of signals in trading
Trading signals based on well-proven trading strategies allow beginners, guided by the professional advice of experienced traders, to conduct their trading on known currency pairs: EURUSD, GBPUSD, USDCHF, USDJPY. At the same time, such trading allows not only to learn to make complex decisions related to market movements and trends but also opens up many invaluable advantages:
- ability to make professional decisions, regardless of personal trading experience;
- independence from psychological and emotional factors affecting the quality of decisions;
- full awareness of the events taking place in the market on the chosen trading strategy;
- automation of the trading process, providing speed and profitable reliability of transactions in the securities market;
- accumulation of invaluable experience during the period of work under the” guidance ” of a professional trader, followed by the opportunity to make individual trading.
Independent research of market behavior can include: technical and fundamental analysis, reading books about the stock exchange and market psychology, professional online consultations with break-even traders. Self-improvement and self-training is the shortest way to the opportunity to become a competitive exchange player who, although relying on trading signals, but at the same time with understanding, assesses what is happening in the market and makes meaningful decisions.
Advantages of real-time trading signals
It is no secret that the basis of effective stock market trading is the speed of the monetary transaction. The higher the speed of opening and closing a position, the more pleasant and more significant the percentage of possible profit becomes. Speed is especially important for fans of short sales, where every second can decide the outcome of the transaction and affect the numerical value of income.
It is in such conditions, where personal indicators can not bear the burden of quick decisions, and personal experience does not allow you to make one hundred percent high-quality transactions, the advantages of trading signals online come into force. Online or real-time mode solves the problem of speed of delivery of important economic data, information on currency quotes, prices of negotiable goods. Quickly delivered information will help to correctly set the leverage, which will open the opportunity to trade on several trading pairs at a low level of margin or collateral. This, in turn, is guaranteed to provide a constant profit to novice traders.
Can trading signals be trusted
On this subject, there is a funny story that happened in the West in the last century. One enterprising gentleman (let’s call him John) gathered a client base of 100 traders trading on the stock exchange. After that, he sent them free forecasts on the shares of company N (consider trading signals). And in one-half of the forecasts, he promised a rise in prices and advised to buy these shares, and in the other half of the estimates, on the contrary, he promised a decline and advised to sell. After some time, one of the scenarios was embodied in reality (the shares either rose or fell in price).
Then John threw out of his client base the addresses of those traders to whom he sent the wrong forecast, and the remaining traders (who received the correct forecast) he again divided into two groups and repeated everything again. Thus, as a result of these manipulations, in the end, he was left with the addresses of several traders who received only accurate forecasts. Then he offered them to buy another forecast for serious money (because it is worth it, the previous recommendations were 100% correct!). This last forecast was again taken from the ceiling and sent to gullible simpletons (who also laid out a decent amount of money for it). Draw your conclusions 🙂