Forex trading signals

With good forex trading signals, a trader can make good trade decision that will lead the profitable trades, while bad trading signals will do the exact opposite. If you are still new to the forex market, you need to understand what a forex trading signal is and how to use it to your advantage in the forex market.

WHAT IS A FOREX TRADING SIGNAL?

A forex trading signal is a trading system that helps a forex trader to make the right decisions at critical times in the process of trading. It is simply a trading tool that suggest to the trader when, how, and the price to enter a trade on a particular currency pair. They work based o the analyses of the forex market as gathered by reliable forex analysts.

The forex signals are based on analyses gathered by a forex analyst (who probably is a forex trader too). With these analyses, the trader tries to predict what will be of a particular currency pair; the risks it might face, the price movement, and what to do to manage these factors. After taking careful look at factors that are most likely to affect the market, the analysts (or forex signal providers) come up with what they think is the best suggestion for trading the market, and publish it in the form of signals for other traders to gain access to, either free of charge or for a fee.

THE BASIC TYPES OF FOREX SIGNALS

As there are different ways of analyzing the forex market, there are also different forex trading signals based on different analyses. Generally speaking, there are three different methods that are most common among signal providers. They are

  1. Investor services

  2. Copy trading services

  3. Signal provider

THE INVESTOR SERVICES:

This method of signal provision requires that the investor invests a certain amount of money with the signal providers, and leave it for them to trade with for over a specified period of time, within which the investor is provided with monthly, bi monthly, quarterly, or annual returns.

COPY TRADING SERVICES:

Copy trading is also known as social trading or mirror trading. The simple logic behind this method of signal provision is that traders get access to the providers live trades and are free to copy the trades as they will. The trader can copy exactly what the trader is doing, or can make some adjustments as deemed fit.

SIGNAL PROVIDER:

Here, the forex trader is granted access to the dash board of the signal provider with vital information such as the buy and sell price, the stop loss price, and the take profit price. However, the trader, after getting such signals from the signal provider, will still have to execute the trade in a timely fashion.

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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