Forex signals (or forex alerts) are an important aspect of forex trading, but what are forex signals exactly and why are they useful?
In this post we’ll be looking at exactly what a forex signal is and how to recognise what makes a good service.
What are Forex Signals?
Many traders across the world use various Forex trading alerts programmes. It’s a key tool that can assist them with making decisions about their trade positions. This could either be provided by a person who specialises in analysis or via a trading robot or software.
Each forex alert will contain vital info about how to trade a set currency pair, for example the price to place the trade and in which market. It’s an important tool for many forex traders who may not have time to complete much analysis themselves.
However, there are various forms of forex signal systems, for instance some are provided for free and some may come with a small fee applied.
The most important thing is that the source is trustworthy and you have a good feeling about using the provider.
You should also check that the alerts mention both the stop loss and take profit settings as this can prevent loss of funds and help you stay in control of your account. If this is not provided in an alert, we’d recommend searching for another service that has this info available.
The alerts can also be received in a range of ways. For instance, as either an SMS text, email or as a message from RSS feeds or social media websites.
If you’re cautious about paying for a service or wish to test an alert system before investing in trades, it might be worth trying out the alerts in a demo account first. This will give you an idea of how the service is and how well it is working generally without wasting actual money.
Of course, it’s worth pointing out now that no signal service, whether from a robot or human, will be 100% accurate. That’s because it’s just not possible to do, it would be nice if it existed but sadly it will never happen. So of course there will be alerts received that won’t always succeed.
There is always a percentage of risk with signals, but a good service will have really analysed the market so the percentage of success should be fairly high. Just keep in mind that it’s not a guarantee of profits.
Types of Forex Signals
The signal type is all based on the exact function it has and how it works. There are two main types of them, which are always available to use in the fx market. These are either Automated or Manual forex signals.
Both options have different plus and minus points. However, the main difference between the two is that manual signals are issued and analysed by a human.
Whereas for automated signals, they are put together by forex signal software and trading robots. These trading robots are also known as Expert Advisors (EA’s). So it’s the age-old debate of man vs machine.
Some examples of manual signals include when social networks like Twitter and forex blogs send out forex signals to users. Because a person will have manually gathered the signal data to forward to their users.
Large banks, hedge funds and forex based websites sometimes also send out manual signals to followers. They key is that there is a human or analyst team behind them.
Automated signals though are put together by artificial intelligence. The automated signals can come from trading robots or algorithm software which can normally be bought online. Some brokers also develop their own trading robots that can be used, usually for a fee.
The main thing with trading robots is that they can be very efficient and fast, but if you’re not familiar with them they can be tricky to use.
Let’s take a closer look at both options in more detail now:
Manual Forex Signals
This means that a trader has to search for signals themselves ‘manually’. By doing this they can interpret the potential trade movements. The main strength of manual signals is that a human can analyse and assess the forex market in a manner that an automated system cannot.
Human beings will always be able to view the foreign exchange market better emotionally than an automated programme ever can, especially when the market is behaving unusually.
This can help the trader to use their knowledge to help them to be aware of when to place or move out of a trade. Trading skills and human interpretation is just something that cannot be replicated by a machine.
So for instance, if you choose to sign up to a person who offers fx alerts themselves, they will be providing these manually.
However, manual fx signals do require a lot of time to be spent front of a computer so that research and analysis can be completed. This can be quite a time-consuming process and the analysis results will vary based on the professional experience of the trader.
Automated Forex Signals
Automated forex signals however, can analyse a lot of research and figures in an incredibly short amount of time. This is due to the fact that the software behind the automated signals can process much more data, at a faster rate, than a human trader ever could.
The trading software can also run 24/7 which means that it can monitor price charts all the time. There is no need for someone to be physically sat in front of a screen researching, instead the automated programme will do it for you.
It’s also possible to set up an automated system to only search for set alerts, for example for a certain currency or a forex pair. Once found, the software will comprehend whether to sell or buy that set currency.
Of course the only downside to automated signals is whether a software programme will be able to make a trade decision as clearly as a human would.
Both options have their strengths and weaknesses, so a lot of professional traders will use a mix of both manual and automated systems. However, it’s important that you go with the option that you feel most comfortable with.
How to buy Forex Signals
If you decide to go for a paid service instead of a free one, it’s good to know how to start looking for a service. We would always recommend doing your research on the service by reading reviews of a service and whether you can access an overview of the company’s results.
Doing this will give you a general idea of their result accuracy and whether customer satisfaction is good. Most legit companies will also offer a free trial so that their service can be tested.
This is a perfect way to see if it’s the right service for you before parting with your money.
If there is no free trial offered, it’s likely that it’s not a top service company.
If you’d rather not spend money there are plenty of free service options around. Again just try to see if there are any reviews available for the service for research reasons. Most importantly don’t feel pressured to stay with one service if the results are repeatedly off.
Forex signals are a great tool though that can benefit many traders and investors. With so much choice around, make sure that you choose the best option that suits you.
To learn more how to trade Forex and apply those signals we suggest to read this guide: https://tradingonlineguide.com/what-is-forex-trading/how-to-trade-forex/