The FX is volatile and the largest in the world. Making profitable trading positions or determining when and how much to exchange somehow involves complex statistics, a great deal of research, technical analysis, etc. So every forex trader has to go through this data before making any decision.
Unfortunately, most traders lose their money on the market by not understanding its principles. However, forex traders can make more profitable trades by using services as forex signals. Such signals are recommendations about the currency exchanges with an exact buying/selling position.
These FX signals came out about a natural innovation of the financial industries to support the traders and make money for themselves. This article will discuss the FX signal: what it is, how to choose an effective one, etc.
What is the forex signal?
It is trading ideas or recommendations about currency exchanges. These signals came from technical, fundamental, and sentiment about the specific trading asset for a particular time or range.
You can find out a lot of forex signal providers, individuals or websites, across the internet. So no matter why you are, beginner or expert, you can always use signals to get more profitable ideas or constant trading positions. In addition, experienced traders can consistently increase their profitability by using forex signals.
There are several types of signals based on their types of services.
Manual signals
Professional traders generate manual forex signals using technical patterns, calculations, and fundamental analysis to determine the profitable price direction. This signal also checks the historical information before predicting any particular movement about any specific pair of currencies. Combining essential data with technical studies is the specialty of this type of forex signal.
Some signals are free. But some manual signal services require payments to provide calls on time. Subscription fees can be way up to 500$ from 40-50$ monthly. Often they provide their signals or notify clients by their system, e-mail, or such kind of apps.
Some manual signal providers show chart analysis with the signal so that followers can learn from it.
Automated signals
The other type of FX signal service available and popular among traders is automated forex signals. This type of signal involves algorithms and codes using historical charts, patterns, information, and mathematical formulas to predict the future movement of currency pairs.
Automated signals calculate technical information by specific mathematical formulas to discover patterns and send calls to the users. This type of trading signals system is also known as expert advisors or forex robots, as they don’t require any human intervention to generate such trading ideas.
Let’s see an example of the automated forex signal from the MT4 chart.
Here we can see the AUD/USD H1 chart, where an expert advisor took multiple trades based on a logic set into it.
This system allows users to modify the spread and currency pairs they wish to trade. Simply the automated trading signals use several technical data to publish signals with high profitability, which is also based on the historical movement of the trading pair.
Automated manual signals
This type of signal is provided by leading banks, hedge funds, pension funds, companies, and even some online signal systems. Some social trading networks also offer this type of signal service. Users can access the automated trading signals via the MQL network to copy trades recommended by trading software or professional traders.
These signals also work with social trades, where investors can see a list of traders based on their performance and choose the reliable one.
Here we can see a list of traders based on their performance.
Pros of forex signals:
● Time-saving
● Ease receiving: by SMS, e-mail, direct copying of orders to your terminal, and placing orders
● Pass for both: beginners and trading professionals
● Allow you to diversify risks: on one account, you trade yourself; on the other, you can use signals
Is it wise to follow the forex signal?
FX is enormous and full of opportunities. However, mostly the newcomers lose their first deposit as many start to trade before understanding the market.
In that case, calls can help beginners to make money besides their learning. On the other hand, expert traders can use calls to make more efficient positions by trading recommendations.
Anyway, trading blindly is never recommended. All traders must have basic knowledge, research, information, mindsets, and punctuality to be the best — no matter with or without trading calls.
How to choose a reliable call?
There are thousands of websites and signal providers across the world that provide forex signal services. We know nothing is absolute in the FX, so there are no trading calls or will always be profitable.
Sometimes the price movement is unpredictable in the FX. For example, the Brexit movement of GBP back in 2016. No trading system or professional analyst could predict the exact falling level, but they might know that the GBP would fall at that decision. In this part, we listed the steps to choose the signals to increase profitability.
Find reviews
Before choosing any FX signals to trade or apply on the trading chart or soft, it is likely mandatory to check the reviews about the calls. First, check if they are facing any issues or not. Then, if there are any issues, check that carefully to avoid that call in the first place.
Go through the trading history
In the next step, check the history of the trading signal — the risk ratio of trading, amount of returns, time duration, etc. If any signal provider takes too much risk or a lousy R: R, avoid it and focus on other providers.
Analyze trade management system
In the third step, check the trade management of the trading call. Is it suitable with your trading system or not? Check it also with your account size and expectations of returns.
A good signal provider always takes some profits and asks their clients to move the stop loss at breakeven or close the total trade with a profit.
Here we can see how a standard signal provider gives updates about the market.
Apply demo testing
If the trading signal passed previous steps, it’s time to test it on a demo account. If it shows positive results, you may follow the trading call and apply for actual trading.
Start actual trading with a small investment
Finally, after passing all the steps with positive results, you can apply it for a real account with some small investment.
Conclusion
It doesn’t matter whatever signal system you sign up for. However, it will help if you use it to become a better trader. Always keep in mind that trading comes with its share of risk as no signal guarantees 100% profitability.
However, trading calls are handy, if not for making a profit but for reducing risks from trading. It is up to you how you use it. Use it carefully and wisely, including money and trade management, to generate profits.
