The popularity of Forex today is surging - that is an undeniable fact. It is a place where most individuals, business people, and corporations are trying to familiarize. Or if not, they are making sure that they can bag a profit out of this foreign exchange market with the use of the Forex trading signals.
Before we introduce Forex trading signal, we will give you a general idea about Forex - just in case you are curious about it.
What is Forex?
Forex is a global marketplace for currency trade. Foreign exchange is important for the continuous movement of the global economy. Global trade and foreign exchange and business are not possible without the currencies.
Take this as an example. If you are residing in the United States and you want to buy meat from Australia, then it’s either you or the meat company will have to pay for the product in Australian dollar (AUD). If you are a German, and you are in touring in China, don't expect that you can buy goods there using Euro. You need to exchange it for Chinese Yuan Renminbi (CNY). That is the basic use of currency.
Because of the critical role of currencies, Forex is now the leading liquid financial market across the world. All other markets will fall in comparison to the breadth of Forex, even stock markets.
According to the Bank for International Settlements, the average trade volume of Forex is already $6 trillion a day. That means that in each hour, there are around $220 billion exchanged amount.
Perhaps, what makes Forex a hit nowadays is because it is done electronically or over-the-counter trade? Other markets require physical trading, which makes them limited and arduous. On the other hand, you can easily do foreign exchange because you can do it in front of a computer.
Aside from that, your playing field is vast because the transactions are global. The centers are located in Tokyo, London, New York, Hong Kong, Sydney, Paris, Zurich, Singapore, and Frankfurt. This market is also open 24 hours a day for a five and half day in a week.
But to be successful in this liquid financial market, you need to get familiar with Forex trading signals.
Introduction to Forex Trading Signal
If you are new to foreign exchange, one thing that you have to learn is the use of Forex trading signal. These signals are being used by most experienced Forex traders to guide them. Signals are important, especially on engaging critical trades.
Since there are a lot of providers for Forex signals, traders may have different ways of using this tool. But generally, all of them are using these Forex signals as a safety net from a crashing trade.
How does a Forex Signal work?
Each provider has different schemes for their Forex trading signal. But basically, these signals are founded into two cornerstones. First is technical analysis. The technical analysis is a sophisticated system way of computing the price of the currencies and their possible trends.
The second one is an analysis of global events and how these happening may shift the prices for the short and long-term period.
Some of the Forex signal providers are teaching their systems on how to react to current events. After the analysis, the input would be a signal that was independently generated by the system.
If you think about it, these kinds of systems are advantageous for you. First, a system like this will remove every downside of human psychology. Most of our decisions always involve fear, hesitation, and doubt. Notably, these emotions are ever-present especially at crucial moments such as high-stake trades.
Ironically, the removal of human psychology in the factor is also the greatest downside of these trading signal systems. Without instinct, intuition, and risk-taking, big opportunities might slip away from your hands. Computers are inflexible. Therefore, they will only function the way you programmed them.
Providers usually send the Forex signals directly to your phone or email. By this mechanism, you, as a Forex trader, can track daily your activities. Also, this system will enable you not to miss any great trading opportunities.
How to choose the best Forex signal provider?
In the choice of the best Forex trading signal service, you have to check the following factors first. By doing so, you can assure yourself that you are well-equipped for commercial trade.
1. Comprehensive System - The trade signal that you choose should have an easy-to-use interface. It should have configurations that can aid you in the development of your account as well as management of your resources.
Necessary configurations for a good Forex signal
l Entry Prices
l Stop Loss
l Take Profit
1. All Information Are Present - The Forex trading signal must contain all the necessary data you need before you decide for a trade. All the information under Entry Point, Stop Loss, and Take Profit should be indicated neatly. These pieces of information should have up-to-time updates.
Your provider should also offer the following services for you to get familiar with trade signals:
l Coaching and interaction platforms such as customer support and forum
l Account management platform to manage your trade signals
l Repositories of materials related to Forex and trade signals
1. Avoid Unrealistic Profit - In looking for the best Forex trading signal, avoid subscribing to those providers that indicate +5PIPs, +7PIPs from individual trades. An expert Forex trader would automatically dismiss these profits as unrealistic and may cause you to enter losing trades. These profits are usually robot-generated and may not be dependable.
1. Avoid Random Signals - Aside from the generation of unrealistic profit, some Forex signal providers also produce random trade signals that are not even reliable at all. These signals are not analyzed thoroughly and usually created just to show their clients that they offer "quality service."
1. Signal Arrival - The provider you should choose should have a definite time when they will send signals. You just can't wait all day for a trade signal to arrive, right? The best Forex trade signal providers have a schedule when they are releasing messages to their clients.
1. Ability to Monitor Trade - One of the most important services a trade signal provider can give you is business monitoring. Aside from signals, you should also consider every situation that could affect the market. As we have said earlier, foreign exchange is a liquid financial market. Any major events can cause shifts in prices and trend of trade.
In line with these, we will give you the four types of Forex signal a provider can offer to you:
l Free and unpaid trade signals
l Paid signals (Either by personal analysis or algorithmic analysis)
l Paid signals (From multiple and aggregated systems and networks)
l Signals from a trading system, which is commonly called as Forex robot or EA
Most of all, it is also important that you will select a provider that can give you monthly commitments to the number of the signal that they will give. By doing so, you have a benchmark to how you will rate their service. If they will fail to deliver this, then jumping to another provider is just a logical thing to do.
There are a lot of providers today that are offering trade signals. Always heed the considerations we gave. They can save your money. They can also save you from disappointments.
As you go further to Forex trading, you will get more familiar with these signals. They will help you to avoid risks in trading currencies, which in turn, will maximize your profit.
Do not be afraid to learn about foreign exchange. In this era where access to information is easy, learning about financial trade is possible. Some people get afraid whenever it comes to business, trade, and finance. They say that these subjects are too complex.
Yes, we won’t deny that they can get hard. However, we never told that foreign exchange is something you can’t learn.
Also, take into account that there is no instant success on Forex, neither to any goals that you set. You need to pour constant effort and dedication. Getting familiar with the numbers and learning how to analyze the global market are ways you can get ahead. Keep eye on the events that are happening around you. Some of them can give you your biggest break!