Forex trading signals are important market triggers that provide traders with ideal entry and exit price levels in the market. They can help beginner traders place successful orders all the while minimizing risk.

In our article, we take an in-depth look into forex signals and how you can find the best ones.


What are forex signals?

A forex trade signal is a financial recommendation provided by market experts/analysts or automated systems. They help traders with buy and sell triggers in the market to enter or exit the trade at the right time. Signals are ascertained after analyzing the currency pair’s historical price movements.

Trading signals are like forex alerts that inform you whether you should short or long a trade based on different timeframes, prices and market conditions. However, trading signals do not mandate taking an order based on the signal. Traders can decide on their own if they want to follow the trading signal or not.


Types of forex signals

Manual signals

Manual signals are provided by a market analyst or an expert trader who monitors the market on a regular basis to generate trading signals that can help beginner traders open ideal entry or exit positions.

Automated signals

Automated signals are generated by a software system or computer that analyses the historical price movements of a currency pair based on coded algorithms. Since automated signals are generated by a computer algorithm, there are no emotions involved in the decisions and it's purely based on market data and analytics.

Free signals

Free trading signals are offered by trading signal providers free of charge. These are mostly basic signals or some signals provided in a limited trial period.

Paid signals

Paid signals are offered by signal providers for a specific amount of money. They are either charged on a one-time fee basis or a subscription model. But since these are paid, they are often more useful and advanced than free signals.

Indicator signals

Indicator based signals are provided for particular forex indicators like the Relative Strength Index, Fibonacci, and Bollinger Bands.

Copy-trading signals

Copy-trading signals include the signal provider sharing their exact trades in real-time. You can automatically place similar orders by copying the trade that the signal provider has shared with the help of a copy trading platform.

Moving average signals

Moving averages can be used to filter out noise (minor price fluctuation) from the forex chart. Traders use the MA signals to share the trend that is currently existing in the market for you to place trading orders accordingly.


Who provides forex signals?

Affiliates

Affiliates or groups of traders are several signal providers combined together who give free forex signals after you sign up with them. You create an account with the forex broker by using the affiliate link and receive trading signals on a daily basis thereafter, at no additional cost. These affiliates or traders make a commission based on all the trades you make.

Individual traders

Many individual traders who have years of experience in the forex market wish to enhance their market reputation by sharing their trading knowledge with everybody else. Such traders aim to support fellow traders and help beginners in their trading journey.
Most traders share live forex signals for free on several platforms, forums and social media accounts. They analyze the market beforehand and provide their audience with appropriate signals that can be used for trading.

Expert Advisors

Expert advisors are the automatic signal providers that provide signals on the basis of robust technical analysis. These signals take into consideration the combined historical and future forecasted price movements and can also include fundamental analysis if that suits your trading style. All you have to do is find a platform that offers expert advisors tool and customize it as per your specific signal trading requirements. Thereafter, the tool generates trading signals that suit your trading style in the best way possible.


How to use forex signals?

1. The first step in using a forex signal is to first choose a reliable signal provider that uses trustworthy platforms to provide close to accurate signals.
2. Conduct market research to choose the reliable forex signal provider that has a high reputation and strong past performance in the market.
3. Before finalising the forex signal provider, understand the trading strategies they use.
4. If you are relying on an automated trading signals providing platform, backtest the signals provided by the software to see how the signals performed in different market conditions.
5. Use the customization feature to adjust your trading requirement based on which you receive your trading signals aligning with your trading objectives.
6. Log into your account on the signal provider’s platform.
7. Once you receive a trading signal, make sure that you use it on time since signals are time-sensitive and only work if applied as soon as you receive them.
8. Open the trade according to the data shared by the signal provider and wait for it to close and reap results.


How to find the best forex signals?

Finding the best forex signal contributes to making a successful trade. The more accurate your forex signal is, the higher the chance of your trading profitability. Here are the things you need to consider to find the best forex signal –

Track record

Look at the track record of your forex signal provider to see how they have performed in the past and if their trading signals reaped positive results. Verify the performance and track record of the forex signal provider from a third party to ensure legitimacy.

Comparison

Always compare more than two forex trading signal providers as you start searching for one. Never stick to the first trading signal provider you come across, as that might lead you towards making an under-analyzed decision. Choose the forex signal provider that suits your trading style the best.

Time zone

Before choosing the ideal forex trading provider, consider the time zone they are working in. Choose the signal provider that is working in your time zone or close to it so that you receive signals when you are awake and trading.

Free trials

Most trading signal providers offer a free trial account. Sign up for the free forex trading with signals trial period to see how the platform works, the quality of services provided and if it suits your trading style.

Analysis

Choose a full package provided by the signal provider that covers everything from the entry signal to stop-loss signals. The signal provider must provide you with a proper market analysis and free forex charts so you can confirm the market signals before finally placing an order.

Long-term vs short-term signals

Signal providers that give long-term and short-term signals are different, and you need to clarify beforehand if you are looking to receive short-term signals on a daily basis (day trading signals) or long term-signals on a monthly or yearly basis.

Additional services

Choosing the signal provider that offers additional services adds more value to your trading setup. This is because educational services add up to the trading signal’s quality and help you place more successful orders.


Top forex signals that you can use

Long/buy signals

The entry/buy signals for forex trading indicate the ideal time to enter the market or place a long/buy order for a currency pair. When the value of a currency pair rises, the trading signal provides traders with a price level at which that currency pair is worth buying over the others in the market. Trading forex signals indicate a buy signal when the analysts believe that the currency pair prices will increase in the future, and a strong buy signal is provided when analysts expect the currency pair to outperform the market dramatically.

Short/sell signals

The exit/sell signal indicates the ideal time to exit the market or place a short/sell order for a currency pair. When the value of a currency pair falls, the trading signal provides traders with a price level at which that currency pair is worth selling over the other in the market. Trading signals indicate a sell signal when the analysts believe that the currency is performing poorly and will continue falling, and a strong sell signal is provided when analysts expect the currency pair to take a dramatic downturn.

Momentum signals

Economic shifts and the market momentum that follows affect every financial market, including the forex market. A forex momentum refers to a sharp short-term incline or decline in the currency pair’s exchange rate. Momentum signals provide traders with an indication of the market’s trend and help traders place orders accordingly.
These signals are derived from a currency’s buying strength, which means that if the demand for a currency is high in the market (strong strength), it indicates an uptrend momentum, and if the demand is low (weak strength), it indicates a downtrend momentum.

Volume signals

Trading volumes refer to the total quantity of a currency pair being traded in the forex market. When a currency pair is pulled heavily in one direction, it creates a volume-based signal. Volume signals do not directly provide an exit or entry trigger but help you analyze the overall market’s direction, based on which you can place your trading order. When there is an increasing volume signal, it is a bullish indication, and when there is a declining volume signal, it is a bearish indication.

Should I use forex signals in trading?

Yes, you can use forex signals in trading if you choose a reliable trading signal provider. All profits you gain after applying a trading signal are yours, but all the losses incurred are also to be borne by you, individually. Forex signal providers do not take responsibility for your losses; hence, it is an inherent risk.

However, if you analyze the market yourself as well and do not just blindly trust the forex signal providers, you can place successful orders. It is recommended to backtest the accuracy of the signals provided by the trading signal providers before you actually start trading and check their performance results.


Final words

If you believe that the trading signal providers are able to provide legitimate signals, you can move forward and trade according to their signals. If you ever feel that the signal provider is not able to monitor the markets properly and have started providing false signals, it is recommended that you stop trading according to their signals for some time and look for an alternative.

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Disclaimer: 

  • All material published on our website is intended for informational purposes only and should not be considered personal advice or recommendation. Traders should carefully consider their objectives, financial situation, needs, and level of experience before entering into any margined transactions.