A forex signal provider will send you trading suggestions, and these trading suggestions are known as “signals”. These suggestions are short pieces of text, and they contain only the most essential information about the recommended trade. If you want to use the signal, you can quickly put the info into the trading platform and act. There are also trading platforms where the use of signals is integrated into the platform, which makes it even easier.
When selecting a forex signal service, it is important that you go with one that suits your particular trading preferences. Do you want to do short-term trades or longer-term trades? Maybe even something more unusual like scalping? Which currency pair, or pairs, do you specialize in?
Some forex signals are free while others are only sent to you if you have a paid subscription. Typically, the companies that sell paid signal subscriptions will also offer some signals for free, as a type of advertisement to show potential customers the quality of their signals.
Many signals providers will also allow you to sign up for free and receive signals for a limited number of times without paying. That way, you can get a better idea of if their paid subscription is worth the money.
Tips! Many brokers and trading platforms will allow you to trade on the platform using free play-money (Demo Account). This makes it possible for you to test-run signals from various providers without losing any real money. Don´t do any real-money trades without testing the quality of your signal provider first.
What are the signals based on?
Most of the available forex signals are technical analysis-based or fundamental-analysis based.
Both can save you time, since you don´t have to do the leg work yourself. Still, we recommend that you learn about technical analysis and/or fundamental analysis instead of only relaying a signal providers. For starters, actually knowing what these things are will make it easier for you to properly evaluate signal providers and stay clear of those who promise impossible things.
How are the signals delivered?
Signals can be delivered in various ways, and delivery method is a good thing to keep in mind when you select signal providers. Make sure you go with a signal provider that delivers using a method you like and one that makes it easy for you to put the recommendation into action.
Examples of common delivery methods:
- SMS (phone text message)
- Integrated into the trading platform
What is included in a signal?
A forex signal will include the information you need to trade based on the signal´s recommendation. Full analysis providers will also include information about why they believe the signal to be useful, such as charts, analysis, etcetera.
Examples of information that can be included in a forex signal:
- If the signal is a BUY signal or a SELL signal
- The currency pair, such as EUR/USD, USD/JPY, or GBP/USD.
- Entry Price. This is the price point at which you are recommended to carry out the trade.
- Take Profit. This is the price point at which you are recommended to close the position and realize your profit.
- The status of the signal. “Active” means that you can trade on the signal right now. “Get Ready” means that the signal will change to Active status soon, or disappear, depending on the circumstances. “Closed” means that the signal has already expired and you are not recommended to trade on it now.
It is also common for a forex signal to include a recommendation for Stop Loss. Adding a Stop Loss to your order means that your position will be automatically closed (if the market allows) if the price sinks below a certain point.