Forex signals are online trading alerts which provide Forex traders the latest market information about trading opportunities on the major foreign currency pairs. Forex brokers offer their account holders a signals service which allows them to follow and copy the trading actions taken by experienced teams of Forex traders and analysts.
Basically, a Forex signal is a suggestion for entering a trade on a currency pair, usually at a specific price and time. The signal is generated either by a human analyst or an automated Forex robot supplied to the subscriber of the Forex signal service. Due to the timely nature of signals, they are usually communicated via email, website, SMS, RSS, tweet or any other relatively immediate method.
Reliable Forex Signals
So how do you know if you are receiving reliable Forex signals? Is there any way to find out exactly who are the ‘expert’ traders that are providing these trading signals? If the broker is trustworthy, you would assume they are sending out reliable Forex signals. But is that always the case?
First of all, despite the efforts you might have made to research your broker, you can never be sure he is as honorable and responsible as you think. So how can this account for reliable Forex signals?
Let’s look at a broker that has been around for many years, is properly regulated by a bona fide regulatory organization and is posting some good results. We can assume that the signals are being made by experienced professionals in the Forex industry and it would wise to follow their lead. Since trading Forex is a gamble to begin with, at least we are able to fall back on some expert trading advice.
Forex signals can take many forms. Most signals today are automated and can be prioritized according to personal personalities. There are signals that advise as to the exact or approximate entry, exit and stop loss figures for trades on currency pairs. Others distribute a trading history which shows the number of pips profit/loss per month and/or the risk/reward ratio and actual trades. In the case of Forex robots, this may be shown as back-tested results.
Signals can also include supporting graphs and/or analysis, individual coaching, or additional interaction with the signal provider such as comments, forums as well as educational resources usually via the Internet.
Most Forex signals are offered free by the brokerage firm. Since competition between brokers is fierce, many brokers try to stand out from the crowd with additional signal services. On system that can be put in place ensures that if a trade starts to go negative, its initial position size is gradually reduced before it hits its Stop Loss, ensuring that only half of the initial risk equity is actually lost. Other brokers claim that their Forex Signals are timed and delivered in a manner that ensures a low rate of failure. Some guarantee of the fastest mirror trading in the industry.
With so many differing trading signals, choosing the most reliable Forex signals is not an easy task. But with the right due diligence and research, a Forex trader can find a broker with which he is comfortable and can rely on the Forex signals that are offered to him.