Whether you are a beginner or an experienced trader, it is worth using professional forex signals. Signals save you time and provide you with a higher chance of successful trading if made by experts.

It is also an opportunity to use someone else's wisdom to improve your skills or discover a new trading method. However, not all signals are reliable. Let's learn to distinguish a strong signal from a weak one.

Forex signals: definition

A Forex signal is a recommendation to open a position on certain conditions. Usually signals arise in the foreign exchange market. However, they can be provided in other markets as well. Signals are accepted by professional traders, analysts or companies. They can be either free or paid.

A Forex signal is a recommendation to open a position on certain conditions.

The Forex signal includes information about the ideal entry point, take profit and stop loss levels. The very best guidelines contain the reasons for this warning. Thus, you have information about the profitable signal and the strategy or method used by the EA. This will help you gain new knowledge.

Why Choose FX Signals

There are several reasons why you should rely on signals and not just your decisions.

Expert opinion. If you are a professional trader, you can use forex signals to get confirmation of your opinion. Plus, it's a great time-saver. In case you are a beginner, expert alerts will help increase your chances of a profitable position.

Acquire knowledge. Whether you have just started trading Forex or have been in the market for a long period of time, there are various approaches and strategies that you can still learn.

Save your time. Sometimes it can be difficult to find the right circumstances to open a position. You can waste a lot of time. To save your time for other achievements, you can use other people's signals.

What is included in trading signals

Let's take a look at the points that are included in trading recommendations:

Point of entry. As mentioned above, the Forex signal contains information about the entry point. Thus, it tells you at what level you should enter the position. Usually professionals give signals for upcoming positions. Therefore, you are unlikely to see a signal that offers to open a trade immediately, because a trader can read the signal after a few hours. Thus, unclear conditions will lead to the loss of positions.

Take profit is not enough to enter a position at a reasonable level. You also need to know where to exit a successful deal. Thus, the signal will contain the take profit level. There may be several such levels if the alarm is promising.

Stop Loss. It doesn't matter how long you trade, there will always be a risk of loss. Even Warren Buffett and George Soros are mistaken as the two richest and most successful investors in history. To limit losses, forex signals include a stop loss level. If the market moves against you, you have a chance to save your funds.

Buy or sell. Any signal must speak, buy or sell an asset. Some alerts can have both a sell and a buy warning. This means that the current situation is unclear. Thus, the direction of your position will depend on the specific conditions that must be met, which is why one of the signals works.

Additional Information. Usually traders and analysts explain the reasons for the appearance of the signal. Various reasons include a pattern, candlestick or indicator state. Such information may also include a chart.

Forex signals: types

There are different types of signals. Let's start with the first classification. Since there are two main types of analysis, signals can be divided into fundamental and technical. However, the most accurate signals are based on both types of analysis.

Fundamental signals

Fundamental analysis is based on news and economic data. Analysts using fundamental analysis base their signals on economic releases, political and economic news. Thus, fundamental signals work ahead of significant market events.

One of the economic events that gives more accurate signals is the meeting of the Central Bank. For example, if the Federal Reserve is expected to lower the interest rate, the US dollar will depreciate before the meeting and some time after the announcement of the decision. Therefore, the signal will recommend buying the EUR / USD pair.

Pros: Lots of possibilities.
Disadvantages: If you open the economic calendar, you will not find a working day without some kind of exemption.

Unclear conditions. Since the outcome of fundamental events is difficult to predict, it is much more difficult to make fundamental signals rather than technical ones.

Moreover, much of the news and economic data is accompanied by high volatility. Thus, it is difficult to determine the stop loss level. Sometimes they are placed too close and traders simply exit the trade at a loss.

Technical signals

Technical analysis is based on historical price movements. Analysts use a variety of tools such as indicators, charts, and candlestick patterns to predict the direction of price. Unlike fundamental signals, technical signals are often made not only by analysts, but also by forex robots. The forex robot follows algorithms that include certain conditions that warn of possible entry and exit points.

For example, you are trading the GBP / USD pair. The RSI indicator predicts price reversals. The indicator line crossed the 30th level upwards, this is a signal of a bullish movement. Thus, the signal will recommend buying GBP / USD.

Pros: Easier than fundamental signals. Technical analysis is more accurate because it is based on specific conditions and previous market movements. To send a technical signal, you just need to know how indicators and patterns work.
Disadvantages: No sense of market sentiment. Effectively take into account previous market movements and base your signals on specific market conditions. However, the situation is never completely repeated. Therefore, it is very important to consider current events.

Hand signals

Hand signals are made by humans. Professional traders or analysts working in the company or on their own use their experience, knowledge and proven strategies to provide trading advice.

Pros: More complete analysis. People evaluate not only technical conditions, but also market sentiment and fundamentals. This gives a more complete picture of the market.
Disadvantages: Potential for error. Although the signals are given by professionals, there is always the risk of error as no one is perfect.

Automatic signals

Automatic signals are provided by software programmed with a specific algorithm that follows price movements and generates signals regarding specific circumstances.

Pros: Less chance of error. Bots are not affected by emotions, so they base signals on calculated algorithms.
Disadvantages: No sense of market sentiment. Robots ignore the fundamental factors that are critical to decision making.

Paid signals

Some companies provide paid signals. Thus, in order to get them, you need to pay a commission or choose a subscription plan.

Pros: More reliable. There is no guarantee that the signals you buy are better than free signals, but you have the right to claim a refund in the event that they result in a loss.
Disadvantages: Money. You have to pay for these signals.
Constant. Usually paid signals are released at a specific time, as opposed to free signals.

Free signals

Most forex brokers offer free signals published on their websites and available not only to their clients. Moreover, many well-known traders post trading recommendations, mainly on social media.

Pros: Obviously, the main advantage of free signals is that you get the opportunity to make money for free without any effort.
Disadvantages: Not guaranteed. If you receive signals for FREE, you cannot demand anything from the provider. No timetable. The provider decides when to send signals.

Input Signals

If we consider short-term signals, then they always have an entry point. If you find a trading recommendation for a short-term position with only an exit level, then the signal is more likely to fail as there is no clarity about the entry point.

Pros: Main signal. The entry point is the most critical level for successful trading.
Disadvantages: There are no disadvantages in the input signals. However, if the signals do not contain any information about the exit point, the risk of losses increases.

Exit signals

Usually signals provide a full range of information - entry points, exit points and stop loss. However, if the position is held for a long period of time, then there can be signals only with an exit point for the current open trade.

Pros: Additional signal. If you have been holding a position for a long period of time, this is good advice on how to exit profitably.
Disadvantages: Only for long term signals. Short-term signals without an entry point can simply confuse traders and lead to position failures.

Where To Find The Best Forex Signals

Forex signals are available online and you can find Forex signal providers very quickly.

Forex broker

Most forex brokers provide signals. They can do it either for free or by subscription. If the broker is trustworthy, it will offer a trial period to check if the signals are working. In addition, they may have a track record of successful trades, which will confirm that alerts work.