How to Catch Effective Forex Signals
No matter if you are a newbie or an expert trader, it’s worth using professional forex signals. Signals save your time and provide a higher chance of a successful trade if made by experts.
Also, it’s an opportunity to use others’ wisdom to improve your skills or discover a new method of trading. However, not all signals are reliable. Let's learn how to distinguish a strong signal and a failing one.
Forex Signals: Definition
A forex signal is a recommendation to open a position based on particular conditions. Usually, signals occur in the currency market. However, they can be provided in other markets as well. Signals are made by professional traders, analysts, or companies. They can be both free and paid.
A forex signal is a recommendation to open a position on particular conditions.
A forex signal includes information on the perfect entry point, take profit, and stop-loss levels. The best recommendations contain the reasons for such an alert. Thus, you have information on a profitable signal and the strategy or method an expert used. It helps you gain new knowledge.
Why to Choose FX Signals
There are several reasons why you should rely on signals, and not only on your decisions.
- Expert opinion. If you are a professional trader, you can use forex signals to get confirmation on your opinion. Also, it’s a great option to save your time. In case you are a beginner, expert alerts will help increase the chances of a profitable position.
- Gain knowledge. No matter if you have just started trading in forex or you are in the market for an extended period of time, there are different approaches and strategies you can still learn.
- Save your time. Sometimes, it’s not easy to find suitable circumstances to open a position. You may waste lots of time. To save your time for other achievements, you can use others’ signals.
What Is Included in Trading Signals
Let’s consider the points that are included in trading recommendations:
- Entry point. As we mentioned above, a forex signal contains information about an entry point. Thus, it tells you at what level you should enter the position. Usually, professionals give signals for upcoming positions. Therefore, it’s unlikely you will see a signal that offers to open the trade immediately, because a trader may read the signal in several hours. Thus, unclear conditions will lead to losing positions.
- Take Profit. It’s not enough to enter the position at a reasonable level. It’s also necessary to know where to exit a successful trade. Thus, the signal will contain the take profit level. There can be several such levels if the alert is promising.
- Stop Loss. It doesn’t matter how long you trade; there will always be a risk of a loss. Even Warren Buffett and George Soros make mistakes as two of the most wealthy and successful investors in history. To limit the loss, forex signals include a stop loss level. If the market moves against you, you will have a chance to save your funds.
- Buy or Sell. Any signal should say whether to buy or sell the asset. Some alerts may have both an alert to sell and to buy. It means that the current situation is unclear. Thus, the direction of your position will depend on the specific conditions that should be met, so one of the signals works.
- Additional information. Usually, traders and analysts explain the reasons for a signal. Among the various reasons, there are pattern, candlestick, or indicator conditions. Such information may also include a chart.
How to Choose the Best Signal Providers
It might be challenging to find a reliable forex signal provider as there are a vast number of companies, private analysts, and investors in the market.
The first decision you should make is whether you are ready to pay for signals or not. If you choose paid recommendations, you can require information on the success rate. Moreover, a provider of paid signals should be authorized.
No matter whether the signal is free or paid, you need to get a confirmation.
Even if you use free signals, a provider may share a success rate of their signals by posting the performance of previous trades. If there is no information on a success rate, you can use a demo account to check whether the signals work.
Libertex offers a demo account that is similar to a real one. Thus, you can trade with fake money without losses and check whether the signals are efficient.
Before relying on a signal, check what data it includes. Reliable signals should consist of data on entry, exit point, and stop-loss, together with an explanation of how the signal appeared on the chart. Robo-signals don’t provide an explanation. But their reliability is based on mathematical algorithms.
If available, you can check reviews of the signal provider. However, only companies that specialize in paid forex signals will have reviews. If you consider the free alerts of a private analyst or trader, the chance to find reviews is smaller.
Check reviews and don’t believe promises on enormous rewards.
Be cautious as the market of forex signals is full of scams. Thus, if a provider promises enormous rewards, it’s more likely it’s a scam that wants your money.
If you are not sure which signals provider is better, check their success rate and the range of information. If you don’t get a full explanation of the reasons for a particular signal, there is a risk that the signal won’t work.
In conclusion, a forex signal is a useful assistant for both beginners and professional traders. It saves your time, efforts, and provides an opportunity to place a successful trade. However, a considerable number of signal providers make it difficult to choose a reliable one.
So, to check whether the provider is trustworthy, you should use a demo account. Libertex demo account gives you a free opportunity to test the signals and ensure they work with a high rate of success.