How to use forex signals to make profitable trades
It helps to have a good understanding of forex signals when you are first starting out. As a novice trader, you might not have a solid trading plan in place yet, so you need all the help you can get. Use them wisely and they may prove very useful, but get sucked in by a scam forex signals provider and you will rue the day you ever signed up.
What are Forex Signals?
Forex signals help traders make successful trades. Many traders make use of FX signals to help them enter a trade. Forex signals can be anything from an automated bot alert on prices to a Twitter account sending you daily recommendations on which currency pairs to watch. You don’t have to use FX signals, but if used correctly, they can be useful.
Using Automated Forex Signals
Most brokers and trading platforms offer automated forex signals. These are programs that send out alerts based on pre-programmed criteria. For example, if you are trading GBP/EUR, you might ask the software to send you an alert when the price drops below a certain point, so you can buy or sell. This gives you the freedom to leave your desk without missing out on a potentially profitable trade.
Using Manual Forex Trades
Many traders sign up for alerts from human analysts. They wait for signals to arrive in their inbox or via SMS or social media. It is then up to them whether they act on the signal. This is a useful strategy for newbies who are not familiar with the markets. Acting on recommendations from more experienced traders and analysts can take some of the risks out of a trade. It isn’t a fool-proof method, but many traders trust signals from human analysts more than they trust signs from robots.
Paid Forex Signals
There are subscription services where you can sign up for forex signals but beware of using a forex signal service based on a recommendation from a review site. Most online review sites are not impartial, as they funnel potential customers via an affiliate link, which earns them a fee. A paid signals provider may be useless, but at worst, it is a scam.
The Dangers of a Forex Signals Service
It can be tempting to sign up for a forex signals service, paid or otherwise, but don’t expect it to work miracles. Forex tips are time sensitive. If you don’t act on them quickly, you may as well not bother. Many traders complain that a forex signals service is useless, but what they fail to realize is that they only acted on a fraction of the tips.
Beware of forex signal providers charging a lot of money for useless tips. You are much better off devising your own system of forex signals. This is what all experienced traders do. They follow the markets, read the news, and make sound judgments based on experience.
Do not fall into the trap of relying too heavily on forex signals. They are a useful tool, but they are not the only one at your disposal.