Forex signals are very popular in the realm of forex trading. Forex signals are an alert sent to the traders to take a position or exit from a position (long or short). In the following article, we will discuss what they are and how to use them.
Most people don't have the urge to learn the art of trading. They love to look for easy money. They waste their time looking for shortcuts to make money in the forex market. That's why a different industry- called Forex Signal has emerged within the forex industry.
The burning question is should a trader subscribe for it or not?
In this article, we will explore the following:
- What are forex signals?
- How do forex signals work?
- What to consider to choose a forex signal service?
- What should you avoid in forex signals?
- Who uses forex signals?
- Why do traders decide to use forex trading signals?
- Can forex signals help traders?
Let's explore all of them.
What are forex signals?
You are here reading this article means you want to know more about forex signals. Let's start with the basic question- what are forex signals?
Forex signals are the alert sent to the subscribers' smartphone or email by the signal provider to take a position in any currency pair either short (sell) or long (buy) with a profit target and stop loss level.
In most cases, they send you the entry and exit points (take profit and stop loss level). Rest is up to you whether you want to execute the trade or not.
Some signal providers give extra service. They also give money management and risk management tips along with the signals. For example, they tell how much risk you should take in that trade and what should be the lot size against $1000.
Sometimes they tell traders to take instant entry. And sometimes, they give special instructions to set buy limit or sell limit and buy stop or sell stop.
Some signal suppliers also send alerts to close the trade earlier than previously mentioned or hold the trade for a longer time.
Below is the screenshot of an SMS of fx signal alert
What Signal suppliers do
Forex signal providers use different marketing methods to attract more and more clients. One of the methods is sharing profit screenshots like below.
I guess you already have seen this type of screenshots across different social platforms, i.e., Facebook, Twitter, and messaging apps like Whatsapp and Telegram. Interestingly, everyone claims they provide the best signals for forex trading.
Temptation works in any newbie trader by seeing this type of profit screenshot. You might not be the exception.
Sometimes you may dive into the wilder imagination of such easy money and luxury it will provide.
We get tempted because many of us want quick and easy money without putting in much effort. It's human nature. Isn't it?
But hold yourself on before making yourself thrown into the amazon of forex signals. I am comparing it with Amazon Forest because there are unlimited forex signal services available on the internet where you would feel lost like you are in the middle of the Amazon Forest. You will surely get confused.
The real dilemma is which signal service to subscribe to or subscribe to at all. Everyone promises lucrative profit. Whom should you trust if you want to subscribe to the fx signal service?
Well, stay with us; we will unveil everything about forex signals together.
How do Forex Signals work?
To understand fully how forex signals work, we need to know that there are two types of forex signal service suppliers.
One of the signal providers gives forex signals by doing manual analysis. Others depend on software-generated signals, which are automatic.
Let's find out more about these two types of signal providers.
Manual Forex Signals
Traders like us (they claim themselves as an expert forex analyst, but in reality, most of them are not the expert at all) generate manual forex trading signals by technical analysis and price action. They also use different indicators, i.e., Moving Average, Bollinger Band, Forex Trend Indicators, RSI, MACD, Fibonacci, etc, in their trading system to generate forex signals.
Many signal providers combine both technical analysis and fundamental analysis to find out forex signals.
Once signals are generated, they send the signals to their subscribers via SMS, email, or telegram, or WhatsApp group.
Manual signal providers send different types of signals, for example, entry at market price and Pending order (Buy Limit/Sell Limit or Buy Stop/Sell Stop)
Automated Forex Signals
Automated forex signal providers use programmed software or expert Advisor (EA) to find signals in different currency pairs.
Once the system detects any trading signal, for example, Buy GBPUSD @1.3860, it sends an alert to all the subscribers via a predefined communication method.
This method doesn't require any human analysis; the Bot or EA does the market analysis and comes up with trade signals.
There are other types of forex signals based on the holding time of a trade.
Some provide signals based on a short time frame which we call intraday trading. Usually, they target 10 to 50 pips.
Then there are swing trading-based signals. They trade in longer time frames like the Daily Chart. They look for 100+ pips, sometimes up to 300 pips.
The third type is scalping-based signals. Here target pips are from 2 to 10 pips.
Based on cost, there are two types of signals available.
Some signal suppliers (mostly forex brokers) provide forex trading signals at no cost.
Other providers sell signals on a subscription basis. Usually, they take a certain amount as a subscription fee on a weekly or monthly basis.
What to consider to choose a forex signal service?
One needs to consider a few things before choosing a signal service.
Credibility and reputation: There are a lot of scam signal services available on the internet. From them finding a good service is a very difficult task.
Before choosing, check their reviews and reputation. It's best to subscribe to those who give 3/7 days free trial. By using the free trial, you can understand the quality of their service.
Cost of the service: Second thing to consider before subscribing to the service is the cost. You have to choose a service that is within your budget. Usually, they sell weekly or monthly subscriptions.
Mode of delivery: Check by which communication method they send the alert. It should be convenient for you. Sometimes you may need to execute the trade instantly at the market price. As we earlier said, the most used communication methods are email, SMS, WhatsApp, or telegram.
What should you avoid in forex signals?
The Forex market is the biggest financial market in the world in terms of daily transactions. In that big market, there are a lot of people who are ready to scam you.
Yes, it's true!
Similarly, in the forex signal industry, many people are there who are scamming people in the name of providing signals.
The easiest way to find fraud or scammer is to observe what they promise you. If they promise something too real to believe, congratulations, you find a scammer.
If they will give you a 100% guarantee, stay away from them.
You can also ask about their performance tracks. For example, check their performance report from Myfxbook or MT4 at least for the last six months. Also, check their signal performance report to find out whether they are legit or scammers.
Who uses forex signals?
There are two groups of traders who use forex signals.
Traders who are a novice and those who can't make money with their little knowledge. Most subscribers fall under this category.
The second group is experienced traders who use the signals to support their own analysis. Small numbers of traders fall under this category.
Why do traders decide to use forex trading signals?
Novice traders or traders with little knowledge use forex signal service with the hope of making money.
Lucrative marketing and screenshot make the traders tempted to use forex signals.
Successful forex trading needs deep knowledge and understanding of the market. Following someone blindly doesn't help.
Experienced traders use signals to support their strategy and analysis. Though sometimes, it may confuse them if the signals go against their own market analysis.
There are also very few people who do not have time to learn trading or trade by themselves. They get influenced by screenshots and think WoW! I can make money that easily.
Can forex signals help traders?
Whether forex signals can help traders or not that's a very important question. The answer depends on some factors.
If the traders have the plan to develop trading skills and abilities, using forex signals can make them averse to learning.
How?
Following signals is like doing the trade activity blandly. You are depending on someone to make your financial decision. You have no idea why you are taking a trade. You do not know what's the analysis behind it.
This type of dependency makes a person lazy for giving the effort to study. He starts to jump from one service to another.
Another issue with forex signals is they give a lot of signals every day. If you have small capital and following a proper money management policy, it's not possible to make all the trades.
For example, you can open a maximum of two trades, but they are providing you ten signals. Which two trades would you take out of 10 trades?
If your two trades hit the stop out and the rest eight trades hit the profit target. On average, the service provider's success rate is 80%, but your winning percentage is zero.
As you have no idea about the analysis behind the signals, it's not possible for a novice trader like you to select the best traders out of those ten signals.
Some might not agree. Some may argue that there are signal providers who share the analysis as well. What about them?
You have to understand who wants to subscribe to signals. One is newbie traders, and second those who can't make money with their own skills.
As we know, little learning is dangerous. It applies to forex trading as well. Suppose you are watching the EURUSD chart; your little learning is telling you the price will go up. That time you get a signal alert with analysis telling you to sell EURUSD at market price.
What will happen inside your mind? Firstly you will be confused. Out of confusion, you will take a trade according to signals if the trade goes wrong you, alas! I was right. Then next time, you will believe your analysis. If that goes wrong, your frustration will be high.
This psychological dilemma will make you a confused trader.
On the other hand, signals can be beneficial only to those who have good analysis skills. Other people's analyses don't affect them, but they can help from the analysis in their favor.
Best forex signals in the UK
Now we will tell you about the best free forex signals in the UK.
There are some websites from where you can get forex signals completely free in the UK.
- Babypips
Babypips is considered the most popular and authoritative site on forex trading. It has more than 2 million visitors.
Along with forex education, they have a section where you will find trade ideas. For leaner, it could prove effective.
- Daily Forex
Daily Forex is also a very popular forex website. They also give forex signals without charging anything.
- AtoZ Markets
AtoZ Markets is another popular forex trading website. They also provide free forex signals on their website. They just do not give forex signals. They give complete trade ideas with visual charts.
- Forex GDP
According to their website, Forex GDP gives four free signals per month. Their rest signals are for paid subscribers.
- Trading View
Though TradingView does not give any signals directly. But here, you will get many trade ideas shared by experienced traders. It is the best place to share your trading ideas.
Conclusion
To conclude, I would say trading is one of the toughest jobs in the world. It requires extensive technical skills and psychological calmness.
Only by following forex signals, it's not possible for anyone to make consistent money in the forex market. If it were that easy, everyone would be rich by following signal service.
I would request my readers to focus on learning the art of forex trading.
Yes, it takes time to develop skills and experience. But it's worth giving that time. You will never regret it.
But If you want to subscribe forex signal service. I would suggest you subscribe to one that gives detailed trade ideas.