Introduction to Forex Signals
The Forex market, the largest and most liquid financial market in the world, is unpredictable. Irrespective of your level of experience, you cannot easily say for certain what the next market move will be. Little wonder that over 90% of traders lose money in this dynamic financial market. Definitely, this figure is abysmally huge.
Although there are many reasons Forex traders lose money, perhaps, the most significant is indecisive trading. Most traders, especially newbies, have tough times deciding when to enter and exit trades. Usually, this follows from the unpredictable nature of the market as stated earlier. The good news: using Forex signals can help you add orderliness to this seemingly disorderly business of Forex trading.
What are Forex Signals
Most likely, you would have come across Forex signals. They make the news — in print and digital advertisements alike. Marketers tout them as the ultimate solution to the losing woes of struggling traders. Consequently, many traders, irrespective of the level of experience, rush to them. But what are they?
In short, Forex signals are trading suggestions. They are suggestions for entering and exiting trades at specific times and at specific prices. Usually, they include risk management suggestions too such as stop loss. That is, they recommend to traders the prices at which to buy and to sell, to enter and exit their positions.
Also, they recommend, to guide against unexpected market moves, prices at which they should put their stop-loss orders. Consequently, Forex signals can help traders profit maximally from the market, while also protecting them from unexpected losses. Forex signals have really become widely popular among traders. Do you wonder why it is so? Maybe it is because they work.
As suggested earlier, the most probable reason for the increasing popularity of Forex signals is their effectiveness. Hence, here are some of the benefits you would enjoy if you start using them, too.
- Increased profitability. Ideally, Forex signals would yield better trade results for you.
- Saved time. Using Forex signals would reduce the time you spend on monitoring and analyzing the market.
- Increased account size. Reliable signals can help you significantly build a small account within a short time.
- Capped risk. By using the stop loss in your signals, your risk of losing money is capped.
It is imperative to point out that no Forex signal provider is right all the time. Also, there are many who only seek to scam their clients. As a result, you should choose only a reliable and trusted provider. Also, knowing some market analysis techniques will help you discover false signals yourself.
Forex signals can be automated or manual. Automated Forex trading signals are computer-generated signals. Often referred to as “Algo trading,” they are the Forex signals that trading software generates. Automated Forex signals are especially recommended for new traders who are most likely to find the market totally confusing.
On the other hand, human analysts are the ones that usually provide manual signals. These providers can be financial analysts working for institutions such as banks, hedge funds, websites, and even corporations. They develop their signals by conducting thorough market analyses. Usually, they base those signals on economic news and historical chart patterns.