Trade Signals
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Forex trading statistics indicate that up to 90% of traders lose money, with only about 5% of retail traders having something to write home about. Nothing is more annoying than analyzing a market for hours after reading the best available resources only for the market to move against your position as soon as you enter a trade. Instead of getting tempted to quit FX trade because you can’t get a grip on the market, you need to consider trade signals to salvage your career.
Trade Signals Defined
A trade signal can be defined as a suggestion for action, especially to buy or sell an asset or a security. The signal is generated by a trading robot or human analyst regarding what moves you should make about a specific financial asset, when, and how you should act. Signals are created via mathematical algorithms dependent on prevailing overall market conditions and current economic indicators.
Trade signals run in real-time and contain all the information you require before you can enter a substantial trade. Such signal notifications are sent via various media, including email, Twitter, websites, RSS or SMS. They are posted in different designs and shapes, whether they’re geometric designs or bull and bear designs. Trade signs can show you important details you could have missed.
The Basics
Signals play a critical role when deciding the right moment to buy or sell currency pairs. Most signals are created using analysis produced by technical indicators, which highlight the convenient time for an investor to enter or exit a position. These include sentimental measure or signals from other collected from other trade signals.
Subscriber-based trade signal providers offer traders real-time information on available opportunities. Trade signals are designed to ensure that you have a mechanical method for buying or selling without depending on your emotions. There are at least three classifications of trade signals.
Manual vs. Automated Signals
Manual signals are generated by an expert FX trader while automated trade signals are generated via computer software that mechanically analyzes and tracks market price action following coded algorithms.
Paid vs. Free Signals
This classification is based on pricing. Some signal providers offer free services for a trial or an unlimited period while others charge a one-time fee or a subscription.
Entry vs. Exit Signals
This classification depends on the level of detail involved in the signal. Some providers give only entry signals; to help you open a trade position while others offer only exit signals to show you when to a trade position that’s running.
The Importance of Trade Signals
Anyone who’s traded any other markets knows the importance of knowing where to place your bets; this is where trade signals come into play. When used correctly, they will help to:
Recognize Trade Opportunities
Trade signals are a good source of the best trading opportunities, especially if you’re new. Newbies can be overwhelmed by the amount of Forex market trading skills and knowledge they must master in addition to the information they need for every currency. Trade signals provide a flow of opportunities giving you more time to focus on trading.
Test Trading Strategies
Trade signals give you access to numerous trading strategies, including those you haven’t considered. This includes strategies and systems you haven’t had time to develop trial or back-test but are promoted by a trade signal provider. Left alone, you can only grow and trail so many strategies, but trading signals can enhance your knowledge base.
Access Trading Gurus
There’s nothing better than having an instant connection to the brains behind that particular trade signal service. Most trading signals are the brainchild of expert traders and other the result of back-tested algorithms and systems. Becoming an expert trader takes lots of time and effort, but using trade signals makes life easier.
How to Create a Trade Signal
Successful traders don’t leave anything to chance; they know those random profits from gut feelings can’t be guaranteed. There are deviations every once in a while, but exchange rates follow a specific pattern. Trade signals are the result of a strategic approach borne of such patterns, and that’s why you should learn to create your trade signals.
Trade signals solve the most significant challenge every trader faces, knowing how to identify opportunities at the correct time. Learning how to trade successfully is a prerequisite for knowing how to create your trade signals. Proper knowledge ensures that you understand the basics of the FX market. Anything less than that, and you will experience the sour taste of failure.
There may be hundreds of existing trade signals available; it’s prudent to build your own eventually. The undeniable advantage will be having a successful personal approach in trading. You’ll understand:
- When and how exchange rates move
- How Central Banks’ release and meetings affect economic data
- How economic events and technical setups lead to specific moves
- How to use technical indicators and read Forex charts
Creating your trade signal is the best way to widen your scope of experience and profitability eventually.
How to Trade using Trade Signals
Primarily, you choose whether to use trade signals, with the full knowledge that a third party determines the outcome. Should you trade successfully, there are considerable benefits to celebrate, but when things go south, you also carry your loss. You can follow some simple tips to increase your chances of this lucrative opportunity. These include:
Choose a Good Broker
The best brokers have reliable platforms the execute trade signals. You’re better off with globally reputed brokers with state-of-the-art platforms.
Choose a Reliable Signals Provider
The most challenging part of using trade signals is choosing the right service provider. If you get a signals provider with a rate of over 60%, you’re good to go. A provider with a good history will ensure your account grows steadily with minimal drawdowns.
Trial Period or Back-Testing
Don’t commit to a trade signals service provider before testing their performance. Take advantage of some providers’ trial period and only proceed to a paid version if you are thoroughly impressed by their performance. If you choose an automated strategy, perform back-testing to check performance besides trying the signals on a demo account before you can invest.
Concluding Thoughts
If you’ve chosen to become an investor, you want to be sure to grab the available edge. Every expert will tell you that the most significant side you can take advantage of is trade signals. The reason is apparent, trade signals represent the missing piece of the puzzle between being left behind and being in the league of market leaders.