Whether you’re a novice trader or an experienced one looking to offload the laborious and time-consuming process of looking for trade ideas and setups, forex signals are invaluable in your trading arsenal. Using these signal services, however, can be daunting as there are dozens of traders pitching their system is the best in the industry. Even those who do manage to find a decent signal service provider still fail to make money off it due to incompatibilities between the system and the person’s investment objectives and risk profile or simply because they cannot precisely follow the signals.
What are Forex Signals?
As the name implies, they are signals provided to customers to buy or sell a currency pair. Signal service providers can either be retail or institutional traders. Most retail traders who have enough field experience and have a proven track record choose to expand to the signals service market to add a channel of income. Institutional traders, on the other hand, are composed of small funds that use more advanced statistical measures and technical strategies to provide signals. Aside from the signal to buy or sell a particular currency pair, most signals also come with ideal stop losses and profit targets that customers can set on their platform. This completely eliminates the need for the customer to analyze price charts in search of logical stop loss and profit target levels.
Benefits of Forex Signals
The most obvious benefit to forex signals is that traders don’t have to think about their entries and exits, trade ideas, and other risk/reward potential. All of the mental load is transferred to a forex signal provider. This frees you to manage other investment accounts like your stock trading account or Roth IRA. You get to participate in the myriad of tradable opportunities the forex market provides without having to miss quality time with family and friends. Another benefit of forex signals is that it’s a win-win for both sides of the coin. Customers get access to an unlimited number of strategies without even having to read a book about technical analysis or study macroeconomic factors through a college program. Forex traders who are selling their signals have wildly different approaches to the market, ranging from naked or price action trading to algorithmic and scalping strategies.
Tips to Get a Good Service Provider
Look for unbiased reviews from sites like AlfaTrade’s. The brand is a well-established provider of brokerage services and forex-related information. Stalwart traders worth investing your money in will also be featured in the “Top 10” or “Highest Monthly Gains” type of categories on websites that cater to the said service. Look at their results, more importantly their drawdowns. You don’t want too volatile drawdowns as this can affect limited sized accounts. Look for signals that align with your own approach or perspective towards trading. For example, you’d want the signal provider to deliver at least one signal per day if you are looking to be a daytrader and post the gains/losses of a typical daytrader.
Final Notes on Forex Signals
Forex signals can be a double-edged sword on your trading career. Conduct thorough research and make prudent investment decisions before signing up with any signal provider. Ideally, you’d want to divide your available capital into portions. Some should be allocated towards a long-term growth account that will cover your retirement lifestyle while an equal portion towards an individual trading account with either manual or automated forex signals attached to it. Automating your forex signals should only be done if you are completely confident of your chosen signals provider otherwise manually input trade orders.