If you are new to the world of Forex trading, you may have thought about using Forex signals to help you speculate on the currency markets. Indeed, following someone else’s Forex signals can clearly save you a lot of time and energy, but it can also help to teach you new trading methods and strategies.
If you are an intermediate trader you may have already encountered a number of different Forex signal providers. The main task for any beginning Forex trader is to learn how to trade efficiently and gain an understanding of the Forex market. That being said, the knowledge of what those signals actually mean for a trader in general, and how to apply them, is useful for traders of all proficiency levels.
The most difficult aspect is to find the best Forex signal provider. Therefore, in this article, we will go through an overview of the services provided by Forex signal providers, along with some of the current providers on the market and what they offer. We will also explain what Forex automated trading signals are, along with the benefits and potential risks of using them and how to generate your own trading signals and become an autonomous trader. Let’s get started!
What are Forex signals and FX alerts?
A Forex signal is an alert on a trading opportunity, usually in the currency market, but also in other markets. These Forex signals are provided by experienced traders or specialised companies, free or for a fee, through written messages. Trading signals help novice traders with accurate transaction details recommended by real-time Forex signal providers.
Trading signal providers will tell you when to buy or sell an instrument, and where to set the take profit and stop loss to take profits or close the position at an acceptable loss level if the market moves against you. The best trading signals will also explain the reasons for this position.
This means it’s a great way to try new strategies and see how other traders make their decisions. Most FX alerts and FX trading signals can be split into two distinct groups:
1. Fundamental FX trading signals
The first entry in the list is the fundamental approach to Forex signals. Fundamental analysis relates to economic events and market news, all of which can influence the price movements of financial instruments. A fundamental signal is simply one of those events – such as an interest rate announcement – which a trader can use to make informed trading decisions.
To access fundamental signals, traders will need to keep an eye on the news and company announcements. They can also use an economic calendar to stay up to date with upcoming events, to ensure they are ready to act as soon as the news breaks. At Admiral Markets UK Ltd, clients can also see breaking news provided by Dow Jones in the MetaTrader trading platform.
Example: If the European Central Bank (ECB) President’s speech was favourable for the euro, the Forex signal will then aim to buy the Euro against the US Dollar (EURUSD).
2. Technical FX trading signals
While fundamental analysis looks at news and economic events, technical analysis focuses on historical price movements and chart patterns. By seeing how instruments behaved in the past, traders can predict how they might behave in the future – should similar patterns present themselves.
A technical signal is when a chart pattern indicates that an instrument’s price is going to move in a certain direction. Traders can generate their own signals using historical data and indicators, or they can use Forex robots or subscribe to Forex signal services for automated alerts as we go through later on in this article.
Technical Forex signals are frequently issued along with different risk management strategies, in order to ensure minimal losses occur if the current plan does not work out as it was initially expected to. Most online Forex signals tend to fall under this category, which can make the search for the best Forex trading signal provider a much longer task.
Example: EURUSD breaks above a bullish resistance level as part of a bullish trend. This can be a trading signal to take a long position.
Did you know you can see professional traders perform live technical analysis of the markets through the Admiral Markets Trading Spotlight webinar series? Three pro traders offer live sessions three times a week. Some of the topics they cover include how to do technical analysis, how to identify common chart patterns and trading opportunities and how to implement popular trading strategies while helping you to find some of the best Forex signals in the market right now!