Part of the thrill of investing in the forex market is using your knowledge, training, and instincts to make your currency trades. At the same time, no one can possibly keep up with everything that’s happening in the currency markets. That’s why accurate forex signals can be such a powerful tool in your investor’s toolbox.
What Are Forex Signals?
At its most fundamental level, a forex signal is simply an indication on which currency pairs to sell or buy. A typical forex signal will also include a recommended Stop Loss point to protect your investment and a Take Profit point at which you exit the trade and reap your profits.
Almost all traders, even advanced traders, rely on forex signals to some degree, because they offer so many benefits, including:
- An easy way to begin trading
- Clear stop loss recommendations to lower risk of loss
- Clear profit indicators so you know when to jump out
- The ability to automate your Forex trading
- A way to trade successfully without having to keep up with the news on dozens of different currencies
Who Creates Reliable Signals?
A forex signal is only as valuable as the person or company that’s behind it. After all, anyone’s uncle can start recommending trades. That doesn’t mean they are good! Many top forex training companies as well as brokerage firms offer forex signals to their members.
Signals are developed by their in-house staff of expert traders who create signals based on a variety of factors, including:
- In-depth knowledge of different currency pairs
- Years of trading experience
- A variety of trading strategies
- A technical analysis of the market
- Past pricing information
- Current news and trends
- Indicators, such as support and resistance levels, moving averages, market sentiment, candlestick patterns, etc.
Most companies also incorporate advanced computer software to help them develop signals. Some companies even completely automate their signals, using computer programs that incorporate a variety of strategies and learn how to recommend trades over time.
Usually, the best signals are designed with a mix of human and computer influence. One path to adding scientific influence to your own mix is through the Smart Tools found in SmartTrader.