There are tons of forex signals offered on the internet via the web and social media. However, of course not all signals are reliable. In order to choose the best signal, there are a number of things that traders need to know. First of all, do you know, how do signals work?
A signal provider can provide a shortcut for traders to trade without analyzing the markets themselves. Signals already contain information about a currency pair that can be directly executed by a trader, including the entry price, the stop loss (SL) price, and the take profit target (TP).
Real-time forex signals are provided by providers to their members via email, SMS, or a special platform for members on a regular basis. Traders can choose for themselves what method to use to access or acquire signals. Importantly, signals must be executed by traders as soon as they are received.
Analytical Methods on which Forex Signals are Based
Signals do not suddenly come from smart people or astrological discourse based on the circulation of the stars. Signals are sure to appear based on certain analyzes. Usually, signal providers make use of technical analysis and or fundamental analysis to find signals.
You must know what basis of analysis the provider is using so as not to make the wrong choice of a randomly generated signal. Technical analysis deals with support and resistance levels, candlestick patterns, Fibonacci levels, Pivot Points, or similar technical approaches.
Sometimes, it is based on technical analysis will also contain the name of a candlestick pattern or technical signal on which to base buy/sell suggestions. If you come across a signal like this, then you can use it to learn while trading.
There are also signal providers based on news (news). They will send an entry, stop loss, and profit target signs before or after the release of certain economic data. The data is usually Non-Farm Payroll, interest rate announcements, unemployment rates, and so on.
Forex Signal Frequency
One of the most frequently asked questions traders ask signal providers: How many signals will be sent per day/week/month? The answer actually cannot be static, but it depends on market conditions. In volatile market conditions, you can get more forex signals than when the market is quiet.
Many novice traders think that the more signals the better. However, a best forex broker company will recommend you to choose the best signal based on quality, not quantity. The best signal providers must also be able to detect when it is best not to trade (due to bad market conditions), so as not to mislead their customers.
The signal frequency can also be affected by the trading style of the signal associated. There are scalping, day-trading, swing-trading, and long-term. Scalping signals usually target very small profits of around 5-15 pips, so they tend to send signals more often.
Day-trading signals will send signals every day, but the frequency is less and the profit target is bigger. Swing-trading and long-term signals are of minimal frequency but are best because traders don't need to enter too often and have the potential for higher profits.
Free and Premium Signals Providers
There are free signals and paid forex signals. Which one should you choose? Either way, can be chosen, provided you know where the signal provider's revenue is coming from and whether the price given is quite reasonable.
Some signal providers can provide free service. But usually, they ask us to join a certain broker company. Why is that? Because the signal provider will get a commission from the broker. This is actually normal. You can learn about this from Didimax forex broker.
However, we need to be aware of the possibility that signal providers have certain interests and only encourage you to frequently execute trades (overtrading). Therefore, it doesn't hurt for you to choose premium forex signals in order to get more accurate results and not harm you.
