The Forex market is the most unpredictable, largest, and most liquid financial market in the world. And if you are a beginner in FX trading, you will not easily predict what will be the next move in the market. And most of the time, a lot of traders lose money for many reasons most significantly due to making indecisive trading. But if you learn how to use Forex signals, then it can greatly help you add orderliness to this dynamic financial market.
What are Forex Signals?
If you are going to enter the Forex market, you will most like come across the term Forex signals. Well, FX signals, as the name suggests, are alerts that notify and tell the Forex traders of the onset of any notable, concerted price action in the market.
It gives recommendations when it is the right time to enter the Forex market as well as signals you when is the right time to enter and exit trading at specific times and at specific prices.
And since Forex trading is highly inconsistent, the Forex signals have to be broadcast to their prospective users in real-time. In that way, the Forex signal companies can communicate their signals to their subscriber through instantaneous channels like email, social media, proprietary signal websites, SMS, and RSS feed.
5 Elements of Forex Signals
There are five (5) essential elements of Forex signals that will help you determine the exact steps that you need to take before forming the core of your trading decision.
The Entry Price:
Imperatively, Forex signals must contain an entry price or entry point at which the recommended trade must be initiated. And without the entry price, there cannot be a Forex signal for you. Your entry price, known as the entry point, can be either your market or limit.
The Action:
And now that you have your entry price, your next action will be either buy or sell. With Forex signal must be accompanied by an actionable directive like to buy, to sell, or to hold. And just like a hunter, you need to know the proper timing when to kill your prey.
The Status:
In Forex trading, the status of your FX signal is very crucial. And if you are paying close attention to it, you might end up missing out on trades or take trades when they are not yet ripe to take. Aside from that, you might also end up always taking trades whose active periods have lapsed.
There are three types of status that you need to keep close attention to the Active, Get Ready, and Closed status.
- Active Signal – you can still take it
- Get Ready Signal – will be activated soon and you need to be prepared for it
- Closed Signal – already passed and you miss your chance to trade.
The Stop-Loss:
This is the most critical element of every FX signal in Forex trading. And you should not use any signal that does not have a recommended stop loss. And without the stop-loss, you are not safe in the Forex market because it will only draw you into the market, leave you alone to its storms, and wait for you until you are stripped-off.
The Take Profit:
This helps you mitigate risk by helping you to minimize the downside potential. If you don’t know how to exit your trade at the optimum time, the Forex market might end up eroding all your gains. And to avoid and prevent this, you need your FX signals to clearly help you and specify the points at which you take your gains.
Benefits of Using Forex Signals
- Forex signals can help increased profitability to help you yield better trade results.
- You can also save a lot of time monitoring and analysing the Forex market.
- FX signals can help increase your account sizes within a short period of time.
- By using the stop loss in your FX signals, prevents you from the risk of losing money.
Why You Should Use Forex Signals?
Banks, hedge funds, pension funds, large corporations are just some of the millions of Forex traders/investors that you will compete in the Forex market. And these investors are using technology, information, and human advantage to make their trading much easier. And if you are a beginner, you need to learn how to use Forex signals to your advantage.
