To begin with, we must be clear that Forex trading signals provide us with all kinds of information about the financial markets that we have available to operate, as well as the assets in which we can invest.
Using the data specified in these signals, it is predicted what will be the final price that a specific asset may present, information that will be very useful for the future to be able to carry out our operations in the most successful way possible.
What are Forex trading signals?
Forex trading signals are alerts traders receive on their trading devices (whether a phone or a computer) where they warn them of the opportunity to buy or sell a certain currency pair. The main characteristic of these Forex signals is that they are made by different computer software or professional traders, who can verify their success in the market they are working on.
Subscribing to these signal providers is obligatory if you want to receive the signals and in most cases, this kind of service comes at a charge, although there are also sites/channels that offer Forex trading signals for free. Some of these services include news on a permanent basis, linked to the currency market.
Usually the trader receives an indication of which trade to tackle as an opportunity. But, these Forex signals lack any argument to justify why we should face such an option. Hence, the mistrust it has generated.
Most signals are built in a timeframe that matches a particular strategy. This will depend on if we’re trying to do scalp trading or swing trading. The best signals are supported by the signature of a prestigious specialist in financial markets, which would help give a credibility framework to said signals.
Are Forex trading signals reliable?
Although these signals have numerous admirers and many other detractors, the wisest option is always to take an objective position on their effectiveness and analyze how much profit they can bring us.
- For signals designed by programs or computer algorithms, Forex signals can be a good compendium of an instant technical analysis. Of this there is no doubt. Those algorithms collect all kinds of technical data and draw a series of investment conclusions.
For the same reason, these signals have the enormous disadvantage of not being able to correctly assess all market reactions to situations that are beyond technical: an untimely decision by a central bank, a threat of war, a terrorist attack, the fall of an untimely company, etc. All elements that can seriously affect the currency markets, but that will not be duly taken into account by software.
- For signals whose setups are created by market specialists/professional traders, the margin ratio generated by these alerts will be proportional to the experience and performance of this person trading these assets. The more successful the trader, the more accurate the signals will be.
Another aspect that we must take into account is the risk management that the signal provider handles, since in this world there are losses and gains. However, good risk management can minimize your losses and maximize your profits.
The truth is that many brokers also provide this service, but, in the event that the support that we have chosen does not offer us a signal system, we can always work with providers that are exclusively dedicated to issuing all kinds of alerts.
Of course, although these signals usually offer data for all markets, we are above all interested in acquiring information about Forex, since, as we well know, it is the most important market that exists, since in it, they carry out multiple transactions on a daily basis.
