As forex traders, each of us eventually comes to the conclusion that to make sense of the complex and fluid dynamics that is the forex market, we’re going to need certain tools to help us trade.
The best tools not only help you strengthen your understanding of the markets, but also increase your effectiveness as a trader by helping you win more trades.
When considering what could take your trading to the next level, forex signals are a tool you can’t look past. They are one of the simplest, yet most effective ways to start seeing big gains in your learning and your trading results.
What Are Forex Trading Signals?
A forex trading signal is essentially a set of information that tells you when to enter and exit the markets for a particular instrument during a particular day and time.
Every signal has recommended entry points, as well as take profit and stop-loss targets.
They provide a simple way to execute trades without having to rely on too much of your own analysis.
What Does A Forex Trading Signal Consist Of?
Every forex trading signal will contain the following information:
The direction is the basis of each signal. A green upwards arrow indicates that the signal is a buy signal, meaning we expect the price to go up, while a red downwards arrow indicates that the signal is a sell signal, meaning we expect the price to go down.
This is a critical price level at which the primary signal is either validated or rejected. Let’s say we have a buy signal with a pivot at 1.2173. So long as the price remains above this level, the signal is considered active. If the price drops below this level, the alternative scenario comes into play.
This is the “Plan B” of the signal. If the primary signal does not materialise, the alternative scenario guides how to trade the opposite direction.
The chart shows every level contained within the signal. The red lines signal the support levels, which are also the take profit levels for a sell signal. The green lines are resistance levels, which also take profit levels for a buy signal.
For either a buy or a sell signal, you should aim to take profit at the first level, and if you have supreme confidence in the signal, you should aim to take profit at the second level.
The charts also include the indicators which were used to create this signal.
This is an explanation of the logic of the signal. It will usually refer to an analysis of technical indicators from which the signal was formed.
Why Use Forex Trading Signals?
The easiest answer here is that trading signals essentially do the work of trading for you, if that’s how you intend to use them. Simply follow the rules of the signal, and you could well be on your way to a winning position.
But aside from essentially giving you trades, signals have other uses as well.
Getting your emotions under control is perhaps the trickiest task that faces any trader. As we’ve discussed many times before, making rash decisions based on impulse is the easiest and worst mistake you can make as a trader. We easily panic when things don’t look like they’re going our way, we get over-excited when we think we’ve cracked it.
Signals, when followed to the tee, are one of the surest ways to help you get your emotions under control.
Simply do what the signal says. The signal is predicated on strategy and analysis. Your high-flying dreams of scoring a private jet by July are, with respect, not.
Use signals to get into the habit of executing according to strategy. You’ll thank yourself later.
Sometimes, we get so caught up in our world of the two or three instruments we always trade, that we fail to see the forest for the trees.
Browsing through a list of signals, you might get ideas for new trades that you wouldn’t have considered otherwise.
When was the last time you traded GBP/JPY or EUR/NZD? For most traders, the answer is probably, “it’s been a while”.
Good signals can help open yourself to new possibilities in the market, or give you the courage to tackle new trades you wouldn’t normally go for.
Confirmation or Pause For Thought
If you’re a beginner trader, use signals not only to execute your trades, but to learn as well. Read the comments to understand the analysis of a trade, the thought process that goes into it, and take lessons from each signal you decide to follow.
If you’re an intermediate or advanced trader who regularly analyses the market, use signals as confirmation of your own take on the markets. Are the signals matching up with what you think is happening in the markets? If so, it can be a great way to gain more confidence in a trade you’re looking to set up.
Is the signal going against your own reading of price action? If so, it might be a good chance to take a step back and consider the merit of the counter view. You may very well turn out to have been correct all along – but it’s worth taking a moment to pause and consider. It could save you valuable money.
TIO Signals – A New Forex Trading Signals App
There can be little doubt that trading signals created by expert market analysts are immensely valuable. They not only do what they say on the tin (give you actionable price levels at which to enter and exit trades), but they can also help you explore the markets, as well as educate you on technical analysis.
We recently launched TIOsignals, which is a high-quality forex signals service for TIOmarkets customers.
Registered users who haven’t deposited with us will see a handful of signals for free throughout the day.
Premium signals are reserved for those traders who deposit $500 or more with TIOmarkets. You’ll get dozens, sometimes hundreds of more signals throughout the day than free users.
Premium TIO Signals are the best way to truly open yourself up to the markets, gain new perspectives, and start growing your balance using expert strategy and analysis.
Download TIO Signals on Google Play or App Store to try the app for free.
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