Depending on the type of forex trader you are, forex trading signals can form a part of your trading arsenal.
Forex Trading Signals Defined
Forex trading signals comprise forex information on buy and sell orders or entry and exit signals sent by forex brokers or forex analysts to their subscribers either for a fee or for free.
Time Validity Of Trading Signals
Obviously, forex signals are basically forex trading opinions and are not embedded in stone. At best, they are educated opinions formed after analysis by brokers or analysts who study price trends, make economic assessments and form their opinions on the state of the currencies that their trading clients hold, or are transacting. Such signals are valid for certain periods of times and often carry short term specific value and are worthless with the passage of time.
Assessing The Forex Trading Signals
If you are a forex trader who would like to benefit from trading signals issued by any forex broker or analyst, it is important to assess the methodology the forex broker uses to issue these signals. More importantly, how reliable are their signals? Does the broker or analyst has a good record of being accurate in his signals? How detail are those signals issued? Are they issued with clear cut trading recommendations or are they couched in uncertain terms? Are the signals just a representation of pivot prices or price projections without giving basis or the explanatory notes on how to derive and use them?
Big Brokers versus Small Advisory Trading Signals
This aspect of checking the background of brokers and analysts issuing these trading signals is an important activity because of the speculative nature of forex trading. As forex trading is a large market, as in any other financial trading market, and owing to the speculative nature of the market, you must subscribe only to signals that are proven to be reliable. The larger brokerage firms are able to afford more analysts or cover more ground before they release their trading signals in comparison to an individual analyst operating from a small advisory company.
Forex Trading Signals As A Timing Device
There are trading signals that are issued based on methods that are novel and developing in contrast to those that are known for their performance. For example, pivot trading signals is a common trading signal system that is followed by many forex brokers and you can get these pivot trading signals as timing signals.
Dissemination of Trading Signals
With the advent of high technology and fast communication via the internet, trading signals can be routed to your email box as an email, or they can be delivered via sms ( short messaging system) or by fax. All this helps in ensuring you get the signals in a timely manner.
Recommended Use Of Trading Signals
Is it good to use these signals outright?
Generally, unless the issuer of the signals has a proven track record, it may be easier for your peace of mind to use these trading signals as a basis to research further. You may want to check these signals in your favorite charting program or to run further technical or fundamental analysis on any aspect of the trading signals that you receive to test their reliability.
The next time you receive any invitation to subscribe for what is claimed to be an “accurate, reliable and timely” trading signal service for forex trading, remember to check and assess their claims, or even rank them.
Considering the fact that you will soon be very familiar with certain currency-pairs that you are trading frequently, you may not be interested in accepting the broker’s trading signals outright. Where you have an accurate trading system that is capable of identifying and generating accurate and timely signals, you can be in control of all your trades, and especially the entry and exit trading signals.