As investors in the worlds largest financial market, Foreign Exchange traders have access to thousands of different strategies, systems, and indicators to help them make profitable trading decisions.
While a high number of Forex strategies and tactics is necessary for navigating such a complex market, so many options can often cause traders to over-analyze the markets, which in turn affects their trading decisions. This is especially true of beginning Forex traders.
The solution to this problem is simple: Forex signal services. But in order to make the most of your Forex signals using your provider, you need to understand how to use your Forex signals correctly.
Types of Forex Signals
While there’s a large number of Forex trading strategies available at your fingertips, there’s also a high number of ways to receive and execute Forex signals.
There are multiple ways to receive Forex signals, which will vary with each provider.
- Email/SMS text message
- Live trading room
- Chat room
- Social trading
- Automated copy trading
Using Each Type of Signal Correctly
Getting the most out of your signal service requires an understanding of the different options available to you with each type of signal.
Free Signals – Free FX signals should be used on a demo account. Using free signals to make trades using your real money is dangerous, and not advised.
Email/SMS text – Most signal services who offer email as their delivery method also offer a text messaging service. It’s best to use a signal service offering both. If busy traders don’t like the risks that come with copy trade services, then they want to make sure they have text message alerts set, and that their platform has a mobile app. This prevents the need from having to be at a desktop computer. As soon as a trade is delivered, quickly analyze the reasoning behind the trade idea and, if you agree, open the platform and place a trade.
Automated – Automated signals includes copy trader platforms, software and robots. Parameters should be set for automated trading services, because if everything’s completely automatic, then you’re betting your entire account balance on someone else’s knowledge. This is just asking for trouble.
Being Late to Enter
If your signal was not delivered on time, or you were unable to access the signal near its delivery time, then you need to look at your charts and see how price has moved since its delivery.
Create rules for yourself in this situation. For example, if a signal is delivered ‘X’ number of minutes late, then don’t enter. If a trade moves ‘X’ number of pips against the execution price, then don’t enter. If price has moved only ‘X’ number of pips in favor of the signal, then quickly enter without hesitation.
Creating rules surrounding your Forex signals will ensure you reap the maximum benefits of a signal service, no matter the signal’s method of delivery.