Forex Signals Tips
Read these 7 Forex Signals Tips tips to make your life smarter, better, faster and wiser. Each tip is approved by our Editors and created by expert writers so great we call them Gurus. LifeTips is the place to go when you need to know about Forex tips and hundreds of other topics.
Types of Forex Signals
The forex signals are generally explained by the forex signal service that you choose. The forex signals and their specific meanings may change between forex signal service providers. The simple ones, such as buy and sell, are the most common. There are other forex signals that are not as common, but are used by different providers. The forex signal providers always offer an explanation and FAQs regarding their specific terminology. Some forex signals come in simple buy/sell at price messages. Other forex signals come in pie charts or line graphs.
Other than the traditional buy/sell signals, you may receive any of the following forex signals:
OB/OS-- Means that a currency has been overbought or oversold when an indicator reaches a certain level.
Volatility—This is a statistical measurement that is usually found in a line graph. It measures the frequency and tendency of a particular currency pair to have high rises or deep falls within a relatively short period of time. This basically examines how uncertain a foreign currency exchange pair is.
Partial Buy/Sell—This is almost a hem-hawing forex signal. Basically, it is saying to buy/sell some of the currency, which minimizes risk in highly volatile currency pairs, but it is also saying to hold some of the currency because a highly volatile currency pair may swing the other direction at any time. This will likely be accompanied by a Volume indicator which creates more flexibility in closing.
SL/TP – This is stop-loss or take-profit. This is the point at which the prediction system initiates a suggestion to stop losing in a downward trending currency pair or to take the profits generated in an upward trending currency pair.
Please read the forex signal service's instructions and guidelines carefully as they may or may not use this exact terminology. This is only an example of common terms used by many, but not all, forex signal services.
Forex Alert Signal
The terminology used in the forex alert signal varies based on the forex alert signal software service. The forex signal service you choose should offer consistent and verifiable forex alert signals that are based on technical analysis.
There is a buyer beware caution that any company offering 100 percent guarantees, or no-risk options, is likely not being forthright with their forex alert signal service. Furthermore, if they do not offer time-intervals forex alert signals you may want to explore other options. Most forex alert signals are very simple to read with easy to understand information. These forex alert signals are commonly issued suggestions, such as buy, sell and so forth. It is important that you understand these are suggestions, and while the forex alert signal may offer specific instructions it is up to the user to make the final decision and therefore the burden of risk lies solely with the user/trader.
Usually the forex signals can be delivered on an hourly or daily basis, and with a few companies on a weekly basis. Forex alert signals are mathematically generated and electronically administered, which means that they are also very time-sensitive. If you plan on acting on a forex alert signal, it is a good idea to do so in a relatively quick manner, but also double check currency charts to be sure the forex alert signal is appropriate. Look for forex alert signal services that report trades as they occur and deliver subjective information. Be wary of any forex alert signal that comes from a company that does not offer trade reports or seems to have additional ‘invisible' rules.
A forex alert signal does not need special software or hardware to work. It is the same as an instant message, email, or telephone call. The difference is that these are mass-communicated (except the telephone calls).
To read a forex alert signal, first understand that these are simple and quick suggestions regarding forex currency trades, and not definitive instructions. You have the power to hold, trade, buy or sell your stocks based on the information you receive. A forex alert signal is usually very easy to read. For instance, if you are trading the Brittish Pound (GPB) and US Dollar (USD), you may see a buy/sell forex alert signal as the following (example ONLY):
Gpb/Usd buy at 1.2980 stop loss at 1.2932 take profit at 1.3020
Gpb/Usd sell at 1.2932 stop loss at 1.2980 take profit at 1.2892
The Forex Signal Service
Forex signal service works because it allows a trader to monitor trends without constantly checking the computer. Basically, a trade signal is generated from a forex indicator and technical analysis. It is then sent to the trader's mobile phone via text message, e-mail, or a telephone call/message. The forex signal service monitors and researches foreign exchange market trends for you and delivers the trends and signals directly to you. Forex signal service is a paid subscription service offered by brokers, firms, and forex analysts. Many forex signal services offer free trials. The main benefit of a forex signal service is that the service analyzes forex trading signals for you, which saves time and resources.
Forex signal services should be chosen based on their track record and the technical analysis indicators used. It is also important to note that most forex signal services operate only using the base currency pairs: EUR/USD, USD/JPY, GBP/USD and USD/CHF. Specialized forex signal services may also offer signals for the currency pairs that are not common. It is therefore important that you know what currency pairs you are trading and at what frequency prior to signing up for a forex signal service.
The Best Forex Signals
Even the best forex signals are not perfect indicators, but they exist so that traders can make an informed decision. The best forex signals use technical indicators that are derived from price data analysis. These technical indicators are generated using mathematical formulas that consider price and trends. Thus, they deliver a view of the market. The best forex signals are used to indicate the times at which one enters or exits the forex market. In short, the best forex signals give traders, brokers, and dealers a type of script to follow in trading.
The popular signals are: crossing signals, oscillators, thresholds and conditions.
Forex signals as crossing signals exist when two indicators ‘cross' on another or the forex signal price indicator crosses another price. This is an easy to see chart ‘cross' that is prevalent. Forex signal oscillators occur when price indicators move in a positive or negative manner between two fixed values. The forex signal thresholds occur when a price reaches a certain value or a technical indicator reaches a specific level, such as increase or decrease in Federal Reserve funds. In forex signals, conditions are used when two price indicators create a relationship through the technical indicators.
Enter Or Exit The Foreign Exchange Market
The foreign exchange market is constant, volatile, and inconsistent compared to other markets. Trading in forex has increased risk when the trader uses too much leverage. Therefore, the only time you should enter a foreign exchange market is when you have done adequate research and funds are available to trade. Research regarding the technical and fundamental analysis that occur will help you decide on the correct time to enter the market. The time of entry is important to minimize risk, and that is the main reason why research is so important. A trade should be timed correctly based on the technical analysis of the current market situations. Furthermore, entering the foreign exchange market can occur at any time, as can exiting.
Before you enter the market, you will want to make sure that you have the money to lose, and not money that is necessary for survival. That is not to say that you will lose money, but there is risk and it benefits new entrants in the foreign exchange market to be prepared to lose money. Also, be logical and level-headed. Many a millionaire has lost a fortune simply from the exhilaration of trading and making the ‘big score.' So, take some mental preparation time before you enter the foreign exchange market.
Commit to doing research prior to entering the foreign exchange market by learning the trends of the money market and understanding how the foreign exchange signals work. Set a specific time frame for your first trading experience. This way, you will be mentally prepared to leave the market. To set a specific time frame, spend time understanding the commitments of your time it takes to enter and exit the market. Can you commit to intra-day trading, which requires hourly examination of price to value changes? Perhaps you prefer a more long term approach over days or weeks. In either case, the foreign exchange market signals are based on time sensitive data — in hourly, daily, weekly, monthly, and annual technical analysis. Use these technical analyses to time your entry and exit in the foreign exchange market by recognizing market expectations. The most important advice for entering or exiting the foreign exchange market is: if you are unsure or hesitating, then observe prior to making a decision.
Types of Available Forex Signal Software
Forex signal software is nearly as vast as the forex currency exchange market is. Forex signal software is nearly always available for Windows, Linux, and Mac users. There are few limits to the compatability of forex signal software. However, since forex signal software delivers generated messages, charts, and graphs directly to the computer or other electronic interface, it is important to have high speed Internet access (DSL, satellite, or cable). This will prevent any slowing of the forex signal software updates. Some forex signal software will also operate continuously as an add-on to the computer's operating system. Others will be electronically delivered as text and graph images. It simply depends on what you are comfortable with and which forex signal software you choose. The good news is that unlike some software, forex signal software is almost always easy to navigate, use and update. This is because forex signal software is nearly always a paid service. If the customer is not happy or not able to use the forex signal software, then the service provider will not be able to stay in business.
Some forex signal software is actually integrated into a forex trading platform. FX Club offers this method through three different trading platforms which also include forex signals through continuously updated tips, charts and graphs:
IDS Original Forex Trading Platform
This is a simple-to-use trading platform for beginners with intergrated Dow Jones News and tick-by-tick charts. Perfect for those who are new to Forex trading.
Rumus 2 Forex Trading Platform
Forex Club introduces Rumus 2, which allows you to operate with multiple accounts, and "trade on the charts," as well as design your own workspace
IDS Mobile
This is the same as the IDS Original (beginner) software, but offers live updates on Windows Mobile 2003/5.0 supported mobile devices or PDAs.
Forex Trading Signals
The most common forex trading signals are generated from MACD, Stochastics, and RSI.
The Stochastics forex trading signals are indicators of trend momentum based on the relationship within the high and low ranges over a specific period of time. The forex trading signal is a buy signal when the closing levels of the plot lines are near the top, indicating accumulation of value. It is a selling forex trading signal when the plot lines close near the bottom ranges, which indicates distribution-loss of value. Like the MACD, this is an oscillating forex trading signal, but generally does not create plot lines for other trading indicators.
Relative Strength Index generates the forex trading signals by comparing the volumes of a monetary units gains and losses over a period of time, usually 14 periods. Periods can be defined by hourly, daily, or monthly and annual trading periods because the forex market runs continuously. This forex trading signal uses a range of zero to 100 based on a singular parameter and the number of time periods. Basically this works because it shows how the average gain compares to the average loss, and the difference between gain and loss generates a numerical indicator of positive or negative one.
