If you have been part of the forex trading world for a while now, you’ve probably heard about forex signals. Forex signals are an essential tool for traders. They can help you make better trading decisions and maximise your profits. Unfortunately, they are often poorly misunderstood by many beginner traders.
Moreover, the UK market is saturated with a gazillion forex signal providers, which makes it a challenging task for traders to choose the best. For this reason, we’ve put together a guide to help you understand what forex signals are, how they work, and how to use them.
In This Article
What are Forex Signals and How Do They Work?
What are Forex Signals?
Forex signals are trading recommendations or ideas on a specified financial asset, to be executed at a predetermined time and price. A forex signal may be based on fundamental analysis, technical analysis, or a combination of both.
Signals contain valuable information about a particular currency pair such as entry price, take profit targets and stop loss price. As a trader, you can use forex signals daily to assist with your trading decisions. Signals can help you determine:
- Which forex pair to trade
- The best time to open/close a trade
- Whether to buy or sell a pair
- How much profit you could make if the trade succeeds
- How much money you are likely to lose
Types of Forex Signals
Technically, there are two types of forex signals that are available to traders. These are:
- Manual Forex signals
- Automated Forex signals
The major difference between manual and automated forex signals is that manual signals are created by an expert trader with knowledge of the foreign exchange market. These professionals analyse the market and then decide what options are the best for trading at that point in time.
Automated forex signals, on the other hand, are generated by complex computer programs that analyse the market based on algorithms. The algorithms analyse market actions and prices in order to send a forex signal.
Some signal providers offer daily forex trading signals for free, while others have a payment or subscription-based model. Payment can vary depending on your subscription plan.
Signal providers usually provide manual and automated forex signals in the form of short messages that are sent via text, email alerts, desktop notifications, or messaging apps like Telegram or Whatsapp.
How Forex Signals Work
Forex signals are a perfect way of getting the latest market information about trading opportunities, but you need to know how they work and trade wisely through careful analysis. As we have already mentioned, forex signals are generated in two ways: automated and manual.
Automated signals are the most popular among traders, mainly because they are created by professional market analysts in conjunction with skilled code developers. These signals use algorithms and proven mathematical formulas to discover patterns and send out trade ideas. Moreover, they utilise technical analysis indicators to observe and quantify trading recommendations.
On the other hand, manual forex signals are generated by professional traders or analysts based on their own technical and fundamental market analysis. The way they do this is by examining historical price charts and trends in a specific forex pair, with indicators and tools chosen based on your trading strategy.
While there is no guarantee an automated or a manual signal will be profitable, both are beneficial tools for beginner traders who are just starting out or even experienced traders short on time. Analysing the markets is often a daunting and time-consuming task for some traders, so daily forex signals can help you decide if you want to enter or exit a position and also help you discover new trading strategies.
Who Provides Forex Signals Services in UK?
In the UK and most other places, forex signals are provided by professional traders, market analysts, or online brokers such as AvaTrade. As we have already mentioned, the signals are communicated to traders via text, email, desktop notifications, Telegram, Whatsapp, etc.
When searching for a forex signal provider, you will find hundreds of them on the web. However, not all are reliable. While some providers aim to benefit traders by giving out sound trading ideas, you are also likely to come across unscrupulous ones.
If you are looking for a signal provider, there are several essential factors you should consider. First, check to see if the signal provider offers details about their success or win rate. A good forex signal provider should have a success rate of 70-80%, meaning that most of their signals are profitable.
In addition, you need to consider the number of signals a provider sends out per day and how fast they take to deliver the information to traders. Moreover, ensure you select a forex signal provider that meets your budget to enjoy your experience.
Most importantly, ensure that the provider is not a hoax and can help you in generating profits. You can do this by checking user reviews on Trustpilot, Google Play, or the App Store.
How to Use Forex Trading Signals
Engaging in forex trading necessitates a firm grasp of its dynamic nature, which involves trading currency pairs and substantial market volatility, leading to potential gains as well as losses. Before entering the forex market, crafting a well-defined trading strategy and establishing a robust risk management plan to safeguard your investments is essential.
Moreover, exercising caution is imperative, as there is a risk of encountering forex broker scams and unregulated platforms. Since this market operates 24/7, always invest with what you can afford to lose. Plus, stay informed about market developments and continuously educate yourself to make well-informed trading decisions.
Remember that past performance does not indicate future results, and there are no guarantees of profit in forex trading.
Signals are an integral part of forex trading, especially for beginner traders. The sheer size of the scope of the foreign exchange market and the hours of analysis and research that comes with it may be overwhelming to many people. Forex signals save time and energy, and you can use them to strengthen your confidence when trading.
Using forex signals is a simple and easy process. First things first, you will need to find a trusted and reputable forex signal provider. Once you have found and registered with a UK forex signal provider that suits your needs, you will receive signals via email, text, or via messaging apps. When you are sent a signal, you will then use it to place a trade. Most providers give clear instructions alongside the signal.
Forex signals can be helpful for beginners, but it is necessary to choose a trusted forex broker in the UK with a pool of reliable trading signal providers. Make sure you share common trading approaches and goals, as you are going to share both losses profits and losses.
Keep in mind that a reliable signal provider will never guarantee you a 100% win rate since they know that trading is risky.
Example of a Forex Signal
When you receive a forex signal, it may look similar to this: BUY GBP/USD @ 1.3820, SL @ 1.3800, TP @ 1.3850.
In this example, the signal provider is recommending you buy GBP/USD at a price of 1.3820. In addition to this, the provider is suggesting a stop-loss of 1.3800 to help minimise potential losses.
The last part of the signal is ‘TP’, or total profit. TP is set higher than the recommended trade price and indicates when the provider thinks you should take your profit and close the trade.
Key Features of Forex Signals
A forex signal may look brief and basic, but there is a lot of useful information contained in those few lines of data. The signal begins with either a “Buy’ or “Sell” designation after which the currency pair is shown. In the example above, the signal begins with a “Buy” designation.
At the end of the first line is the strike price. In most cases, signals also have a second line with orders such as stop loss (SL) and take profit (TP). Other orders even have trailing stop (TS) values, but this is very rare.
FAQs
Forex signals are only worth it if you purchase them with the intention of using them to make money, and their cost is considerably lower than the average returns generated by following them.
You can get free forex signals from the providers we mentioned earlier and from many other sources on the internet.
You can learn to trade signals from an expert trader who is making money trading forex.
The best forex signal providers in the UK is AvaTrade. However, if you want to use other providers, ensure to check out their performance records to know how profitable their signals are before making any sort of commitment. Check their reviews and ratings on Trustpilot, Google Play, and the App Store.
Conclusion
Forex signals are alerts or notifications that are sent to traders to notify them of potential trading opportunities. There are several types of signals and they can be sent through various channels such as email, SMS, or social media. They can help traders and investors to make accurate forecasts, minimise risks, and maximise profits.
However, there are some risks associated with using forex signals, so it is important to use a transparent and reputable signal provider. Overall, the best forex signal provider should suit your needs and guarantee a worthwhile trading experience.
