Any beginning trader who decides to try their hand at forex trading will quickly realize the benefits that come with using any and every tool available. As tools, they should help move you forward as a trader by helping you to understand and build your own strategy. Creating and testing your own strategy will undoubtedly help you in the long run.
As something that can dramatically elevate your trading game to the next level, forex trading signals are something beginners cannot afford to ignore.
In short, fore trading signals are pieces of information electronically delivered via email, text message, social media, or through a dashboard. This data directly relates to the forex market, and acts as a great way to find profitable trading opportunities you would have otherwise not discovered.
Trading Signal Formats
Forex trading signals are generated and delivered by the forex signal provider. While some signal providers offer an automated feature that allows their trade ideas to replicate on the subscriber’s platform, most services require you to manually place the trade onto your own platform. Both manual and automated signals have their own advantages and disadvantages, and what you end up using will depend on your own personal goals as a trader.
Common Types of Forex Signals
There’s various types of forex trading signals out there. It’s important to understand what each signal type is and how it works to avoid mistakes. Here are the most common signal terms you need to know in order to make forex signals a profitable investment.
- Action: This signal term is basically a call to action telling you do something specific, such as place a direct buy or sell order.
- Stop Loss: Your stop loss is your exit point. Stop losses protect you from losing more money than your strategy, or in this case the signal provider’s strategy, can afford to lose.
- Take Profit: Your take profit level is a price point that, when touched by the market price, closes your trade order and saves your profits.
- Current Market Price: The term Current Market Price is used by signal providers to indicate the price level they’re placing an order at. This price will probably be different than the price you see on your own charts because of the time delay.