20 November 2013
A Quick Glimpse At How Forex Signals Work
If you are just entering forex trading or thinking about entering this arena, you will find that there are many forex signals upon which trading decisions are made. The Forex market moves, shifts, and trades twenty-four hours a day, seven days a week. The market is volatile and is very hard to be successful in when other types of trading strategies and methods are used.
Many people who are avid traders are working on their computers for several hours each day to make sure that they are trading when a signal indicates an entry or exit point. Because of the fast movement of Forex, entry and exit points can often be critical factors in the amount of revenue or loss that you will incur when trading.
Many people who are just entering Forex employ the services of a signal service provider. These providers send alerts when there is a change in the pairs that you are following. When you decide your level of risk and set your buy/sell points, the provider will alert you when a pair has reached that point. This can significantly lower risk for the trader.
If you are using an online brokerage, you are probably working on a desktop that has a candlestick in the upper left-hand corner of the trading desk. The candlestick signal gives important information that helps you predict price movement, entry/exit points, trend reversals and more. You will want to take time to learn how the candlestick signal can be used to its fullest to help you make successful trades.
The confirmation signal just confirms the direction of the trade. The goal of this signal is to reduce the risk you take on a given trade. Confirmation signals are established with technical indicators, news events, and candlesticks.
A doji is a candlestick signal that alerts you to a possible reversal in the direction of a price. Ideally the doji will have the same close/open price with long wicks on either end.
There are hundreds of signal providers that offer different types of services. These are usually subscription services that charge on a per-signal basis. Some individuals like the signal service providers because using this method takes a lot of the emotion out of trading. However, other people feel that they have only a partial need for a signal service such as when they are sleeping or on a trip.
When looking at the services provided by the signal providers, you will want to think about the kinds of service that you want. When you first begin, you will probably stick with trades that you are familiar with. When a person is making trades with one of the major trading pairs, it is easier to follow news and changes more easily.
Spreading your risk in Forex will be as important as when you are trading in ETFs. You will want to have more of your resources allocated to low and medium risk pairs than in high-risk pairs. In this way you will not lose your entire portfolio is one of your high-risk pairs tank.
The signal service providers provide many benefits to a trader. They are awake when you are asleep and can send alerts when changes occur. This relieves you from the need to be watching Forex signals without taking a break. In addition, using service providers as part of your overall decision-making process will give you another information network from which to draw.