Forex Signal Types and How to Use Them

Forex Signal Types and How to Use Them

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Forex Signal Types and How to Use Them

Forex trading is a highly potentially lucrative endeavour. As of April 2019, over $6.6 trillion worth of trades was exchanged in it. This immense size of the market ensures that liquidity is never a problem and that slippage is a rarity. As a result, orders are always instantly executed at stipulated prices in it.

However, sadly for many participants of the market, making a killing is still a herculean task. In fact, most market reports indicate that at least 90% of them struggle, fail, and eventually quit for another business or trade in another, more seemingly predictable financial market. Evidently, earning a living with Forex is not as easy as you would think.

Consequently, it is always suggested that newbies especially should ensure they get a tool that can enhance their success before they trade it. One such tool is Forex trading signals.

What are Forex Trading Signals?

Forex signals are those dedicated attempts made by human analysts and traders or with the aid of computer programs to identify profitable opportunities in the Forex market. There is only one goal that they want to achieve: it is to improve the profitability of their users. Forex signals have grown in popularity in recent years.

So, what accounts for this increasing popularity? First, before the advent of the internet, the Forex market was mainly the exclusive playground of institutional investors. It was almost unheard of for ordinary individuals to participate in it, as we have today. As a result, banks, pension companies, mutual funds, and hedge funds were its major players.

Now, retail trading, that is the type of Forex trading conducted by regular individuals, accounts for almost $400 billion of the total daily market trading volume. However, in spite of this market having been opened up for retail trading, the high failure rate of retail traders has made it obvious that it is hard for them to rise above the state-of-the-art technological and professional edges of the institutions.

And also considering that at least 90% of them fail, it is indeed a big problem that needs to be solved. With Forex trading signals, the solution has been initiated and has even been made to be readily available.

Forex Trading Signal Types

While Forex trading signals have continued to prove to be a viable solution to the high failure rate of retail traders, they are still inaccessible to many retail traders partly because of their lack of understanding of them. It is understandable that as a beginner, it can really be hard initially to wrap one’s head around the essence of signals and how to actually use them. So, the situation should not be surprising.

The first part where beginner traders tend to be confused is the right one for them to pick. Indeed, there are types of Forex signals, which include manual and automated signals. Each of these two has both unique benefits and disadvantages. Hence, indeed, before they choose the type to use, they should really first understand what the two types are, their benefits, and their disadvantages.

First, what are manual signals? Manual signals are those Forex trading signals that human analysts and traders working for financial websites and blogs, investment and brokerage firms and other similar trading-related establishments, generate. They are communicated to their subscribers, via easily accessible channels such as social media (e.g. Facebook, WhatsApp, Twitter, and even Instagram), email, SMS, and by RSS feed, who then execute them on their trading accounts.

Automated signals, on the other hand, are generated by software. The software, also known as expert advisors (EA), analyse the market using historical price data to find opportunities which the subscribers do not even have to execute themselves. In fact, users of automated signals never have to do any analysis or interpretation. Robots do everything for them, even including the execution of the recommended trades. Automated signals are considered to be so successful because they reduce the inputs of human analysts, which can be emotional sometimes.

Which Type Should You Use?

First, it is important you know that there is no best signal type to use. The one you should use should be the one that fits your personality, your existing trading style, financial capabilities, and your personal preferences. All the different types of signals have their peculiarities and your choice should depend on what you want. For example, if you do not have time to analyse as well as even execute your trades yourself, then automated signals should be your choice.

However, if you want to use signals that are only based on third-party analyses but still give you the flexibility to interpret them and also place your trades yourself, manual signals are the way to go. But remember that with them, even though you will be getting more flexibility than with their automated counterparts, you might find out that you will have to be committing substantial amount of time to their analyses and execution.

Next, you should ask yourself what your skill level is. If you are a beginner Forex trader, for example, you might want to go for automated signals because of their convenience and ease of use. You will not have to analyse or interpret anything again; all you will need to do is just to sit back and watch opportunities identified in the market being automatically executed. In this regard, automated signals are better advised than manual ones.

Next is the associated fees. Automated trading systems tend to require only one-time payments. Those fees are usually discretionary. So, they can be as high as four figures sometimes. Manual signals work on a subscription basis; you choose the provider you want, subscribe for the signals, and then pay a fee. However, there are some manual signals that do not even come at any fee.

1000pipBuilder is here to make your choice simpler to make. They are a provider of independently-verified, reliable signals which are generated from a variety of strategies such as trend capture and momentum trading. The high accuracy of those signals has endeared them to many users and has also continued to attract new ones. Hence, you might want to become a user, too. You can subscribe to their signals.

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