The Different Types of Forex Trading Signals
If you ask a majority of traders about how they make informed forex trading decisions, it’s likely that they’ll mention trade signals. Thanks to the growing popularity of online forex trading services, trading signals are having quite a moment. Even so, it seems like there’s a lack of awareness on the types of signals. Many beginner traders assume that signals are automatically generated using algorithms, but this isn’t always the case. So let’s look into the different kinds of signals, and what makes them different from each other.
Entry/Exit Trading Signal Services
As a trader, you’re surrounded by plenty of fantastic opportunities on the market, like wanting to enter a trade when a price reaches a certain level. And in a dynamic market like forex, you can’t count on keeping up with rapidly changing trends. Otherwise, you risk missing out on a good opportunity to enter a trade. So if you want to enter a trade, you can set the parameters on a signal, so you automatically enter a trade once the price reaches a specific level.
Similarly, exit signals help you prevent a loss by providing you with an opportunity to exit the trade as soon as prices drop below a certain level. Just like with entry signals, you can set specific parameters and automate the signal.
Paid/Free Trading Signals
Another common classification of trade signals is that they’re either free or paid. There are plenty of trading signals services that provide free signals, but at the same time, a select few will charge you a premium price for paid signals. Nevertheless, remember the old saying – there’s no such thing as a free lunch. Besides applying to all domains, it also applies to the forex market. So even though you don’t pay for free signals, you want to avoid incurring a loss because of low-quality signals. And since there’s a lack of regulation, just about anyone can start developing trade signals. Of course, it doesn’t mean that all free trade signals are bad. Rather, you should carefully consider before following a signal.
Then, there are paid market signals, which take their input from the best sources, and promise to deliver reliable information. You also get a bunch of other perks, like access to an application and other supported platforms. In this way, it’s very easy for you to follow suggestions that paid trade signals provide. Plus, they give you some extra information so you can build your knowledge about the market, which includes concepts like risk management.
Also see – Trading Tools:
Automated/Manual Forex Signals
Last but not the least, you have manual and automated signals. There’s quite a lot of debate surrounding this category, since each one has its perks. Most trading signal providers rely on algorithms and bots to come up with automated trade signals. These are arguably more effective since they’re not based on human emotion, but their efficacy highly depends on whether or not the developer is an expert on the forex market. This explains why the best automated trade signals require you to pay, and free ones don’t live up to your expectations.
In manual signals, you can build your own strategy, and the signals will help confirm your analysis. And although algorithms and bots can develop the necessary knowledge to be more efficient than a human, they’re only effective if they’re developed by an expert on the market. That’s few traders prefer manual signals that require them to conduct their own analysis and research on the market. Not to mention, the human intelligence factor ensures that you don’t trade blindly. Rather, you spot when the market isn’t operating as it usually does, which helps you modify your strategy.
Bottom Line
This goes to show how diverse and unique the variety of different trade signals really is. By choosing the right kind of trade signals for your preferences, you can ensure to make a better profit. Just make sure you’re approaching a reliable trading signal service.
