Forex signals can provide you with an easy way to trade the currency market … as long as you understand what you are getting and what to do with it. There are many providers of forex signals out there and not all of the services are the same, so it is important to know what you are signing up for.

Many companies provide forex trade signals or alerts that tell you when conditions are right for trading. In some cases they are aimed at beginners and will advise you on stop losses, profit aims and number of lots for the trade which will vary according to the strength of the observed trend.

Acting on signals like these is almost like using a forex robot, except that you do control the trade yourself. This has the advantage that the final decision is yours, but it also has the disadvantage that you may not be able to act and access the market at the time that the signal comes through, while a robot would do that automatically for you.

If you are comparing forex signal providers with the aim of following their trading plan, you will want to look at their results, if published. This is the result of making trades in the live market based on the signals. It will usually assume that all of the recommendations were followed.

When you are looking at results, keep in mind that they are often based on a standard forex account with a lot size many times bigger than most beginners would start out with. This means that you might only have a small fraction of the profits shown. Also, they will make assumptions about costs which you should check carefully. They may assume a smaller spread than you can expect on a mini or micro account.

Finally, do not be too concerned with recent results, but look at the long term trading profits or losses. Be suspicious of any company that only provides results in the very recent past. Remember that there are no guarantees with forex trading. You could pay a lot for forex signals and still end up losing money. A lot depends on how you manage your funds.

Other forex signals will be less prescriptive and simply announce market conditions or the results of indicators, leaving you to make your own trading decisions. In this case you have a lot more control and of course you need to understand the market yourself in order to make the best use of these alerts. Many experienced traders make use of a service like this so that they can be away from the computer for most of the day without missing good trading opportunities.

Forex trade signals are usually sent by email and/or SMS. Which you prefer depends on you. SMS is better if you check your text messages more often than email, but you may be a long way from a computer when you receive the text. It can be frustrating if you receive forex signals and then cannot place the trade.

Filed under: Forex Signals

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