What are Forex Signals and how to use them?

The international Forex currency market offers excellent opportunities for earning. However, in order to get really solid profits, you need to understand the current situation very well and be able to make accurate forecasts.

To do this, you need to either spend a lot of time on in-depth research, or use a special tool that will help automate trading, minimize losses and maximize income. The article talks about Forex signals, the benefits of using them and how to find reliable providers.

Forex indicators and it's work?

A Forex signal is a clear indication of the moment a trade is made for a particular currency pair. The use of such a tool helps to quickly respond to the current situation, makes it possible to protect assets from drawdown or, conversely, open a promising position in a timely manner.

In general, the Forex indicator can be a ready-made trading offer, where the following parameters are indicated:

The pair on which the transaction is made. As a rule, currencies with high liquidity and, as a result, having a small spread are chosen. This is done so that the trader can easily make a deal at the required price. 

Forecast for a price change - an indication of entry or exit. If the signal shows that the value of the asset will increase, it is profitable to buy it for subsequent resale. Conversely, an asset that is expected to fall in price should be put up for sale in order to be acquired later at a lower cost. 

Entry or exit price, stop-loss and take-profit. The entry or exit price shows the most favorable moment for opening or closing a position, respectively. Stop-loss automatically protects the trader from possible serious losses in the event of an unfavorable transaction. Take-profit allows you to automatically take profit.

Or Forex indicators can be graphic constructions (for example, lines, histograms, their combinations, etc.) superimposed on the chart. In this case, they clearly show the trader the possibility of entering the market or exiting the transaction. But the decision on the moment of investment must be made by the investor himself.

Forex signals can be created in two ways:

Using manual mode. In this case, the analysis is performed by a person who has extensive experience in trading. Such a trader manually analyzes currency exchanges, uses the techniques of technical and fundamental analysis, and when he finds a great investment opportunity, he creates a trading offer. For his work, a professional requires a good reward.

using automated algorithms. Automatic calculation of Forex indicators using artificial intelligence and machine learning technologies is used most often. An automated algorithm turns out to be preferable to manual calculations due to the ability to process huge amounts of data; work around the clock without breaks for lunch or sleep; lack of overwork; inability to make irrational decisions based on emotions. In addition, automated algorithms can be used either for free or for a fairly modest fee.

Forex trading signals can be provided by the provider in two modes:

Fully automated: With this option, transactions are concluded automatically upon receipt of a trade offer and the achievement of the conditions specified in it. The mode is suitable for investors with extensive experience, who are well versed in the market and make a huge number of transactions daily. 

semi-automatic: This mode is offered by most indicator providers. Trading offers are automatically sent to the trader, and the investor decides on his own which of them to apply and which to refuse. After that, the trader independently places an order with the broker. This is suitable for beginners and experienced both traders.

Best Forex Signal Sources

It is very important to choose a proven supplier and not:

A scammer who allegedly distributes free tools, but in fact profits from overly gullible people, testing "raw" strategies on other people's wallets. 

Pustomel, who chats on the forum or on social networks and does not bear any responsibility for providing false information. 

A dealer who works according to a "black" scheme and therefore is directly interested in the trader making a bad deal and losing his money. 

A reliable and responsible source of Forex indicators is the Capital.com platform. The company provides a wide range of technical analysis tools and gives detailed information on how a particular indicator was developed, in what situations it is better to use a signal. If a trader has questions, he can contact technical support, and experts will explain incomprehensible points.

Here are just some of the Forex indicators used on the Capital.com broker platform:

moving average: This signal shows the average value of an asset over a given period of time (it can be either minutes or months), which allows you to smooth out the “noise” that was formed due to random price changes. 

A simple moving average (SMA) is calculated as an arithmetic average:

for this, the closing prices of an asset in given periods of time are summed up and then divided by the number of periods. In this case, all prices (both old and new) have the same weight. The use of moving averages in technical analysis began at the beginning of the 20th century. Using this indicator, you can evaluate the overall picture and make a decision to buy or sell an asset. If the current market value of the currency is above the ascending moving average, then a signal is given to sell the asset. And if the price falls below the descending moving average,

1. Exponential moving average - EMA:

It differs from the average discussed simple moving above in that all closing prices of a currencies have different weights. The latest data has more weights then the initial data has less weights. Therefore, with the help of EMA it is easier to react to recent price changes. This indicator was first used in the 1960s. The exponential moving average is especially useful for detecting short-term changes in the value of currencies, finding the best entry and exit points for short positions. While a simple moving average will help to more accurately assess the long-term prospects.

2. Divergence Oscillator & Moving Average Convergence– MACD:

Oscillators include signals between two extremes that changes, that is, in theses places on the chart where the price of an asset reaches the limits value ​​in a given period of times. The oscillator fluctuates in the specified interval, and its position shows whether the currency is overvalued or undervalued, depending on whether the oscillator is closer to the upper or lower limit. 

The MACD was coined in the 1970s by financier Gerald Appel. To calculate the moving average convergence and divergence oscillator, the long-term EMA is subtracted from the short-term one. The MACD signal is presented in the form of the following elements - a line that shows the distance between two moving averages; a signal line showing changes in price momentum; a histogram representing the difference between these two lines. A sharp rise in the MACD indicates that that the currency has been overbought and may soon roll back to its normal price. And a rapid fall shows that the asset may soon increase in value.

3. Relative Strength Index - RSI:

This signal is also an oscillator. It was developed by technical analyst Welles Wilder Jr. in the 1970s. Relative Strength Index is the best for measures the price movement speeds. The range s of RSI from 1 to 100. A currency is considered overbought if the Relative Strength Index is above 70 and oversold when the RSI is below 30. RSI works well as a lead and allows you to make a winning trade sooner than with other oscillators, however it often gives false signals.

Fibonacci levels: The Fibonacci sequence (0, 1, 1, 2, 3 and beyond, where each next number is equal to the sum of the previous two) was formed in the 13th century. With its help, many processes in wildlife are described - the arrangement of branches, leaves, petals, the placement of scales of cones, sunflower seeds, the twisting of mollusk shells, and so on. But it was only applied to finance in the 19th century, when Charles Dow noticed that the fundamental Fibonacci ratio between neighboring numbers, or as it is more commonly called the "golden ratio", is observed when adjusting the value of assets.

Now this signal makes it possible to predict the trend reversal and the degree of correction. Therefore, traders using Fibonacci levels can find profitable positions during a downtrend to sell a currency for the purpose of subsequent redemption, or during an uptrend to buy an asset.

Other sources of Forex indicators

When choosing a Forex signal provider, the following factors should be considered:

Source reliability: Of course, no supplier can guarantee that their indicators will be 100% correct (and if someone gives such guarantees, then he will definitely turn out to be a scammer). 

However, it is enough for a trader if most of the Forex signals bring profit. Therefore, it is important to choose a source with a proven track record and extensive analytical capabilities.

Availability of different Forex indicators. Usually those trading strategies that are based on the use of several signals are more successful. Because of this, it is important that a trader be able to obtain various Forex indicators and choose from them the most appropriate for the current environment.

Publication of analytical data that justifies the use of a particular signal. If the supplier claims that he has some kind of secret knowledge and offers to blindly trust him, then with a high probability he simply takes trading offers “out of the blue”. It is important for an investor to understand how and why a particular signal is formed, and in what cases it is better to use it.

The cost of indicators in case of buying paid Forex signals. Too high a price can eat up all the profits. And if losses occur, the supplier will still not compensate the trader for the loss.

In addition to Capital.com, you can rely on the following sources of Forex trading signals:

AvaTrade platform: The broker offers the most popular technical analysis indicators, talks about strategies for using several Forex signals at once to improve the accuracy of forecasts, and provides traders with the opportunity to trade automatically without personal participation. At the same time, automated trading with copying the strategies of successful professionals is free. 

Traders Elite Forex Signals: A fairly popular Forex signal provider works both online and via email notifications, but does not support the Pakistani language. This provider offers a large selection of not only popular Forex indicators, but also less popular ones, which is why it is more suitable for experienced traders. 

The Learn 2 Trade platform: The service provides an opportunity to receive weekly free Forex signals via Telegram, as well as notifications of important economic events that can affect the foreign exchange market. The site also offers a paid subscription to daily Forex indicators. In this case, the trader will receive 2-3 complete trading offers with an entry price, prescribed take profit and stop-loss, detailed charts. But the process is not fully automated, so the trader will have to make the decision to conclude a deal on his own. 

Pip Chasers: This English-speaking provider also offers both free and paid subscriptions to Forex signals. In addition to technical analysis tools, the service also gives traders the opportunity to explore fundamental analysis tools. 

eToro platform: The site offers the Copy Trading service - copying the operations of experienced professional traders. The platform supports the Russian language and will be useful for beginners. But for experienced traders, it is of little use, since the site does not have advanced tools for in-depth analysis. 

We Talk Trade: The site sends signals for free with an average success rate and sends instant alerts. And indicators with a high success rate, Copy Trading strategies and round-the-clock technical support are provided for money. 

Forex Signals: The supplier has been successfully operating since 2012, providing both free materials and paid services, the latter being divided into three levels - from beginner to pro. The analytics opened by the platform is extensive, it is possible to watch live how professionals are trading, you can use Copy Trading. But all materials are published only in English.

Pros of Using Forex Signals

By trading with Forex indicators, you will be able to:

Minimize the negative impact of the human factor. A trader can feel bad, want to sleep, think about foreign objects, and because of this, miss important information, make mistakes in calculations, make a bad deal. And when using Forex signals, such errors will disappear. 

It is much faster to learn to notice the opportunities that open up and to correctly evaluate your actions. For beginners, the use of the Forex indicator can be compared to the use of a modern sports simulator. Only not the muscles will be trained, but the practical skills of Forex trading. 

Expand the number of traded pairs. Even experienced traders cannot keep track of fluctuations in the rates of many currencies. Therefore, investors have to concentrate on only a few currency pairs. And Forex signals will help you track many transactions and choose the most promising ones.

It is easy to set up trading in automatic mode. A trader can be at work, study or relax, and at the same time continue to earn on the difference in quotes of currency pairs.

But in order to reveal all the advantages of Forex indicators, it is important to use them correctly:

If a trader decides to trade only with the help of signals, he should follow all the recommendations and open the proposed number of trading positions. In this case, with a high probability, a smaller part of transactions will be unprofitable, and a large part will be profitable, which together will lead to an increase in the deposit. If the investor begins to open orders every other time, then the strategy may not work due to the rejection of profitable transactions. 

You cannot apply Forex indicators calculated for a specific currency pair to another asset. Although some financial assets behave similarly, they are still not identical. And what turns out to be a winning strategy for a certain currency may turn out to be a loss for other pairs. 

Since trading with the help of Forex signals is carried out with a large number of orders, it is important for an investor not to invest too much money in each transaction. If a major operation turns out to be unprofitable, there may simply be no money left on the deposit to conclude subsequent profitable transactions.

It is also worth remembering that it is always better to test the operation of Forex indicators on a demo account first. And only after obtaining satisfactory results, you should proceed to active trading on a real account.