Forex trading signal providers send alerts to traders with specific entry and exit specifications for potential trade opportunities. They send alerts when the market conditions are right for a trader to be entered into.
For technical analyst signal providers, trading styles may vary from short-term 5 minute charts to longer term 4 hour or daily charts. Other signal providers may be strictly news based fundamental analysts or a combination of both fundamental and technical.
Trading signals can be very useful for traders when it comes to identifying potential profiting opportunities in the markets which they otherwise may have missed.
Here are 5 top tips to pick the best Forex trading signals.
Tip one: Select one that gives you signals in time
Many currency trading signals can be very effective and can help you to make consistent profits from the markets. Nevertheless, you have to make certain that they can deliver their trading signals punctually since timing is crucial for currency trading. Always remember that their timing will be highly impacted by the way they deliver the signal to you – for example, emails may take longer to reach you than pop alerts.
Tip two: Providers who offer several ways to get your signals
Another important thing to consider is the method by which your Forex trading signals provider will deliver the trading signals to you. If you cannot commit to spending all day at your computer, you may prefer to get your alerts via your mobile phone rather than via email. Similarly, if you are on your computer for most of the day, you may be better off receiving you alerts as a pop up notification or email. Be sure that the provider that you pick fits your trading needs and lifestyle.
Tip three: Check the performance of the provider
Make sure they post their current and past performance online with complete trade details from entry price to exit. Also, use them for a minimum of one to two months with a free demo trading account to test the validity and success rate of the signals your receive. If everything looks good and their trade reporting matches yours and you are profitable, then at that time make the switch to a live account.
Tip four: Find out about who the signal providers are
This one is a must. You’ll need to be able to learn about the traders and the company behind the Forex trading signals you decide to use. Why? Because as far as you know the person behind a site could be a 16-year-old geek living in his mom’s basement (nothing wrong with living in your mom’s basement, but this may not be the kind of person you want to trust with you money and trading career.)
Tip five: Sign up for just a month first
Choosing the best currency trading signal software requires a good amount of research, comprehension of your trading needs, and quite often it just requires you to look around and sign up for a 1 month subscription to a Forex trading signals provider.
This way, you can test the signals you receive, work out what type of delivery method works best for you and see if you wish to continue using the alerts for future trades.
While Forex trading signals can help you find good entry and exit points for your trades, they are never 100% accurate. This is why it is important that you try a few providers out first to see which ones work out best for you and your trading style – using the tips above should help you to do this.
Alberto Pau, (BSc, MSc Mathematics & Finance, London, UK) is a published author and leading risk management consultant in the foreign exchange and commodity markets. After spending 8 years as a market-maker for some of the world’s largest investment banks and managing over $1 billion in assets, he helps traders at all levels make a full time income trading Forex online.