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FOREX SIGNALS: THEIR IMPORTANCE FOR TECHNICAL TRADERS (EXPLAINED)

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FOREX SIGNALS: THEIR IMPORTANCE FOR TECHNICAL TRADERS (EXPLAINED)

WHAT ARE FOREX SIGNALS?

Forex signals are a key factor for all types of traders when considering taking on a position. The key is combining technical factors and fundamentals to achieve the best signals and manage the risk outcome. Forex signal systems are among the most important tools in profitable traders' arsenals.

Short-term signals are generally traded within a timeframe of anywhere between 10 minutes to a few hours, offering between 15 to 50 pips.

Longer-term forex signals are traded between one day and up to a month or even longer, with 70-80 to over 250 pips.

When correctly applied, technical analysis tends to work more than fifty percent of the time, but adding in fundamental analysis gives more comfort and security to the trading opportunity. Some brokers offer a forex signals service.

HOW DO FOREX SIGNALS WORK?

It is not unusual for traders to tend to trade in a specific direction or according to one’s natural preferences. It is essential though, to have an open mind to different, sometimes unexpected, directional trades. This means incorporating a diversity of techniques into your thinking before applying an individual business. It is also vital to consider positional variety should the investor wish to establish a trading portfolio. The opportunity cost should be used, and the trader should be prepared to wait for a strong signal, technical or otherwise, to appear or to give you every chance of maximising your returns.

When the technical analysis may point to a directional move, the price continues to move in the other direction. The mixed signal is usually the result of a fundamental underlying factor.

When there appears to be no option to trade, you can utilise the scalping method to earn small profits repeatedly. An example here would be to identify a trend, wait for a pullback, and then buy when the prices start moving in the trending direction. These types of trades will typically yield 8-10 pips.

When the technical analysis may point to a directional move, the price continues to move in the other direction. The mixed signal is usually the result of a fundamental underlying factor.

These trading scenarios would be regarded, in their purest form, as missed opportunities that should be taken into account and acknowledged as such when a trader is factoring in their decision-making process.

HOW TO FIND THE BEST FOREX SIGNALS?

Using technical strategies can indicate good entry points. However, it is important to keep an eye on potential exit points when executing a trade. This is where fundamental analysis provides the trader with additional information and can enable the investor to hold a position open for more extended periods and thus allow the position to mature into a larger positive move. Therefore, a combination of technicals and fundamentals is optimum.

When considering the technical analysis, the indicators may reach an overbought or oversold level soon after the trade has been initiated. This can lead to the premature closing of the opportunity; however, it gives the trader the comfort of allowing the initial trade to run its course when coupled with fundamental analysis.

The key here is that once a trading position has been placed it is important to give it every opportunity to become a larger, more profitable move while considering a stop loss to mitigate risk.FOREX SIGNALS: THEIR IMPORTANCE FOR TECHNICAL TRADERS (EXPLAINED)

WHERE TO FIND THE BEST FOREX SIGNALS?

Quality forex signals do not just tell you when to enter a particular trade and the trade direction. They also include detailed information on your Stop Losses and Take Profits' configuration. You should also pay attention to time frames.

It is worth having a checklist when considering the best areas to go:

  • Track record of performance of the provider
  • Comparisons to other providers
  • Technical and fundamental signals
  • Educational and learning support
  • Access to free trial/demo account of broker you are considering
  • Time zone of the provider

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