Forex signals are specific instructions for forex trades. There are many companies that sell forex signal subscriptions, and some of them also offers free signals.
Exactly how to utilize forex signals vary somewhat depending on factors such as the provider and the trading platform. In many cases, it will work a bit like this:
- Be logged in to the signal provider’s channel or open a message sent to you from the provider.
- If you decide to use the signal, copy the information and use it for forex trading on the trading platform.
A forex signal service can be connected to automated trading, making it possible for you to earn – and lose – money without placing any orders manuallly.
- 1 What is included in a forex signal?
- 2 Closing
- 3 How are forex signals generated?
- 4 Exampels of fx signal providers
- 5 Picking a forex signal service provider
- 5.1 Free signals and paid subscriptions
- 5.2 Time
- 5.3 Pick a service suitable for your trading strategy
- 5.4 Risk level
- 5.5 It is okay to use several providers
- 5.6 History
- 5.7 How much information is included in the signal?
- 5.8 How will the signal reach you?
- 5.9 If you are already using a trading platform, take a look at what’s on offer there
- 6 Test-run a signal provider using play-money
- 7 Adjusting fx signals
- 8 Questions and answers
- 9 Forex signal frauds
What is included in a forex signal?
That depends on your choice of fx signal provider and subscription.
Here are examples of points that ought to be included for you to evaluate and use the signal properly.
- The instrument and/or currency pair. E.g. the currency pair EUR/USD or a CFD based on EUR/USD.
- Direction and order type. Next to the recommended price point, you should see BUY or SELL clearly to avoid mistakes when you are in a hurry to implement a signal. Entry price = the price point where you should BUY.
- Price point for recommended stop-loss (SL). Using stop-loss is an important aspect of risk management.
- Forex signal status: Active, Get Ready or Closed. If the status is Active, you can use the singal directly. If the status is Get Ready, you should not use the signal yet. It can become Active soon, but it can also be removed if new information emerges. When the status is Closed, it is too late to use the signal.
Examples of other things that can be included in a forex signal is tables, explanations, market analysis, and comments that make it easier to evalutate the signal and understand how it was generated.
Positions are typically closed by either take-profit or stop-loss, depending on which price point that is reached first.
Some fx signal providers retain the ability to close your position manually. An explanation will usually be left in the comment section to show you why the position was closed without reaching TP och SL levels.
When using a fx signal service, you may receive a new message after the initial one, recommending you to change your take-profit or stop-loss. A recommendation to increase TP is usually because there are indications that the trend will last longer than initially projected and the provider wants to give you a chance to profit more.
How are forex signals generated?
That depends on your provider and subscription.
Many providers use only technical analysis, but there are also those who incorporate fundamental analysis.
Exampels of fx signal providers
- BuySide Global (for the platform NinjaTrader 8)
- Chart Viper
- CoinGecko (for crypto speculation)
- CoinMarketCap (for crypto speculation)
- Forex Signal Factory
- Toggle AI
Picking a forex signal service provider
Here are a few examples of points that can be useful to keep in mind when selecting a signal service provider.
Free signals and paid subscriptions
Some signals are available for free while others require payment.
Many providers will display at least some free signals, to give customers a chance to evaluate their product. This does not always mean that the free signals are of the same quality as the paid ones.
With some providers, you can sign up for a free test period and receive signals that would normally require payment.
Important: Getting something for free feels nice, but this is a situation where going for the free option can actually cost you a lot of money if you end up using low-quality signals just because they are free. You are putting real money on the line, so make sure the product is up to snuff.
Pick a forex signal provider that will be active and generate signals when you are likely to be available for trading, unless you wish to use an automated system.
The more limited your time and availability is, the more important this aspect becomes.
Some providers specialize in certain times during the trading day, e.g. the London-session or when two major sessions overlap.
Pick a service suitable for your trading strategy
Different subscriptions can vary in their usefulness for different trading strategies. Make sure you pick a forex signal service that is suitable for your selected trading strategy. There are for instance subscriptions that cater to day traders and subscriptions that are more suitable for swing traders.
Different subscriptions can have different risk levels. Make sure you pick one suitable for your trading strategy and your risk preferences.
It is okay to use several providers
Sometimes, it is best to stop looking for that perfect provider that will tick all the boxes and instead realize that you need different signal service providers for different objectives. This is especially true of you are employing different trading strategies, trading with different fx instruments, using both manual and automated trading, and so on. One provider can also be excellent for a certain currency pair, but pretty much never give any signals for another of your favourites.
Evaluating a signal service provider based on their self-published history is tricky, since they chose what to publish. Even if they are not outright falsifying anything, they may still be highly selective in how they present the data.
How much information is included in the signal?
Higher up in this article, we have gone through points that are good to have in a forex signal in order to use and evaluate it properly. Will these points be included with this provider?
If a lack of certain info in the signal is a deal-breaker or not depends on your preferences. Some traders are for instance more than fine with not getting any recommended stop loss point, because they always prefer to decide that for themselves. Others want to use automatisation and definitely need a stop-loss to be included.
How will the signal reach you?
How do you prefer to get the signal and is that option available with this provider?
Examples of common solutions:
- Integrated into a trading platform
- Social media
- To your phone through text message, Whatsapp message, Skype message or similar.
- Published on the provider’s site
If you are already using a trading platform, take a look at what’s on offer there
Some platforms come with a free signal service and/or the option to sign-up for a paid service (or services) within the platform. This can be a good and convenient solution, provided of course that the signals are of the right quality and suitable for you. Do not pick a service based only on convenience.
One notable example of a platform where a lot of traders are using signal services is the large independent third-party trading platform MetaTrader (MT4) which is utilized by a wide range of forex brokers. When you are logged into the platform, go to the Signals tab to find out more. A multitude of signal providers are available there and they are all compatible with the platform.
Test-run a signal provider using play-money
You can open up a free Demo Account with a broker and use the play-money to test-run signals from a signal provider that you are interested in using. Some traders dislike “wasting” paid-for signals on play-money trades, but you will waste even more money putting real-money on the line based on the advice of a low-quality signal service.
As always, remember that past performance can give you useful indications, but does not actually guarantee anything about the future.
Adjusting fx signals
If you use fx signals manually (i.e. not for automated trading) you do not have to put them in exactly as they are if you do not want to. Some traders use signals as helpful suggestions, but tinker with them to suit their own preferences better.
Adjusting the size of the trade
- You can adjust the size of the trade to better suit your trading strategy and risk management.
- Some brokers will increase trade size when the deem a signal to be especially trustworthy and decrease trade size when they are more unsure but still do not want to miss out completely.
In order to maximize profits, a signal might recommend you to wait for a long time during a downward trend and not open a position until the price is really low.
As a trader, you might prefer to open the position earlier, to reduce the risk of the market turning up before ever reaching the recommended price point. The purchase price will be a bit higher (and your profit will therefore be a bit lower), but at least you will have a position open when the market begins to go up again.
You can also do the opposite thing. If you have reason to believe the market trend downwards will continue longer, you can adjust the entry price and not buy until the price is even lower than the price point recommended by the signal service.
Stop-loss och take-profit
You can adjust the stop-loss and take-profit points to better suit your trading strategy and risk management.
If you want to decrease risk, you can elect an earlier take-profit point to reduce the risk of the market turning before reaching the recommended take-profit point. You can also adjust the stop-loss point to allow for a small loss than recommended.
If you are willing to increase risk, you can do the opposite. You can put in a higher take-profit point and/or a lower stop-loss point.
A lower stop-loss point can also be useful if you believe that the market will go lower before turning up. With the recommended stop-loss point, your position would be automatically closed during such a dip and you would no longer be in it for the ride up.
It can be helpful to know that some forex signal providers use a fixed number of pips to determine stop-loss and take-profit points. Their recommendations are thus not based on any analysis of the market trend. Experienced traders therefore tend to override these fixed recommendations and put their own SL and TP points in. A trader experienced with technical analysis can for instance notice when a fixed stop-loss or take-profit happens to land right above or below an important level, e.g. moving average or resistance, and adjust to avoid problems related to this.
Closing a position manually
Sometimes, there will be events that are difficult to predict and that algorithms and automatisation will not be great at handling. You, the human trader, might need to step in and close positions manually to get out of the chaos brought on by news events.
Important: Closing a position in the wake of a news event is not always the right thing to do. Especially for more longer-term positions, it can be better to adjust the stop-loss and keep the position open while the market panics, provided you have good reasons to believe the market will eventually calm down and climb up again. When the short-term turmoil is over, a lot of traders will regret closing positions manually or allowing their stop-loss orders to realize losses that could have been avoided by simply staying with the position open.
Using the signal to do another trade than the recommended one
The forex market is a complex web and it is also intricately tied to other markets, e.g. the commodity markets. Various factors will impact each other and experienced traders can get really good at noticing patterns and correctly predicting how the cards will fall. Therefore, a certain forex signal might make you realise that there are other trades you want to do as well, even though your signal provider has not spotted en recommended them (yet). It is for instance fairly common for trends pertaining to the AUD/USD currency pair to be observed for the NZD/USD pair as well.
Questions and answers
Are forex signals suitable for scalpers?
A standard subscription for forex signals will normally no work well for a scalping strategy. This is especially true if the trader is not utilizing a fully automated system. If you need to receive, evaluate and manually input a forex signal the opportune moment will already be over for quick-paced scalping.
Do I have to register with a signal provider to get signals?
No, some companies are publishing free forex signals and will display them without requiring a registration.
There are also fx signal services that come integrated with a broker, so you do not need to go through an additional registration process to subscribe.
Can I get fx signals to my phone?
Yes, many providers will send fx signals to your mobile phone.
Examples of solutions:
- Download a special app. Apps are available for both iOS and Android mobile devices.
- Use traditional texting (additional cost may apply)
- Use an alternative method, such as Skype or Whatsapp
What are live signals / daily signals?
When a provider is marketing a service as “live signals” or “daily signals”, they are normally telling your that they generate and send out signals frequently. Exactly how frequently will depend on the subscription and the algorithm.
Forex signal frauds
Regrettably, the forex signal field has become popular among scammers. Many people who are attracted to forex signals are dreaming about getting rich quick without having to do their homework, which in turn make them prime targets for fraudsters willing to sell a dream. If a trader do not understand forex signals, how they are generated and where their strengths, weaknesses and limitations are, it will be easy to sell them expensive snake oil or use their naivete to hijack their trading account.
There are serious providers out there as well, but it will be difficult for you to separate the wheat from the chaff unless you are willing to put the work in and learn about forex trading in general and forex signals in particular.
It is also a good idea to remember that some forex signal providers are simply delivering a product of poor quality. They are not fraudsters by the letter of the law, but they can end up costing you a lot of money if you follow their advice. So, you need to implement techniques to keep both the fraudsters and the low-quality providers away.
Here are few things that are good to keep in mind:
- Do not give others access to your trading account. Signal service providers that need access to your account (e.g. log-in credentials) should be viewed with very suspicious eyes. You have no control over what they will do once they have access to your trading account.
- If you encounter technical issues when trying to get the service to work, do not let this stress you into providing your log-in credentials to the signal service providers. This is a fairly common scam.
- If you have decided to neglect our advice and give a signal service provider access to your account, open up an account with another broker and do not put much money into it. This is still risky because the shady provider might still get access to private information about you while they are logged into your account, but at least you are not giving them access to your main trading account.
- It does not take much to put together a professional-looking site, pretend to be a premium signal service provider and post a lot of “evidence” and success stories.
- If someone had actually invented a signal service that could offer 100% risk-free trading and huge, quick profits, they would not be so eager to sell it to you for $49/month. They would be using it themselves instead and roll around in coins like Uncle Mc Scrooge, or maybe sell it to a huge hedge fund or similar.
- Be careful about sharing private information. It is usually necessary to share private information with your broker, because they need to comply with anti-money laundering routines and carry out Know-Your-Customer checks. This does not mean that you should open the flood gates and start sharing personal info with each and every entity somehow connected to your trading. Why does a signal provider need all this information about you? Will they refuse to take you on as a client if you refuse to provide it?
- Be especially vigilant in stressful situations, even though it is difficult. Scammers like to create stressful situations since they know people are more likely to fall for scams when stressed. Scammers do not want to give you time to sleep on it, discuss the situation with a knowledgable friend, do your own research, etcetera. Yes, the trading world is filled with situations where trading opportunities will arise and then quickly vanish. But there will be new opportunities. You do not need to sign up with this provider this very second, you do not need to jump on this “once in a lifetime opportunity”, you do not need to act rashly because someone is dangling something appealing in front of you or trying to scare you.
- Do not throw good money after bad money. Learn to cut your losses. Read up on the psychological phenomenon called sunk-cost-fallacy. If the signal quality is low or you suspect something is shady, do not hang in there just because you’ve already spent/lost some money. It can be difficult to admit to having misjudge da signal provider, and many traders stay with their provider for far to long because they hate admitting to themselves that this provider was not a good choice.