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Understanding Forex signals

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Signals exist everywhere in life. In personal life, we pick up signals when our actions are acceptable or not. In conversation, we pick up signals that we are going too far with a joke or we are talking too loudly. Signals on the railway tell an engine driver when it is safe to proceed. Sensible drivers give clear signals and respond to those from other people. Forex traders need, give and receive signals so it makes sense to know exactly what a signal in trading means and the ones that you need to look out for.

So, the first question is what constitutes a Forex signal? When you get a strong hint, you might even say a recommendation, which could come from a flesh and blood analyst, from specialist software or from a trading robot. In that signal, you are going to receive information for you to involve yourself in a trade on a pair at a particular price and time. The signal will come to you in real time and you may receive it on SMS, Twitter, on a website or through an email.

So lets look at the kind of signals that a Forex trader might expect to receive. Firstly there are manual signals which involve many hours in front of the computer screen awaiting the signal to buy one special currency or to sell. A trader has of course to use his intelligence and his experience and a human being can make judgements that are far more sophisticated and show awareness of trends and subtleties with which no automated system could possibly compete. Sometimes his gut feelings will tell him far more than any software what he should or should not do.

With automated Forex signals the entire human element is missing. The software will have in itself to make an interpretation leading into a recommendation about what action should be taken, i.e. whether you should buy or sell a particular currency. Now any software analytical system is as good or bad as the person who programmed it but providing that the programmer was a reach trading pro the automated system will have the advantage of allowing you to manage trading on several pairs simultaneously. As in so many aspects of our lives, the best solution is probably a combination of manual and automated signals.

The question you need to ask yourself is exactly what kind of advice do you want to receive. What would suit your particular individual form of trading? The choice includes paid signals from one expert which can either be delivered through his own analysis or automatically. Secondly there are the paid signals which come from a variety of sources or systems. The third option, frequently regarded as the best emanate from trading software under the management of a Forex robot.

Buyer beware is a good motto. Make sure that you are allowed to fully test the system before you part with your cash and only go with companies that will show you clear, unambiguous and preferably audited results.

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