What Are Trading Signals?

If you are new to trading, it is important that you make the right decisions. One wrong trading move can drastically harm your trading account while a good move can bring great profits. There are two key components which are necessary from the start: a combination of a winning equity management strategy and a well-planned trading system for whatever you are trading, whether it be forex, stocks, indices or commodities. The absence of these two factors will ultimately spell disaster for an investor or trader.

A key feature that you need to have access to is trade alerts or “signals.” Trading signals are very important. They are indicators that let you know when it’s a good time to buy or sell an asset. They provide you with insight as to what’s going on in the markets without the necessity to monitor trends throughout the day. What are trading signals? Normally referred to as entry and exit signals, they are the result of a vast amount of in-depth analysis, research and tracking that the different trading systems engage in on an ongoing basis.

Trading signal providers are available to provide signals around the clock. It is advisable to try a demo account first for practice so that you can create a strategy that works for you. You can then add trading signal services as a useful tool in your trading. Most brokers offer signal alert services, either themselves or through third party arrangements. If you trade either with a demo account or a real account the signal service is free.

Signals can be e-mailed or texted to your mobile phone, or you can simply visit the broker’s website to get the signal. The services also vary in how they present information to you. Some will provide live charts to give you more insight and a head’s up as to what is happening in the market. You can receive the signals, and then decide if you want to buy or sell.

There is also software available known as ‘forex robots’ which claims to be able to identify entry and exit points automatically for all the major currency pairs. Forex robots at first seem like a low-cost option, the idea being that you load them on your computer, set them up and sit back and watch the money roll in. Perhaps not surprisingly however, they have not lived up to those expectations. Successful traders generally do not rely on software to generate the signals that they trade upon. They have spent hours on end fine-tuning their technical analysis skills using price charts and the many analytical tools available to be able to identify profitable entry and exit price points.

This is a highly competitive arena so remember that a well-planned trading system and subscribing to a reputable broker with a signaling feature is paramount to your success or failure in the currency exchange market.