The forex market gives more signals than other financial exchange markets due to its massive scope, liquidity, the diversity of its participants, and the nearly 24/7 trading sessions. A forex signal is essentially a recommendation to traders about what position they should take on the market at a given time. These signals can be thought of as the traditional stock picks from analysts that are regularly featured on financial new media outlets.
Forex signals are discovered through data analysis and observation, which can be behavioral, fundamental, technical, or preferably a mixture of all factors that affect the market.
These signals are just one component of different strategies that make up more comprehensive trading systems. Just like with stock picks, forex signals have kept up with technology and are now increasingly being produced by automated systems.
The Basics of Forex Signals
The worst thing a beginner forex trader can do is to place an order that is purely based on gut instinct. That would be worst than playing the slot machines or the roulette at a high-stakes casino. Forex signals add some level of caution and efficiency to blind trades. At their most basic level, forex signals are pieces of information that tell traders about an opportune moment to take a position in the market and the steps they should follow with regard to how the specific currency pair performs.
Forex signals are logical conclusions derived by humans, trading algorithms or artificial intelligence systems. Some of the most advanced signals include several scenarios that traders may encounter, but they are essentially recommendations that traders must still evaluate as part of their strategy.
Modern Delivery of Forex Signals
Thanks to the advent of Internet technology, forex signals can now be delivered in real-time via forex software platforms, email, text messages, and even social media updates. Automated forex trading systems or robots can also be programmed to listen to signals and execute trades accordingly. To begin receiving signals, forex traders usually sign up to receive a subscription and choose their preferred delivery method.
In some cases, forex market operators may offer some forex signals as part of their online platform offering. These free signals usually cover only the major currency pairs.