There are many profitable trading opportunities in the forex market, but unfortunately, we often don’t have enough time to take advantage of them because of the various daily activities. In this kind of situation, subscribing to forex signals Trading is one solution that you can take to still be able to profit from the forex market, no need to stare at the platform 24 hours per day. One of the famous forex brokers is InstaForex, Instaforex review from previous users say this broker is worth a try.
Among the trading signals, it is not uncommon that it is just a fraudulent mode. Forex trading signals come in many different types. How do we choose the right Forex Trading signals for us? The first thing we need to do is recognize the character and types of forex trading signals.
Getting to Know Forex Trading Signals
What are Forex Trading Signals? Forex Trading Signals Are suggestions to buy and sell currencies at specific prices and periods. Forex Trading Signals are sent from signal providers to customers to help them trade forex. The exit and entry signals are sent based on an analysis of the movement of currency pairs based on a certain strategy. The analysis that is commonly used is technical analysis, but there are also some signals combined with fundamental analysis. While the strategy usually varies from one trading signal to another; some use scalping, swing trading, martingale, and so on.
Forex Trading Signals Can Generally Be Classified In Three Categories:
- Automatically executed Forex signals are not automatic.
- Forex Signals Sent By Software And By Third-Party Systems
- Forex Signals Generated Based on Personal Analysis and Certain Algorithms
Automatically Executed Forex Signals Not Automatic
if a trader uses trading signals automatically, then he only needs to subscribe, install settings, then rent a VPS so that the computer can be active/online 24 hours. After that, he can sit back and watch the signals work for entry and exit. Trading signals will be executed immediately on the trading platform, so traders can simply leave the computer on and monitor it occasionally.
The downside of this automatic execution is mainly the resistance of the internet connection and power supply. The computer used for trading must be truly “alive” and online 24 hours 7 days a week, because open and close positions will be carried out continuously regardless of time, and if the trading platform “dies” in the middle then there is a risk of open positions not closed, or missed a profitable open position. That’s why, a VPS close to the trading signal server is recommended for forex trading signal users in an automated way to avoid delays. For this reason, several signal providers offer their own VPS rental services.
Meanwhile, signals that are not executed automatically will send entry and close signals via email, SMS, or alarms directly on the trading platform, to forex traders who are clients. The signals sent must then be executed by the trader himself within the specified timeframe. Note that the signals will not last long and will only be valid for a short time, after which they will quickly change again.
Transaction times in these signals are usually sent according to GMT. You have to adapt it to the time where you are.
Forex Signals Sent By Software And By Third-Party Systems
Signals from software that have been installed on a trader’s computer are also often referred to as expert advisors (EAs). Forex traders can create their own EA by utilizing the EA generator, MQL4, or MQL5. Of course, the reliability of each EA is different. Therefore, before using an EA, traders usually do a trial first, backtest, or ask for proof of a real account from the EA provider. From this evidence, it will be seen how the EA’s performance in a certain period.
The main weakness of EA is its dependence on technical analysis. Because EA is formed from technical analysis, it tends to ignore fundamental factors. As a result, EA users can suffer considerable losses when unexpected movements occur due to fundamental news releases. Several brokers prohibit the use of EA because EA can interfere with the system at certain times. But lately, there are several new generation commercial EAs that have features that can automatically stop trading when there will be major impact news on the fundamental calendar (High Impact News Filter).
On the other hand, the signals sent by third parties, as the name implies, are not sourced from software such as expert advisors. One example of a forex trading signal of this type is the signal sent by traders in social trading networks. In addition, there are also signals sent by independent signal providers via SMS or email. The signals sent by these third parties can be sourced from the personal analysis of an experienced forex trader, but they can also be sourced from algorithms.
Forex Signals Generated Based on Personal Analysis and Certain Algorithms
Signals circulating on social trading networks And the facilities of the instaforex broker are signals from the personal analysis of lead traders. Lead traders make buy and sell transactions, open and close orders, then these actions will be copied automatically or selectively (not automatically) by their “follower” traders. Because it is done by an individual, this kind of signal is susceptible to being affected by the emotional influence of the signal provider. However, signal analysis results like this can combine technical and fundamental analysis more comprehensively than signals generated based on algorithms.
Meanwhile, signals generated based on algorithms are completely independent of individual emotions and feelings, due to their natural state as a trading robot. Yes, signals created based on algorithms are often referred to as algo trading or trading robots. The biggest risk of such a signal is its inability to detect when to stop. Whatever happens, the robot will follow the orders that have been given. As a result, when a crisis occurs, the robot tends to fail. Several studies have warned that algo trading cannot detect market crashes.
To avoid fatal losses, users of algorithm-based trading signals need to carry out regular monitoring; check the smoothness of trading infrastructures such as VPS and trading history, as well as check the reliability of the trading robot used. Traders ought to also be ready to adjust the trading robot settings as outlined by altering market conditions. If the trading robot in the future does not make a profit anymore, don’t hesitate to replace it with a new one.