What are trading signals and what are they for?
Trading signals – a popular way to automate trading signals activity – a popular way to automate trading activities on the international Forex market. Forex trading signals help millions of traders daily and free of charge to get their share of profits from fluctuations in currency rates. … Sending forex trading signals is usually paid.
Trading signals is a service that allows signal subscribers to receive recommendations on how to make transactions in the Forex market or other markets from signal providers. Unlike analytical reviews, a trading signal is a specific place and time to open and close a position. All that remains for a signal subscriber to do is open order with the appropriate parameters. Moreover, depending on the type of trading signal, the market entry can be carried out automatically.
Trading signals are very popular among traders who have just started trading. Beginners expect to compensate for the lack of knowledge with modern computer technology.
In practice, blindly following the instructions of commercial bots often results in a loss of finances. As a result, traders become dissatisfied with the broker, the stock markets, and the whole world, but, unfortunately, are not ready to admit their mistakes. In this case, trading signals can come to the rescue, which is different.
The classic approach to trading involves market analysis. It is carried out based on the study of fundamental indicators, which include:
- news background;
- the state of affairs in the international economy;
- dollar exchange rate and stability;
- seasonal factors.
We will determine whether it is really worth trusting trading signals and how to use this tool correctly in order not to become another victim of the robot.
The second option is technical analysis, which is performed by examining the course quotation charts. It is believed that the market is cyclical, so charts allow you to predict the trend that will be relevant for an asset.
Complex mathematical formulas are used for calculations, which are not always easy for an ordinary trader to understand and learn to accept. To simplify the process, trading signals have been invented.
Simply put, the analysis of the chart is monitored by special robots, which, guided by the data of the charts, suggest when to buy an asset and when to sell it.
Since a favorable moment is highlighted on the chart and, as a rule, is accompanied by an audio or text message, the technique was called trading signals.
With their help, it is much easier for a trader to understand the situation on the market and does not need to spend a lot of time on mathematical calculations. Signals allow you to trade almost completely automatically and can bring very high profits.
This happens because the time gaps between closing and opening orders are minimal. Within the framework of one trading session, a trader has the opportunity to make several transactions at once and fix a profit from them.
At the same time, not everything is so simple and smooth, otherwise, everyone would trade only with a plus, and the market simply would not have room for speculation.
Types of trading signals
All trading signals can be divided into two categories: manual and automatic opening of positions.
Signals for manual market entry the supplier may send by email, skype, SMS, or other similar means. The main disadvantage of this type of signal is that quite a long time can pass between their arrival and the opening of order, while the price will have time to move far from the “signal” entry point. This is especially inconvenient when trading with market orders, not pending orders. On the other hand, the nice thing about manual signals is that you can skip them when you disagree with the vendor's forecast.
Signals for automatic opening of positions most popular and convenient. The subscriber once sets up some parameters, for example, the volume of orders, and then everything happens fully automatically: the signal provider opens an order and the same order is opened on the subscriber's account. The disadvantage of this type of signal is that you need to have high-quality (without interruptions in the connection) Internet and constant, without interruptions, electricity. Otherwise, the signals will be skipped, which will undoubtedly affect the trading results. This disadvantage is eliminated by using a VPS server.
VPS server
A VPS server is a virtual machine (remote computer) on which you can install MetaTrader. Having configured everything properly, you get a full-fledged computer with a trading terminal operating 24 hours a day, 7 days a week. The cost of such a server is low, and many brokers provide it for free if you are their client…
Where to subscribe to trading signals
If you are going to open an account solely to subscribe to trading signals, then look for a broker that provides a service for copying trades. This way, you can subscribe to signals from suppliers, whose trading accounts are open with this broker, without intermediaries. I advise you to look at the Share4you service from Forex4you, ForexCopy from InstaForex, CopyFX from RoboForex. There are special exchanges – intermediaries between suppliers and subscribers. Their main advantage is the provision of detailed statistics for all presented signals.
My view on trading signals
Personally, I have a positive attitude to copying trading signals. In fact, this is one of the ways to invest, with its own advantages and disadvantages. How successful such an investment will depend only on the choice of the signal provider.
How high is the accuracy of trading signals?
This is the main question that a trader needs to study before applying the technique. Since any bot works on the basis of a mathematical algorithm, it is able to produce very accurate results within its template.
At the same time, the situation in the stock markets changes depending on dozens of technical factors. The simpler the algorithm of trading signals, the less their accuracy. But this statement applies only to the global situation.
Within the framework of the template, trading signals have an accuracy of up to 92-95%. But it is important for a trader to consider other circumstances as well. Therefore, it is strongly discouraged to use only one type of signal. In most cases, this will lead to a drain on the deposit.
An elementary example, when a bot gives a trading signal based on a three-candlestick strategy, at the same time, you can see from the Fibonacci lines that the rate has not yet reached resistance.
Most likely, this means that quotes will continue to fall and if you enter now, the trader will simply lose half of the profit or will not earn anything at all.
In fact, there are significantly more criteria for assessment than two. Therefore, trading using signals presupposes the presence of several dozen instruments at once, which together make it possible to accurately predict the market movement.
