Even if you’re not familiar with CFDs,
it’s likely that at some point you stumbled across videos and other online content about forex signals. Some
self-proclaimed experienced forex traders might offer you these signals, either for a monthly fee or sometimes
as “free signals” if you sign up for something using their affiliate link. But can you trust them?
You can also find forex trading
signals on the MetaTrader platform or from forex signals providers on Telegram and other messaging services.
This article outlines what signals are, some of the popular sources for them and why they should be used with
caution, if at all. You don’t need forex signal services to trade forex or any other instrument, but in some
cases they can be useful. Here, we also discuss alternative options to signals for forex pairs (EURUSD, GBPUSD,
USDJPY, EURGBP, etc.) so that you can try and answer some of retail traders’ most common questions about them.
What are
forex signals?
Forex signals are instructions or
suggestions on what to trade and when. They tell novice and professional traders which instruments might be good
trading opportunities to buy or sell. Sometimes they’re sent in apps in real time, but it’s more common for
retail traders either to follow a certain provider consistently using MQL5 – essentially a type
of social trading – or manually transfer
the data from Telegram or similar apps to their chosen third-party trading platform.
A channel on Telegram for forex
trading signals typically looks like this.
Signals from a forex signal provider
for entry and exit mostly come from technical analysis, such as charts, patterns and indicators. It’s possible
to find forex signals based on news and economic data, but they’re very rare. Also, don’t forget that many
signals are generated by algorithms, not human analysts or technicians.
Introduction to forex signals
Forex signals, like entry signals for
other instruments such as commodities, cryptocurrencies and others, give specific instructions on what to do but
not the reason(s) behind them. A trading signal might say something like this:
buy stop 0.1 cable at $1.24
target $1.27 stop $1.235
This forex market signal is an
instruction which tells you exactly what to do but doesn’t explain why. Many forex signals are like this, but
the format can vary.
Trading signals are mainly for people
who can’t or won’t analyze financial markets actively by themselves. That might be because of a lack of
knowledge, a lack of confidence or simply a lack of time. To some extent, signals for forex pairs can also help
if you’ve struggled with trading the forex market and want to follow the lead of a more experienced or
successful trader. However, keep in mind that this scenario doesn’t guarantee success with forex trades, and
it's important to understand forex trading signals.
Types of signals
The most common type of signal is
based on technical analysis, typically applied through a specific algorithm. Forex trading signals rarely use
fundamental analysis, such as monetary policy or major economic news releases.
Many providers of forex signals use a
strategy called martingale. This method originated from a popular betting ‘strategy’ which requires doubling the
bet after every loss. It assumes that the money available is infinite and eventually the profit will cover all
the previous losses.
The specific trading strategies used
by forex signal providers vary greatly. Entries, take profit and exits might be based on static or dynamic
support and resistance, technical indicators, traditional patterns, candlesticks, all of these together,or a
wide range of other things.
Some forex trading signals might tell
you the volume you should trade and specific entries, stops, and targets, while others might simply say ‘buy
cable now’. If you want to use signals from MQL5, you usually receive access immediately after paying and can
automatically copy them in the Signals tab in MT5.
Sources for forex signals
One of the most popular sources of
trading signals is Telegram, but you can also find signals on Whatsapp, Viber and other instant messengers. A
trader might find a forex signal service online or meet a signal provider in person then subscribe to their
channel and use the signals offered. Remember that you are responsible for your financial decisions and their
results, good or bad. Any reputable provider of signals will remind you of this with risk warnings and
disclaimers.
Good signal providers of forex
signals on Telegram or elsewhere will publish results, both positive and negative.
You can equally use MQL5 for signals which can
be more convenient as it’s integrated with MT5. To use these automated trading signals you just need to pay for
them and run them automatically on the trading platform. Keep in mind that Mt8Pro does not provide signals and
we are not responsible for the results of using signals from the MQL5 community. However, you can access a
detailed step-by-step guide on subscribing to signals with MT5 through your Personal Area once you’ve registered
a trading account with Mt8Pro. You can also subscribe to signals from MT5 mobile.
Another option is to use the signals
from Trading Central which are available through your
Personal Area with Mt8Pro. These aren’t typical forex signals because they provide possible targets in
both directions, offering only a ‘preference’ for which direction to trade. However, they can help to provide
context and you can use the preference as a signal.
You can access free forex signals
in the form of preferences from Trading Central in your personal area with Mt8Pro.