Learning to Interpret FOREX Trading Signals

Forex trading signals are a unique investment tool that allows you to take advantage of the FOREX market with minimal experience. There are many FOREX signal providers out there that charge a fee to receive their signals. FOREX signals are provided by those that have an intimate knowledge with the FOREX market. They provide these signals as a subscription to those that want to leverage their expertise. With a good set of FOREX signals, you could make a lot of money. However, in order to effectively use them, you will have to be able to interpret the signals. Here are a few tips for interpreting FOREX trading signals.

Methods of Distribution

There are a few different ways that your FOREX signals could be distributed. In order to take advantage of them, you have to know where you are getting them. One of the most common forms of distribution is email, however text and instant messaging are possible as well. When the expert trader determines that a trade opportunity has presented itself, you will receive an alert via your method of distribution. The trader has taken the time to analyze the markets and tell you when it is time to trade. It is now up to you to interpret the signal that they have given you. 

Currency Pair

One crucial thing that will be in any FOREX signal is the currency pair that you are supposed to trade. Without this, the signal is pretty much useless. For example, they might send an email that says you need to trade EUR/GBP. This is the currency pair that contains the Euro and the Great Britain Pound. In order to trade the correct currency pair, you need to get onto your trading platform and find the EUR/GBP pair. You should then be able to place an order on that pair once it is located.

Buy or Sell

Another crucial part of the signal will tell you what to do with that pair. You can either buy it or sell it. Sometimes it will say "go long" or "go short". In this case, long is buy and short is sell. In addition to these two commands, they may tell you to do a pending order instead of a live trade. With a pending order, you input what price where you want the trade to trigger. It will remain pending until the market gets to that point. 

Take Profit and Stop Loss

Another critical point that they will usually cover in the notification is the take profit and stop loss values that you need to input. It may say something like "t/p 40 pips, s/l 40 pips." This means that they are setting the take profit level at 40 pips and the stop loss value at 40 pips. Therefore, from whatever point you get in the market, you need to add 40 pips to get the take profit and subtract 40 pips to get the stop loss. 

blog comments powered by Disqus
Scottrade