You surely heard or read about the terms trading signal and signal provider, but if you are a beginner, you may be confused about their meanings. In this guide, you are going to see what a Forex trading signal is and what Forex signal provider is, so that the next time you know what they are.
The concept of a trading signal is very simple — a trading signal is a trigger to open a trade. Usually, a trading signal is a result of specific market conditions that together form a trading setup.
A trading signal in Forex can be a signal to BUY or SELL a currency in respect to another one, and it can be the result of a news, price action, some indicators, and so on.
Every strategy includes a trading signal. If you want, you can see a trading signal as an entry signal.
As mentioned before a trading signal can be a result of specific market conditions or status of indicators. Usually, trading signals are generated through technical analysis. However, there may be times when trading signals are a result of fundamental analysis, or even sentiment analysis.
Some examples of trading signals can be:
As you can see, a Forex trading signal can be the based on several elements — it all depends on the strategy used.
Now that you know what a trading signal is, we can proceed with a signal provider. It is quite easy to guess that a Forex trading signal provider is, in fact, a provider of Forex trading signals. Signal providers are services that will supply you with suggestion for orders to execute.
A signal provider is usually a service that you pay for through a subscription. The subscription will give you access to trading signals generated by the provider. Depending on the service you subscribe to, you will be able to open trades manually or to automate the trading by following the signals without your intervention.
A provided trading signal will generally include the type of order, the open price, the take-profit and stop-loss prices so that you can open a complete position.
Usually, signal providers publish historical results of their signals, so that you could set your expectations regarding what you could get from the subscription. Remember that past results do not guarantee future returns. However, they may be an indicator to consider in the choice.
The number of online signal providers is huge and it would be impossible to list even a small percentage of them. No need to say that good signal providers aren't free, but be careful, because many times even if you pay, you won't get a decent service. The number of scams in this industry is also huge.
Notably, social trading can be mentioned as a signal provider. Social trading can be categorized as a signal provider because you actually get trading signals from other traders.
A trading signal is a trigger to open an order and it can be based on price action, technical analysis, fundamental analysis, or other factors. Trading signal providers are services (usually paid by subscription) that provide trading signals to their subscribers, so that the latter get trading ideas or even copy other people's trades.
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