Forex Trading Signals for Better Trade Timing
Forex trading signals are most commonly selected by traders through shopping the charts for the one that shows them exactly what they want to see. The wiser approach would be to learn how each indicator works and use that information to build a unique trading system.
Forex trading signals are price action that set off market entry/exit or any type of intra-trade adjustment. The trading signals provide a clear-cut script for trades typically based on technical indicators.
A technical indicator is a specific mathematical formula applied to price and displayed within the time interval you select. Charts are used to see the technical indicator and the price in a variety of time intervals. Data is updated every minute for a one minute chart, every hour for a 60 minute chart, etc.
Once you have an understanding of intervals and their effect on technical indicators, you can begin finding forex trading signals to enter the market.
A good number of traders look for a clear and easy to read technical signal that tells them when to enter the market. Since the forex trading signal is based on a specific chart interval, watching that chart becomes a practice the trader uses for market entry. The trader may even use signals based on more than one interval to create an entry signal.
After a trade is identified via the entry signal, the trader concentrates on the exit plan. The trader has the option of fixed stops, trailing stops, limit exits, or signals to exit the trade.
You can use a forex trading signal to enter a trade in an attempt to capture a reversal. If for instance a currency pair has recently been on a short swing you want to capture it as early as possible when it turns long, to accumulate as much profit as possible. This turning point is an excellent signal for entry and can also be an excellent signal for exit of the short trade.
Some traders love limit exits. They trade frequently and for a high percentage, but usually for low pips. An alternative view would be to use signals to manage exits. The signals can be conservative if needed, but exit signals will usually capture the “real” move better than limit exits.
What signals should you use? It’s a personal choice the individual trader has to make. The goal is to make an informed decision and commit to it. Learn as much as you can about technical indicators and use the ones you feel work best for your specific needs.
You might want to merge signals or implement parameters with signals to improve their performance and reduce the chances of false moves. Every forex trading signal characterizes a unique aspect of the market.
Using a variety signals provides a good system of checks and balances to make certain the market is moving in the direction that you anticipated before you make a trading decision
Roosevelt Jones is the publisher of Forex Trading System Review ezine. Subscribe now while it’s still free at LearnForexSystemTradingDirectory.com. You’ll also find forex trading courses that are highly recommended.
Written By: Roosevelt Jones