Forex trading signals can enhance your trades. However, a quality Forex signal service can help you only to the extent of how prudently you can use its signals. 1000Pip Builder is a Forex signals provider that is committed to giving its clients reliable Forex signals with verified results. Nevertheless, to profit with those signals, you should learn to understand and interpret them.
Understanding Different Types of Forex Signals
Ordinarily, Forex signals are easy to understand. They should be so because their aim is to eliminate all forms of rigorous analysis for the trader. However, there are different kinds of signals based on their component details. Each has a way of effectively interpreting it. Whenever you get a signal, knowing which type it is will enable you to maximise it. Usually, those types are four.
The action type Forex signals are the ones that give you direct trading suggestions to execute. They are usually straightforward and simply give you the order type, whether buy or sell, to take.
The stop loss signal type goes a step further. In addition to giving a buy or sell recommendation, it also signifies a preset price at which the trader should put a stop-loss order. Thus, this type of Forex signals does not only aim to increase the profitability of traders, but also control their risk.
Take-profit signals combine those characteristics of the three. It directs traders to either buy or sell and signifies preset prices to manage their risk and exit their positions before they turn against them.
Current Market Price (CMP) signals require immediate execution. However, as a result of slippage, they may be difficult to capture. Nevertheless, they can help you gauge how fast your broker executes your orders at market price.
Interpreting Forex Trading Signals
Before you start using Forex signal services, you need to have a firm grasp of their component details to understand what they mean. Although Forex signals can come in different forms, their contents, irrespective of the provider, as a rule, should be in a similar format. For example, most signals come in this form: "Buy EUR/USD at CMP 0.9214 — SL 0.9200 — TP 0.9424.”
In this, you will see that the call to action, the direct action, in the signal is “Buy” and that the currency pair to be traded is “EUR/USD.” Also, the Current Market Price (CMP) is 0.9214, the Stop Loss (SL) is 0.9200, while the Take Profit (TP) is 0.9424. As you can see, it is not so difficult to understand.
However, in using signals, patience is your weapon. You should be disciplined. Do not be tempted to follow your whims and leave signals to the side. Although using a signal service shouldn’t make you dogmatic, your trading signal provider should be reliable enough for you to follow its signals most of the time.
When using signals, there are many set rules for exiting trades. However, an important factor you might want to consider to corroborate your signals is the look of the chart in each trade. As you become more experienced, you should become better at evaluating charts before exiting your trades.
A helpful tip is that you should let your profits run before taking them. This means that you shouldn’t take your profits too early. Wait for the trade to change direction for at least sometimes before you do.
Another principle you might apply is to target taking your profits between twenty to twenty-five pips on each trade. Also, your Forex signal serve provider should give you target prices at which you should exit your trades.
Following this principle would make you break even at least.
Sometimes, Forex signals can be difficult to interpret, especially for newbies. However, in actual sense, they are easy to understand. Their aim is to make trading easier so they cannot afford to be difficult themselves. Nevertheless, to ensure that they achieve this, you should know those vital details about them as earlier discussed. Doing so will enable you to benefit maximally from their use.
However, one essential tool that can help a lot in the interpretation of Forex signals and which you might want to look out for is candlestick patterns. They include the pin bar, inside candle, outside candle, and engulfing (bullish and bearish) candlesticks.
Although Forex signals alone are enough to follow, many candlestick patterns can signify the end or beginning of a trend. Since signals are not always fool-proof, candlestick patterns can offer some usefulness in your trades.
In conclusion, in Forex trading, it is vital that you have your opinions about the market. To be able to do so, you must do your market analysis, too.
Market conditions are different. Each trade is also different. Hence, you must not be dogmatic in following tips. As you get more experienced, forming your views about the market will come easy to do.
Now that you can correctly interpret Forex trading signals, you need a reliable and trusted Forex signal service. 1000pip Builder is, and you can sign up for a membership plan with them