What is a Forex Trading Signal? What is a Forex Signal Provider?

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 article we are going to see what is a Forex Trading Signal and what is a Forex Signal Provider so that the next time you know what they are.

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What is a Forex Trading Signal

The concept of Trading Signal is very simple, A Trading Signal is a trigger to open a trade. Usually the 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 or so on.

Every Strategy includes a Trading Signal, if you want you can see the Trading Signal as an Entry Signal.

Examples of Forex Trading Signal

As mentioned before a Trading Signal can be the result of specific market conditions or status of indicators. Usually Trading Signals are generated through Technical Analysis however there may be times where Trading Signals are the result of Fundamental Analysis.

Some Examples of Trading Signals can be:

  • The Crossover of two indicators, for example two moving averages
  • The price reaching a resistance or support level
  • The formation of an Engulfing Pattern
  • A News regarding political results like an election

As you can see a Forex Trading Signal can be the based on several elements, it all depends on the strategy used.

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What is a Forex Trading Signal Provider

Now that you know what is a trading signal we can proceed with the Signal Provider. It is quite easy to guess that a Forex Trading Signal Provider is in fact a Provider for Forex Trading Signal. Signal Providers are services that will supply you with suggestion for orders to execute.

A Signal Provider is usually a service that you pay 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 the trade or automate the trading following the signal.

The Trading Signal provided will generally include the type of order, the open price, the take profit and stop loss price so that you can open a detailed trade.

Usually the Signal Providers publish historical results so that you can set your expectations regarding what you could get from the subscription. Remember that past results does not guarantee future returns, however they may be an indicator to consider in the choice.

Examples of Forex Signal Providers

The number of Signal Providers online is huge and it would be impossible to list even a small percentage of them. No need to say that the good Signal Providers are not free, but be careful because many times even if you pay you will not have a decent service. We will try to go into more of these details in future articles.

For the moment I feel like mentioning Social Trading as a signal provider. Social Trading can be categorised as a Signal Provider because you actually get trading signals from other traders.

You can visit the sections Trading Signals and Social Trading for ideas and I promise I will publish more article on this topic.

Conclusion

A Trading Signal is a trigger to open an order and it can be based on Price Action, Technical Analysis or Fundamental Analysis, or a mix of them. Trading Signals Providers are services (usually paid by subscription) that provide trading signal to their subscribers so that they can have trading ideas or even copy other people’s trades.

 

 

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