In 2021, the Forex forecast looks bullish.
Whether you’re more of a Forex fanatic who trades and studies the history of currency exchanges, or you’re a newcomer to the field and you’re fascinated by the effects of the current economy on the Forex trades, welcome to the wide world of forex trading.
To properly call yourself a Forex trader, you should have a solid understanding of all things forex trading signals. If that’s not the case, no worries. We’ve got you covered.
Keep on reading for our full breakdown of all things forex trading signals, and the indicators that power those signals.
Forex Trading Signals 101: The Types of Forex Signals
You’ll find that some forex traders will exclusively follow the trade ideas given by signals alone.
On the other hand, some traders will simply integrate those signals into their market analysis. Then, they can formulate their own trading strategy.
No matter where you lie on the spectrum, you’ll want to have a solid comprehension of the main types of forex signals.
Generally speaking, you’ll find two overarching categories of trading signals.
Entry vs Exit Forex Signals
The first category is based on the final trade suggestion given.
In the simplest of terms, some signals are entry signals. Those are the ones that urge you to open a trade position in the market.
On the other hand, you have exit signals telling you the exact opposite: to close an open trade position that’s currently active.
Those signals are rather useful when it comes to long-term trading on financial assets. When it comes to intraday trading, which is short-term in nature, it’s normal to see both signals (entry and exit) at the same time, making them less useful.
Manual vs Automated Forex Signals
As for manual and automated signals, those indicate the method used to generate the signals.
For instance, manual forex signals will be generated manually by a professional trader whose opinion carries a lot of weight in the industry.
Automated signals are exactly what they sound like. They’re generated by algorithms and computer software. You can check out the top MetaTrader 5 brokers here.
The Foundational Baseline of Forex Trading Signals
The main driver behind forex trading signals is fundamental and technical indicators.
You might be using fundamental analysis, which revolves around the understanding of how the real economy can impact forex markets. Or, you might prefer to crack technical indicators, which involve nailing down your trading range, your risk, and your potential earnings.
Ready to Give Your Portfolio an Upgrade?
We know that forex trading can be overwhelming, especially for those who are new to the currency exchange field.
Hopefully, our little guide has shed some light on the different types of forex trading signals, and why they’re so ubiquitous in the forex market.
As with any mainly short-term market, you’ll want to take your time and set up basic strategies before you start trading.
If you’ve enjoyed our article, you’ll want to check out more tips and strategies in our finance section before you go.