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What Are The Best Forex Signals

While no single definition of forex signals, it generally includes: suggestions for initiating trade on a currency pair, generally at a specified price and moment in time.^[1]. Signals can be generated either by a human analyst or an algorithmic Forex robot supplied to a subscriber of a forex signal service. Given the time-importance nature of signals, they are usually transmitted via tweet, email, website, SMS, RSS, or other relatively immediate delivery method. The communication channels over which forex signals are provided are evolving and with improved speeds, cloud data processing and smart-phone apps, we are on the verge of a new paradigm.

Why Forex Signals

Forex signals constitute data on a specific instrument, including recommendations with respect to the trade’s volume, position’s opening and closing details, for setting stop loss and take profit orders, and choosing an appropriate trading vessel. Using these signals protects you against unmonitored losses, thus giving you an edge in your market activities.

Signals should be understood as advisory, only. All trading decisions based on these signals should jive and be in conjunction with other available data.

What is Forex Trading

The purpose of forex signals is to empower a market trader with superior wisdom and insight, so that his activity results in profitable trades. Already, the era of big data has radically impacted the world of forex charts and the forex calculator . Traders using simplistic memory-driven hand-generated forex signals are hopelessly out-gunned by do-it-yourself algorithm home traders employing cloud-based computing technologies and cherry picking from among the endless freely-available services. The ability of big data analysis to abstract and aggregate the accumulated activity of millions of individual decision makers means that trading strategies must be continually refined to ensure that they remain unique and outside herd. If the metaphor for our era is that analysis is now finding haystacks for given needles, forex signals are those needles.

The issue of signals is even more complex because of all the levels of perception and commercial motivation of the various market participants. When you act on a signal or set of forex signals which you devised or acquired via a forex calculator or forex charts, and your trade is profitable, you might reasonably surmise that the insight you garnered and applied did, in fact, result in your success. And if another profitable trade also resulted from the same methodology and execution, then you would be even more confident in the correctness of your actions. And yet… the complexity of price determination might very well be an “unknown known” or even an “unknown unknown” (in the lexicon of Former US Defense Secretary Rumsfeld). Popularized in financial analysis circles as “The Black Swan”, the scenario is that everything is understood and proceeding swimmingly until suddenly it isn’t. This conundrum of underlying truth and causality is particularly vexing for the individual trader in our era without recourse to the apparatus and methodology of big data. At least with a “haystack” of data and analysis at the source of your determination process, a statistical logic and framework imbues your trading decisions with meaning and probabilities of success.

High Frequency Online Trading

The benefits of online trading can be enhanced when one trades at high frequency, or at least they partially extend their methods to high frequency trading.

Traders Find High Frequency Online Trading More Exciting

This is perhaps the most difficult kind of online trading, as it goes beyond even day-trading and forex news trading. Trading through a good forex broker is key, in order to be successful. High frequency means that one would have to trade almost like a scalper during some hours of the day, and like a selective day-trader during other hours. The benefits of high frequency trading is that the trader is able to profit much more than they otherwise would. So that even though the market moves say 60 pips overall for the day, the intra-day fluctuations are so many, that may add up to 100s of pips. And at least 30% of these fluctuations can be traded. These traders have different criteria for each day, and they attempt to make several $100s at least on each one. They also know which losing trades to keep open, and for how long. This is very difficult to do, but it allows them to achieve that high profitability for the day, without employing low risk to reward ratios in their trades. In fact they use high ratios, which means they are willing to risk say 100 pips to make just 10. Low risk reward ratios mean using large stop loss orders, and carrying some open losses through the day. But the probability of these losing trades coming back to break even or partial profit levels, is extremely high! Hence the $100s in daily profits is actually a realistic goal, but it requires many hours of devotion and nerves of steel, which few possess.

Known Volatility is Every High Frequency Trader’s Friend

Volatility is hard to accurately time, but generally the high frequency trader is looking for range bound trading hours. Hours when the currency pair in question will trade between some trendlines, simply going up and then down. The use of a forex calculator for figuring out LSS pivots for the day and stop loss levels is critical. Trading at high frequency means that there is not the luxury of time, and still all these numbers have to be calculated accurately. High frequency online trading is among the most difficult types of trading, in fact it cannot be taught at all. If a trader has such a skill they have learned it all by themselves. It’s something that comes naturally. Volatility alone is a very tough factor to assess, and the use of global forex time zones and LSS pivot levels and news are only the first clues one would have to use. A currency pair can still defy all these so that it trades within a range for a while but it suddenly goes out of that range and trends with momentum in one direction. That’s where most traders attempting high frequency trading and scalping lose most.

What Every Forex Trader Should Know

Every forex trader should know about market risk and how to be prepared for it. Because technical analysis does fail and will fail from time to time.

Some Key Factors Impacting Markets that Every Forex Trader Should Know

Technical analysis is generic, and is based on chart analysis and various patterns, which usually but not always, work. Every forex trader should know that technical forex signals can be totally overpowered by factors such as central bank interventions and geopolitical events. The US dollar for example can sometimes defy all technical analysis, all bearish type of signals, and rally. This is because the US dollar is not always a technical market. It is not even always a fundamentals market. It does trade as a technical and fundamental market for most of the time, but it can turn into a highly sought-after safe haven market when global unrest is high. The entire global forex converter mechanism can be affected by sudden geopolitical events, though it happens in one currency at a time. It will either be the US dollar, or some other particular currency being affected. The US dollar is most noticeably seen being affected because it has many crosses that are popular among traders, such as EURUSD and GBPUSD. But other countries’ currencies can also be affected in other ways, not in the sense of being used as safe haven currencies. Sudden central bank decisions can also make currencies defy all technical analysis. Good fundamental analysis however, if done beforehand, can predict these central bank decisions long before they happen.

What Else Can Go Wrong

Currency trading can be more difficult when a specific currency pair moves on speculation, days prior to some important economic announcement regarding either one of the two economies involved. Such moves are simply fuelled by speculation and may seem illogical and nonsensical. But regardless if it makes sense or not, when a market moves, traders watch support and resistance levels. A good forex trader does not ask too many questions, they just trade based on technical analysis, and on some broader fundamental opinion. If markets made perfect logic sense, they would be perfectly efficient and it would very hard for traders to make a profit. Another thing that can go wrong, is a firm belief that the crowd must be wrong. This is not always the case! The crowd can also be right. Any firm belief, in any indicator is actually a wrong belief. As no indicator should be used in a religiously firm way. Successful trading is about dealing with elusive goals, such as trying to catch a rainbow. When you get too close it’s all gone. But if you keep the right distance you can see it. That’s why all these indicators become useless when you try to make the most out of them, so keep the right balance.

What is CFD Trading

Contracts for Differences (CFDs) are investment instruments created to permit traders the advantages of holding Forex, Shares, Indices, and Commodity positions without taking possession (or shorting) the actual underlying instrument. Traders enter into a contract with a CFD market maker/platform at a specific price, and the change between the contracted price and the price at which it is closed is settled in cash for profit or loss. The needles expense and delay of a physical delivery of shares, for example and their registration, and any holding/safe custody charges that come with having a broker are eliminated, which saves you time and money.

Note that in trading CFDs traders have the potential to lose all or part of the capital in open positions.

CFD trading has continually grown in volume since their introduction over a decade ago. While originally focused on tradeable positions in equities, advances in technology and popular demand motivated the rapid evolution of this form to proprietary derivative financial instruments spanning the whole range of asset classes.

How to trade Forex

Today, the CFD market mirrors the larger financial universe with Forex CFDs representing the largest component. Thus, forex signals and forex charts are of great interest to CFD traders. The enormous leverage (minimal margin) commonly available (up to 400:1) on forex trades and the absence of brokerage fees are key elements in the appeals of CFDs. However, their proprietary / non-tradable nature classifies them as a “swap” under the US 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act and thus non eligible to be issued to retail customers.

The similarity between CFDs and Forex continues to grow:

Forex signals — Increasingly, forex movement is influenced by central bank governors and their bureaucratic minions. The implications of monetary policy are manifested throughout the global economy, thus increasing the overlap.
Forex charts — The basic tool in how to trade forex, forex charts, are also essential in understanding price movement in the CFD markets. After all, to understand what is CFD trading, you need to master the rules of price determination. And here, charting is a key tool. Mapping two dimensional sequential representation of price movement over time is a time-tested method to visually represent underlying prices. While far from definitive, it helps the trader to avoid mistakes and to understand trends, an essential part of trading psychology.

Example:

You decide that there exists a significant liklihood that the British Pound (GBP) will increase in value relative to the Japanese Yen (JPY) in the near future. So, instead of purchasing GBP and selling JPY in open market from banks and incurring brokerage, account management, and commission fees or using other exchange-based derivative alternatives, like futures contracts or currency options, (both of which have expiration dates) you buy GBP / JPY CFDs on a CFD trading platform. Each movement of a pip, (as an example in the price of 184.20 JPY per GBP) generates a gain or loss as if you held the underlying instrument.

In learning how to trade forex we gain a greater understanding of what is CFD trading. Looking at both forex signals and forex charts is critical.

Getting Rich through Foreign Currency Trading

Though not easy by any means, it is actually possible to get rich through Foreign currency trading. This is because risk prevents opportunity from evaporating.

Profitable Foreign Currency Trading is Difficult, Not Impossible

People who are against all kinds of risk taking, usually speak bad about the currency market and criticize the industry as being too risky and downplaying those risks. This is not true however, all brokers and market analysts are legally required to disclose the risks, and they do so explicitly. Especially on the issues of leverage and excessive trading, as well as impulsive trading. Foreign currency trading is fact, this is how some investment banks make money, and this is how some of the industry critics’ actual pensions are grown over the years, through their pension and insurance funds. So it is not fair to criticize the forex industry and forex trading when your own pension or investment fund is involved and profits from it. As far as striking it rich in the forex industry, critics again fail to understand that just like every investment, forex comes with its own risks. Every endeavour where it is possible to profit, is so because it comes with risk. When risk disappears so does the opportunity. Which is why gold has disappeared in the world’s most accessible places, where once all gold prospectors went. But in the harsh environment of mountains and lakes around some places in the world, there is still plenty of gold left. Few dare to go and find that gold, but those who do, do make millions. It’s the same with forex, it is tough to make money but it is possible.

What is Forex Trading All about?

Without the global forex converter mechanism the world would be far worse off, and consumers around the world would be getting a worse price on everything they bought. Foreign currency trading in today’s electronic form, has helped make the world a smaller and more efficient place. A place where everybody can get a better price, as well as insurance against future price fluctuations. This includes the manufacturers of the cars that forex industry critics drive, as well as the oil industry which supplies fuel to their local gas stations. Global currency trading has also helped stabilize economies and industries around the world, thereby making the local job markets more secure. If instead countries still used the rather primitive gold standard to price their currencies, it would be impossible for many industrialize countries to have stable economies and at the same time produce and export cheap and competitive goods. All these goods would be very expensive because they would have to be priced according to how much gold there would be in the central bank’s vaults. But the free-floating forex market has made it possible to stay competitive, and at the same time have a strong economy.

The Risk of Misinterpreting Forex News

Forex news always appears deceptively simple to interpret, but the impact its has on the underlying currency pair is always almost impossible to figure out.

Forex News Creates Confusion

No matter how a trader chooses to trade the market, even through the best forex broker and trading strategy, confusion is always there. Forex trading is especially tough during forex news release times where volatility creates all sorts of traps. News and economic reports in particular, are very hard to interpret, and as a result the market always tends to move in all kinds of ways during those release times. This is because all other traders themselves find it hard to interpret the data, and their increased trading activity during those times creates all this volatility. Trading the news is often promoted as an easy and popular thing to do, mostly by forex analysts and market commentary websites. But it is wise to treat the news with caution, and approach the market with an open mind on those days. Chances are that the majority of these analysis reports will be wrong, and the market will trade in all kinds of ways, so as to confuse as many traders as possible. As the market always goes from A to B in the most confusing way possible. Therefore it is not wise to expect smooth and predictable trends that everybody knows and talks about. In rare cases, a currency pair can move by 100s of pips in less than an hour, and it is not easy to figure out whether it will move even more in the same direction during the rest of the day, or it will reverse. It is that feeling of ‘missing out’ that finally fools day-traders and makes them lose. So there must be no sense of urgency to join any trend, at any time because this is impulse decision making. Good trading starts with not having any urges.

How to Stay Focused

Traders should forget all about attempting to interpret the news. Those involved in day trading should only trade confirmed forex signals several minutes after and only after the actual release time. Forex news is hard to use in a direct way, day traders however are far better off letting the market move as it wants, during the release times. Then look for reasons to fade the move right after the release times. The best trades occur when the market reverses following a strong in magnitude movement after news was released. Traders can use LSS pivot levels and other pivotal levels to figure out where the most likely reversal levels will be on that news day. Swing traders can use the same strategy, by taking into account the longer term trend. And only fade news-induced momentum when the trade is in line with the main daily trend. All other methods for trading the news may or may not work, but they are certainly much more risky, because there are more unknowns. It is one thing to fade a 100 pip move, where you know you can get out at 100 pips, and quite another not knowing where to get out. The market is so volatile at these times that even LSS pivot levels will be tested to the limit, and even the 3rd LSS pivots may be reached or falsely breached.