If you've been around the Forex game for a while then you've heard about signals.
Perhaps you've wondered what exactly they are and how to use them.
First off let me say that Forex signals are services provided by people who supposedly know when a trade is being set up.
They are usually provided by a subscription service provider who doles out signals in exchange for a monthly fee.
The hopes are that the signals are both correct and profitable.
Now let's look deeper.
Longer Term Signals There is a fallacy that it is possible to scalp trades with signals.
This means the essentially a trader would quickly enter and exit a position with the intent of profiting from a shallow movement - something on the order of a few ticks.
The fallacy is because there is no signal service that can deliver the results fast enough to make these kinds trades possible.
By the time the service discovers the signal, transmits the position via text or email and the trader issues the market order, the scalp trade will have long since passed.
So if yo must use a signal service be sure to pick one that operates on a long term perspective - focusing on intra-day and intra-week trades.
These will give you enough time to let a trade mature without getting caught off guard.
Test Test Test Before you commit to a signal service it is highly recommended that you paper trade with them for a bit.
This means that you will take their signals and make an imaginary account on paper.
Trade this imaginary account to see if the trades would have been profitable.
In fact it is wise to use this paper trading method with any trading strategy.
This way if the signals are bad all you lose is some time, but your financial backing is still in tact.