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Summary — In this article we will define what is a forex signal, and we will describe what types of signals are available to traders. We conducted a review of forex signal websites with web searches, and discovered various free signals and paid signals along with a wide price range. We will also provide examples of some profitable real time signals that we found.
What Is A Forex Signal
According to Wikipedia, a forex signal is a suggestion for entering a trade on a currency pair, usually at a specific price and time. The signal is generated either by a human analyst or an automated forex system or algorithm. Most signals are real time or live forex signals due to the timely nature of entering trades.
We believe that this is a reasonably good definition of a forex trading signal, but the quality or accuracy of the signals are not considered in the Wikipedia definition, and as you will see this is a huge flaw. A signal should be an indication to trade from some type of human, automated or computer based system monitoring the market conditions. Human based systems are subject to human error, and nearly every one of these systems across the board is terribly flawed and unreliable, due to the basis of the signals being technical indicators, pairs and scalping.
A signal is not an alert, these are two different things. An actual trade alert is simply a notification, like an SMS alert, email alert, economic news driver alert, website alert, or visual alert, in real time if possible, due to the timely nature of signals. Alerts delivered to a mobile devices are widely touted by signal websites, but the signals themselves are of such poor quality that having a speedy method of delivery to a mobile device adds no value.
Testing A Forex Signals System
If you find some forex signals you like, free or paid, you must demo trade the signals to make sure they suit your personal taste, schedule, and produce pips and profits in your trading account. Setting up a forex demo account and testing any signal system is pretty easy, it is imperative to do this because so many of the signal systems we reviewed were of such poor quality, or had no documentation. If you make profits with a signals system, them you can move to micro lot trading, then mini lots. Do not take unnecessary chances, always test the signal system before trading live funds.
Signals and Signal Systems Available To Forex Traders
Based on google search results forex traders are going to be sorely disappointed when looking for signals, free or paid, as the overall quality is extremely low. A complete review of forex signals we found is below.
When conducting web searches for “forex signals”, most of what we found were not signals at all. We found live trading rooms, trade copiers, pages and websites with large amounts of advertisements for brokers like click ads, banner ads, and pages with little content of value. A lot of the content was repetitive computer generated content, outdated facebook pages, “trade ideas”, forex robots advertisements like “set it and forget it”. We did see one prominent top 5 broker with a paid signal service, this service gave alerts for price breakouts and advised selling a pair after it had risen and buying it after it went down on small time frames, which is an irresponsible way to scalp. Taking signals from a broker would appear to be a conflict of interest. We can say the bar has been set really low for signals and you could argue that almost no real signal services even exist.
The paid forex signals providers we found in the searches ranges from $40 – $200 per month, some for as few as 3 pairs, but none of these paid signal services provided enough information on their website to figure out how the signals were generated. So determining if they are good quality, profitable signals was impossible, there is no way to verify if the signals are effective. Traders should ask a lot of questions and testing these services with a demo account would be imperative. Some the paid services require that you open a trading account with them, implying that brokers or introducing brokers are behind the signals, and giving away poor quality signals is a front to get you to open a trading account.
When you do find free or paid signals providers via web searches, here are some of the problems you will encounter: Generally, there will be no explanation of how signals are generated or any type of written documentation to describe logic behind the signals. You will be dealing with a total black box signal system, with no examples provided. Everything you need to understand the signals and how they work is hiding. Based on the signals we saw, we suspect that the signals systems we found are based on technical indicators, or some kind of front for brokers or introducing brokers (IBs), where you must open a brokerage account to “qualify” to get the signals. Remember that any signals based on technical indicators, pairs, or forex robots disguised as signals, or any human generated signals are just standard technical indicators and pairs, all of which have been proven to be ineffective, except for scalping a few pips here and there.
We noticed a large number of daily forex signals websites that listed the pair, stop loss, and take profit, but the take profit numbers were always very close, like 20-25 pips away. Since the target prices are so close we would qualify this as scalping, and in many cases unfavorable money management ratio, where the number of pips is roughly equal to the number of pips you risk. This will only benefit your broker in the long run. We did not see any signals with “hold” recommendations, only where to exit.
Because these signal systems are mostly black box systems with no explanation of how the signals are generated, we have to conclude that these signals are based on commonly available technical indicators, and most signal services/websites are for 3-12 pairs. We also have to conclude that brokers and IBs behind many of these websites because of the scalping and take profit levels, and excessive broker advertisements to sign up for trading accounts. These issues are for all signal websites we found including free or paid.
Many of the daily forex signals services advertise email and SMS delivery of the signals, “get our signals on the go”. These websites have large pictures phones and Ipads on their websites, but remember these are not signals this is an alert method. Having signals sent to a smart device is great, but is of no advantage or detrimental to your trading success when the signals are worthless.
Good forex signals should be visual in nature, and easy for a trader to interpret, we found few, if any visual signals that were easy to understand, except for some of the ones mentioned below. Also we found little or no mention of audio signals, which can be easily delivered, like desktop price alerts.
Are Profitable Forex Trading Signals Possible?
Yes, they are possible, but even if you find some profitable trading signals you still must set up demo account and do some level of demo trading before proceeding to small amounts of real money like micro lots, then mini-lots. Make sure you understand what the signals mean and how they are supposed to be traded. Since most signals websites have so little documentation about how the signals are generated, it is a must.
The Forexearlywarning Trading Signals
Forexearlywarning has a combination system of signals and alerts, combined with trading plans. Our signals and alerts are the best in the business and all of the problems we found with other signals and signal services we reviewed have been eliminated. We provide trend signals and live entry signals, which are both visual signals, and a large number of examples to demonstrate the signals, these signals are easy to understand for all traders, even beginners. Along with the signals we provide trading plans for 28 pairs, real time price alerts, which are audio signals to notify you of support and resistance price breakouts, and known economic calendar alerts based on specific times. Since the trend signals are based on the larger time frames, our “take profit” areas might be hundreds of pips away form the entry price, not 20 or 25 pips away like the other signals we reviewed, as we discourage scalping and frequent trading. We believe this is the only trend based signal system available on the web.
We trade less frequently and are looking for substantially more pips per trade. We also trade 28 pairs which is the most pairs in the signals business. Our signals and alerts will produce profitable trading, and likely the most pips of any signals system available worldwide. But we still strongly encourage demo trading our signal system, then graduating to micro lots, then mini lots. Our signals system is fully documented and the documentation is thorough and free on our website in the form of 35 forex lessons. The Forexearlywarning website has no broker or IB sponsorship, and our website has no advertisements.
Examples of Profitable Trading Signals
One way to get trading signals that are profitable is to focus on the trends of the market and individual currencies, versus pairs. If all of the EUR pairs are trending down on the larger time frames, the market is signaling for you to sell the EUR pairs.
These simple trend indicators can be set up on any trading platform, even by beginners. In the example above the EUR/NZD is trending down on the larger time frames. If all of the EUR pairs like the EUR/USD and EUR/JPY are also trending down the market is signaling you to sell the EUR pairs. If half of the EUR pairs are trending down and half of the EUR pairs are trending up, then you would need further analysis of the market based on parallel and inverse groups of pairs.
Another signaling system that is profitable is The Forex Heatmap®, which is based on parallel and inverse groups of pairs. The heatmap signals software gives live signals for 28 pairs and is profitable. The are live forex signals and are generated by large amounts of real time forex data These are the most accurate signals available to forex traders..
If the EUR pairs are all trending down and the heatmap gives you a live signal like this one, you can sell the EUR/USD or EUR/NZD and you have somewhat of a risk free or very low risk signaling system, when combined with the trend. Here is another example of these accurate, web based signals.
In this case the NZD is strong so it would still be okay to safely sell the EUR/NZD, or possibly trade another NZD pair that is trending pair with good pip potential. Here are more live signals from the heatmap signals software. This page review some Forex Trading Signals based on the heatmap, here are two more example signals AUD Strength Signal, NZD/USD Buy Signal, and JPY Strength Signal. Many more examples of profitable trading signals on the Forexearlywarning Blog. Some of the important points of the results of our signals investigation can be summarized in the infographic below.
Trying to locate profitable forex signals is difficult via web searches, but not impossible. We conducted a forex signals review and found that most of the information about signals is not really about trading signals at all, mostly it is websites loaded with broker advertisements or free live forex signals for brokerage account holders that encourage frequent trading. If you find a signal system you like, email the signals provider and ask questions and get examples of the signals to make sure you do not waste time, or even worse lose money with live trades. Always test the signals with a forex demo trading account. Forexearlywarning invites you to try their combination trading plans, trading signals and alert system, which we believe is the best in the retail forex trading industry.
To contact Mark Mc Donnell you can email him at Forexearlywarning.com.