What if you had the cheat codes to making money, but you didn’t know how to read them?
For forex traders, this happens each and every day. Forex signals are available to help them understand the market and make quick, smart trades. However, many people don’t understand how to read the signals!
We’ve got you covered, though. Keep reading for our handy guide to understanding forex signals.
What Are Trading Signals?
Completely new forex traders may not know what signals are or how they work. It’s important to know these concepts in order to make profitable trades.
Forex signals (commonly abbreviated to “FX signals“) are tips for making specific forex trades. These tips are very specific, with info on specific prices and times.
Such signals may come from automated systems or human analysts. And they may be received through any real-time communications format ranging from text and e-mail to social media such as Twitter.
How, though, can you understand a forex signal and determine its value?
Successful forex trading involves identifying shifts in price and then buying or selling accordingly. And forex signals are designed to give you info about price turns that can help you make a profit.
Generally speaking, you should wait at least an hour before committing after a price turn has been revealed. It’s true that you could potentially get higher profits by buying earlier, but there’s also a greater chance to lose a lot of money if the turn goes the other way.
Types of Signals
There are many different types of forex signals you can receive. It’s good to know what they are so you can take action when you need to.
Some signals are actually “action” signals, and they are nice and straightforward: they tell you to buy or to sell.
“Stop Loss” is an important kind of forex signal. It sets a price point at which you will bail out of a trade before the losses add up and become unbearable.
The counterpart to a stop loss signal is the “take profit” signal. It is a signal to buy once profit reaches or exceeds a particular point.
Finally, there’s a current market price forex signal. This helps you compare the price at the time of the signal and the price at the time of purchase so you can see if you are still willing to commit to a trade.
All the Acronyms
We’ve given you a basic overview of some key signals and terms. However, it’s important to understand how these will be sent to you.
Most signals have plenty of acronyms. So, a signal might say USD, meaning United States Dollars, and CMP, meaning current market price. And “stop loss” is usually abbreviated as “SL” and “take profit” as “TP.”
The Bottom Line to Understanding Forex
You can now start your journey of understanding forex signals. But do you know where you can find the best signals?
At RedHotFX, we bring you the latest forex news and help evaluate signal providers. With our help, you can make more profit than ever: come get started today!