Forex Signal Service Article:

Forex Signals - Are You Limiting Your Profits?
By David Shephard
One of the greatest disadvantages for the trader is the time that is needed to monitor the often fast moving and volatile currency markets so that advantage can be taken of entry and exit points for trading. For many traders this means sitting in front of their computer screen and watching the markets for hours on end.

One way around this problem is to make use of automation and place limits and stops on your orders. This way, you can walk away from your screen safe in the knowledge that, if nothing else, your losses at least will be kept to a minimum. The problem here though is that you also often miss out on potential profits because your limit order kicks in too early.

So just how do you solve this problem?

The simplest solution is to use a signal service which will both monitor and analyze the markets for you and then notify you when necessary through a variety of different channels including onscreen notification, email, SMS and pager messages.

Forex signals services are provided on a subscription basis, paid either monthly or annually, and can also be provided by your broker as an extra service which can be integrated into their trading software.

Most signal services limited the number of currency pairs on which the service operates but the majority will offer services for the major trading currencies including the USD against the EUR, GBP, JPY and CHF. A number of companies also provide specialist services in less frequently traded currency pairs.

The majority of services use a combination of factors in identifying trends in the market and in recommending entry and exit points, but all are based in the main on a technical analysis of the currency markets. These services in essence

compile currency charts and then use a variety of mathematical models to make their trading recommendations.

For example, they may use a simple moving average to trigger buy signals as currency prices move above the average line and sell signals as prices fall below the moving average. In addition, volume indicators can also be used to indicate levels of interest in the market with high volume, especially when it occurs close to the bottom of the market, indicating the possible start of a new trend and low volume pointing to investor uncertainty.

This of course is a somewhat simplistic picture used here only for illustration of the nature of signal services. In reality a large number of tools are used, including those already mentioned and many others such as Bollinger bands and volatility and momentum, and these together form part of a complex mathematical model which generates the signals sent out to subscribers.

Services will of course vary considerably, as with anything else in life, and they are very much an aid to the busy trader and just one tool in his toolbox. They are certainly not infallible and only your own experience of using such services will really determine whether or not they are of sufficient benefit to you to warrant the cost of anywhere from about $50 to $200 a month.

One important point to remember is that signal services provide you with advice and nothing more. It is up to you to take that advice and act upon it or not as your own knowledge and experience tells you. If you simply take the advice provided by the service and act upon it blindly then, if you have a very good service, you may come out on top but, in many cases, you will find that your trading is less than successful.

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