If you are reading this, it means you have newly started to learn forex. I can very well understand all your confusion when it comes to opening your charts and making a head and tail of it. It’s not easy to study the markets and find what to do to make profits but not to worry, we are going to learn now what ‘Signals In Forex’ are.
You see, when it comes to trading, you are required to make decisions whether to buy or to sell. These decisions are based on studies of the market movement on certain indicators and parameters. Since the market moves all the time, it becomes important to keep studying it time and again and put your indicators on all the possibilities, all the time. Not everybody has that kind of time or is capable of handling this highly demanding Job. This is where ‘Signals In Forex’ come into picture.
These signals mean an advice to the trader on what to do in the given market conditions. These signals are created by experienced and proven professionals who follow markets movements full time and make conclusions about future, expected happenings in the markets and on where the market will most likely move in the given period of time. Since these people usually have a strong history of making correct conclusions and predictions, they are hired by companies under the assumption that their success with their predictions will continue. These predictions are called signals or trade recommendations, sometimes retained by the companies for internal use only and sometimes released to public traders either as a social service or after charging them a professional fee. These conclusions or ‘Signals In Forex’ tell the trader what to buy or sell with clearly defined profit targets (TP). They also have an inbuilt Stop-loss advice where the trader should close his position in case the prediction goes wrong. It does go wrong sometimes but not to worry because simple mathematics can help you ascertain profitability of a signal provider.
To generate profitability of an analyst’s ‘Signals In Forex’, you just need to take his performance history and find out his win: loss ratio out of a sample of ten consecutive signals. If you can find a larger data, nothing like it but this example will give you a fair idea. Make sure that the fellow or the company maintains an average of 70:30 win ratio and the largest loss taken on any of the positions is smaller than the largest win. There are also other factors like Sharpe ratio or Profit factor or risk adjusted rate of returns which you will learn as you grow in forex. They all are highly effective and must be deployed if you plan to ever run a business around trading. All investment companies do while selecting their signals providers.
However, I will suggest that instead of buying somebody else’s signals, you should try to understand some indicator and learn to apply it under all market conditions. This way, you can generate trading signals on your own, use them and may be, also give them to other budding traders who can’t analyze the markets but need ‘Signals In Forex’ to continue with their ambitious plans in trading. You may charge them for your signals but even if you give it free, it feels good.