What are Forex Signals in a Nutshell?
Forex signals providers will send you potential trade setups when the provider’s traders or algorithms generate a forex signal. What you do with that signal is up to you. If you are at your trading station and ready to act – you enter the trade as per the signal. And hope for the best. One of the challenges is that the signal might be a minute or more old by the time you see it, and you will spend some time – maybe a minute or more entering the trade. The time lapse between a signal being generated and a trade being executed can be several minutes. By then, chances are that the price has already begun to move – and this could result in missing the opportunity or worse – stopping out. Leading one to believe that the signal didn’t work.
There are two basic alternatives to trading using Forex Signals: Forex Trading Robots and Copying Proven Profitable Traders.
What are Forex Trading Robots?
Automated forex trading robots are pieces of software which utilize foreign exchange market price movements to signal traders when to buy or sell a currency pair. These bots can be incorporated with online forex brokers or trade platforms and are designed to remove the psychological aspects of trading which can lead to losses. Although these robots promote the possibility of making gains, it is essential to understand that they have limited functions and are not infallible. Forex trading robots are mostly created with MetaTrader and use MQL scripting language to create trading signals, place orders, and manage trades.
Robotic forex trading programs are created to eliminate the psychological component of trading, which can be harmful. Investors should be cautious when buying a trading system from the web, as there are many companies that appear and offer trading systems with money-back guarantees, only to vanish a few weeks later. They may try to make it look like their system is successful by displaying the most successful trades, or by modifying results when testing the system; however, these are not reliable methods for assessing the potential for both risk and profits. NOTE: There are tons of fraudulent robots out there. It is best to look at robots that have proven track records.
Another issue with automated forex trading robots is that they may generate profits in the short term, however, their performance in the long run is unpredictable. This is because they are programmed to stay within a certain range and to follow the trends. If there is a sudden price change, it can erase the profits that were made in the short term. It is impossible to find a trading system that guarantees success, as anyone who discovers one is likely to keep it secret. This is why financial institutions and hedge funds keep their complex trading models hidden away and protected.
When selecting a Forex trading robot, there are certain characteristics that should be taken into account, such as:
- Being able to operate 24/7 – This will ensure that you don’t miss any lucrative opportunities.
- Low investment demands – So that you can afford the robot.
- State-of-the-art trading automation technology – This is essential, as your funds are at stake. Therefore, you should choose a robot with the most sophisticated trading technology available.
Note: Most robots are attached to the trading platform MetaTrader. This involves setting up a VPN that runs 24/7 and installing the software and robot. Not that difficult, but can be a little tricky.
How do you Copy Profitable Traders as in Trade Copying?
Copy trading is an advantageous way for less experienced traders to just follow the trades of more experienced investors. It is similar to the way students in a classroom who want to do well will copy the example of a peer who has done the studying and knows what they are doing, rather than guessing. The primary goal of copy trading is for the less experienced trader to receive the same profits as a successful investor, with less room for expensive mistakes. However, it is critical to fully comprehend the process and to be familiar with stock analysis that is applicable to the market the investor is entering before deciding to copy trade.
Check out our comments on DupliTrade, one of the more successful copy trade platforms.
Taking copy trading step-by-step requires getting an account on a secure stocks and trading platform. The majority of these platforms allow for the choice to follow other traders. It is essential to pick the right trader to follow based on criteria such as a steady trading pattern or a history of profits. The next step is to figure out the amount of money that can be put at risk and is available to invest. It is advisable to start with a small portion of disposable income and to bear in mind that investing involves a risk of not obtaining all of the money back. The final step is to monitor the activity of the investor being copied. Trading platforms may copy the stock selection automatically, but it is also possible to do it manually by monitoring the portfolio selections of the copied investor.