FOREX TRADING SIGNALS
Every forex trader can benefit from accurate signals to trade. A trading signal is simply an indication of when and how to trade a particular forex pair, based on specific price analysis. This could be generated from a manual source or from an analytic program using complex technical indicators.
The key to using trading signals is to be methodical. Find a clear and reliable source of trading recommendations based on a methodology that is consistent with your wider trading strategy. Most signal providers should be able to supply the research underpinning individual recommendations, as well as a ‘strike rate’ of previous signals.
Trading signals: entry point
Your entry point tells you the price level at which to open a trade on the forex pair in question. This could be to buy the pair (a long position) or to sell the pair (a short position). Typically the entry point is set at a level which will trigger significant market activity, according to the analysis behind the signal.
With Intertrader you can create an order to open a new forex position if the price hits the stated level, so you don’t have to be active at your terminal when the entry point is breached. Alternatively you could set a price alert at the entry point level, and manually open a trade if the alert is triggered.
Trading signals: exit point
A reliable trading signal will typically provide you with two exit points, indicating where to close any position created in response to the signal: the stop level and the limit (or ‘take profit’) level.
The stop level tells you where to close the position if the trade is moving adversely, in order to limit your losses. The limit level tells you where to close the position if the trade is moving favourably, in order to lock in your profit. For instance, the signal may be indicating a short-term price rise followed by a reversal, in which case you want to take your profit at the peak of the rise before those gains are reversed.
Stop and limit levels are a vital part of your trading plan, defining your personal risk/reward strategy, and you should stick to the levels you have set rather than seeking to run your profits or chase your losses.
Intertrader lets you set your own stop and limit levels for each trade you make, and your position will be closed automatically if these levels are triggered. Remember that stop orders are not guaranteed and may be subject to market ‘gaps’ and slippage. Find out more about risk management.