Of course,
you can use automated orders such as limits and stops. These will allow
you to walk away from your computer with the knowledge that your losses
will be kept to a minimum. A disadvantage of this option is that you
may miss out on potential profits because your limit order kicks in too
soon.
If you do not
have the time to watch your computer monitor but still wish to create
as much profit as possible, you should consider signing up for a FOREX signal
service.
Signal
services monitor and analyze the market for you and
send their findings directly to your computer desktop, or email They
are also capable of alerting you on your cell phone or pager.
Companies
that offer FOREX signals do so on a paid basis, of course. It will be
necessary for you to sign up and pay a monthly or yearly fee. Some
FOREX
brokers might offer this service
as an extra which integrates into
their trading software. You can receive signals as a popup on your
screen or by the other methods described above.
There are
usually only a limited number of currency pairs that are available for
FOREX signals. Most services offer signals on EUR/USD, USD/JPY,
GBP/USD, USD/CHF only. Specialized services may offer other currency
pairs.
FOREX signals
are primarily based based on technical
analysis of market conditions.
Most companies will use a combination of indicators to identify major
trends as well as entry and exit points. These results are sent to the
subscribers who then have the option of acting on them or passing. Some
services will even execute the trade for you.
By means of a
variety of technical studies, various types of signals can be derived
from currency charts. The SMA (Simple Moving Average) indicates buy
signals when currency prices rise above the average line. Sell signals
occur when the price falls below the moving average line.
MACD (Moving
Average Convergence Divergence) studies have a signal line that is used
to generate a buy signal (above the line) or a sell signal (below the
line).
Volume
indicators are used to determine market interest. High volume
(especially near the bottom of the market) can indicate the start of a
new trend while low volume indicates investor uncertainty.
Bollinger
Bands indicate potential changes in the market. Sharp price changes
tend to occur when the bands tighten while prices that touch one band
tend to go all the way to the other band.
Other
indicators like volatility and momentum can be used to reinforce
signals provided by other sources. Taken together they form a
relatively reliable source of information about how the market is
behaving.
Are signals a
sure thing? Of course not, otherwise we would all be millionaires.
Signals can give you good advice about which currencies to trade, but
no signal service will guarantee their information is 100% accurate.
Reputable services will show you their track record, however, and let
you see for yourself how they have done in the past.
A FOREX signal service
can
cost anywhere from $50 to $200 a month. It's up to the individual
trader to decide if the cost is worth it. Don't think that signals can
take the place of trader education – they are advice, and if
you don't have the knowledge to analyze the advice, you should go back
to the books before using a signal service.
