The Power of Foreign Exchange Signals

Traders are able to make trading decisions in the competitive Forex trading arena, only because Forex signals appear on their charts. If these signals did not exist, then online trading would be almost impossible, especially on short term time frames. Whilst different traders tend to follow different methods for predicting the market, they all agree that interpretation of foreign exchange signals is the key to success; As they really do have predictive power, which varies from time to time.

Forex Signals Make Trading Possible

Even computerized trading is only made possible because of trading signals that algorithmically modeled and programmed into computer code. So that the computer can analyse market price, sense these signals in the making, and then either let the user know or even make the trades all on its own. And while simulated computerized trading is no match for the real thing, it goes to show how foreign exchange signals, in the larger sense, can be used in a reliable way, removing most of the fuzziness and ambiguity.

forex signals in action EURJPY daily chart: the chart is full of divergences and in this case of one head & shoulders formation seen on the indicator chart alone (the indicator being CCI in this case).

How to Trade Forex on Reliable Foreign Exchange Signals

Good technical signals are formed over time, usually over several days, and are confirmed by more than one indicator. Misinterpreted signals on the other hand tend to be formulated hastily, as if someone is forcing them to move, and may only be confirmed by one indicator. Divergences for example are usually spotted between market price and an oscillator, such as MACD, RSI, or CCI. If all indicators agree, that is a red flag, meaning the signal is bound to be false. If only few indicators agree and confirm the signal in question, while the rest seem not to have picked it up, there is a good chance that the signal may be real and of significant impact.

No Forex Trading Course is Perfect

In the world of forex education, no course is ever perfect. But even the worst courses out there do have something of value to teach. Some simple tactics do work in practice, and can be used to identify buy and sell signals with remarkable accuracy. These are, for example:

  • divergence signals
  • hidden divergence signals
  • breach of key pivot levels
  • outside days

Good foreign exchange signals can be inferred from these few observations alone, which can be relatively easy to do on the market charts. All signals however inferred from the charts are technical in nature, they can still fail, but they tend to be more reliable when observed to have formed over a few days rather than few hours. Forex signals vary greatly from one time frame to another, and from strategy to strategy. But even a basic course can teach the key principles of trading using such signals. The trader can take these principles and expand them in their own unique way. Divergences alone for example can be the sole subject of extensive technical analysis for days at a time. And it is one trading technique which is extremely reliable in terms of determining direction of market price, but it provides no clues as to the timing of the expected move.

Trading CFDs involves significant risk of loss. Trading FX/CFDs involves a significant level of risk and you may lose all of your invested capital. Please ensure that you understand the risks involved.