What Are Forex Signals And How Do They Work?

The purpose of forex signals is to identify the best forex trading chances at the proper time. A Forex signal is, by nature, a trading concept based on a certain currency pair that should be executed at a predetermined price and time. Forex signals can assist you to improve your trading operations regardless of your trading expertise or experience.

—TechRound does not recommend any investments financial practices, forex or otherwise and the content of this piece is for informational purposes only—

Forex traders use Forex signals for two main reasons: they’re not good at Forex trading, or they just don’t have the time. Forex signals provide you with the opportunity to benefit from trades that are being made by professional traders who know what they’re doing and can make more money faster than you could on your own.

How Do You Get Smarter About Currency Trading?

There are many ways for anyone who wants to learn the ropes of international finance. One good way is with Free Forex Signals, which provide intelligence on when and where traders should buy or sell currencies in order to earn their profits. All that’s needed now is an open mind.

How Do Forex Signals Systems Work?

Forex signals systems work by analysing historical price data to identify periods of high volatility. They then use this information to generate a trading strategy that profits from these peaks and troughs in the market, with an emphasis on short-term trades for maximum profitability and the highest accuracy and speed.

Forex signals are assigned a level or grade according to their performance in back-testing over various time frames using various volatility levels. For example, if an EA has a 70%+ win rate on a 1M period, but only 40% on 5M – it will be graded as “average”. The same goes for Profit Factor, which is average for this EA. You can see more information on the results of back-testing here: Forex Signals Back-testing

This trading strategy will consist of two independent rules and a single common rule, helping it to outperform most other strategies on the market by not requiring any complicated rules or parameters.

First Rule: If a crossing of the Simple Moving Average (SMA) occurs for X currency units above the SMA line, then BUY Signal is given; if crossing below – SELL Signal is given. The specific number of units for crossing depends on the currency pair, volatility and timeframe used in your trading strategy.

For example, if X=3 and we are using a 1M chart for EUR USD – BUY Signal occurs when the price of EUR USD goes up by 3 points from the SMA line. On GBPUSD this value will be different (it may be higher for example).

Second Rule: If a crossing of the Simple Moving Average (SMA) occurs for X currency units below the SMA line, then SELL Signal is given; if crossing above – BUY Signal is given. For example, if X=3 and we are using a 1M chart for EUR USD – SELL Signal occurs when the price of EUR USD goes down by 3 points from the SMA line. On GBPUSD this value will be different (it may be lower for example).

The Common Rule Is The Following: When both BUY and SELL signals are given, then SL (stop loss) is moved to the break-even level. So if you are long on GBPUSD – your SL goes down with the price of GBPUSD but never crosses it. This rule is very important to the overall trading system, as it helps reduce drawdowns and market exposure. The idea behind this rule is that if two crossing rules are crossed together – the price must move enough so you can get out of your trade with zero loss.

—TechRound does not recommend any investments financial practices, forex or otherwise and the content of this piece is for informational purposes only—