How to Use FOREX Signals
Forex trading--in which international currencies are traded-- has gotten popular over the past few years as the business has become deregulated, allowing traders with all sizes of bank accounts to enter the fray. Advertisements for Forex trading systems, brokers, signals, and even robots seem to be ubiquitous. So how does one use Forex signals to make money?
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Instructions
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Find a Service
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Find a signal service with a solid track record. There are thousands of services out there today. Some of them work; most of them don't. A website called ForexPeaceArmy.com (find a link in the References section below) has ratings for hundreds of brokers, signal services and softwares. These are all reviewed by users and the site is free to join. This is the first place that you should look to find a dependable service. Simply go to the site and click on "Reviews" and "Signals." Look for a service that has at least 60 votes and has four stars or more.
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Review the track record. Some services claim returns of thousands of pips a month, but when you look closer at their records they only give you entry prices and use the highest that the trade went at as a basis for their track record, whether or not they actually told you to exit at the high. For example if the signal was to enter at 1000, and the position went all the way to 1500 and then reversed, they would claim that you could have made 500 pips on their record. While this is true, unless they told you to get out at the top there was no way to know that it was the top. So when you review track records make sure they include an entry price and an exit price.
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Choose how your signals are delivered. Forex is a 24-hour-a-day, six-days-a-week market and orders can come at any time. You should be able to have an option to choose whether you want your signals delivered by e-mail, by SMS, or both. As a rule of thumb you should choose both so that you don't miss any trades.
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When you get a signal make sure to enter the limit price the order will execute at, the stop loss, and the target that you will take your profits at. All signal providers should provide these three recommendations.
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Tips & Warnings
Despite the claims of easy money, Forex trading is a difficult business. Always start in a simulator first and after that play with small amounts of money. Always use a stop loss and don't risk more than 2 percent on a trade.
