Forex trading signal systems are sets of algorithmic procedures or analyses used by Forex traders to establish entry and exit points for a currency pair trade at any particular time. Comprising a large number of signals generated from technical analysis or relevant news events, the signal systems work in unison to create the appropriate buying and selling orders for Forex traders. To obtain the signals, one can either create a proprietary system, or subscribe to a Forex signal provider for a monthly subscription fee.
The execution of Forex trading signals can be carried out either automatically or manually. Manual systems require Forex traders to look for signals at a computer and analyze the market in order to determine whether to buy or sell. Automated systems, on the other hand, require the trader to set the computer program to determine the trading signals’ criteria and interpret their results. As mentioned earlier, by using automated systems one can completely remove the psychological aspects of trading, an issue that can be at times detrimental to success. Both automatic and manual signals can be procured on the Internet.
Before starting to use a signal set for automated trading, it is crucial to examine its past results carefully (in pips and %win), as wells as the system’s risk / reward ratio (max DD, APT and ALT).
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