Forex signals: Can they be trusted for trading currencies?
Michael Stark
Financial Content Leader at Exness
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
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Even if you’re not familiar with CFDs, it’s likely that at some point you stumbled across videos and other online content about forex signals. Some self-proclaimed experienced forex traders might offer you these signals, either for a monthly fee or sometimes as “free signals” if you sign up for something using their affiliate link. But can you trust them?
You can also find forex trading signals on the MetaTrader platform or from forex signals providers on Telegram and other messaging services. This article outlines what signals are, some of the popular sources for them and why they should be used with caution, if at all. You don’t need forex signal services to trade forex or any other instrument, but in some cases they can be useful. Here, we also discuss alternative options to signals for forex pairs (EURUSD, GBPUSD, USDJPY, EURGBP, etc.) so that you can try and answer some of retail traders’ most common questions about them.
What are forex signals?
Forex signals are instructions or suggestions on what to trade and when. They tell novice and professional traders which instruments might be good trading opportunities to buy or sell. Sometimes they’re sent in apps in real time, but it’s more common for retail traders either to follow a certain provider consistently using MQL5 – essentially a type of social trading – or manually transfer the data from Telegram or similar apps to their chosen third-party trading platform.
A channel on Telegram for forex trading signals typically looks like this.
Signals from a forex signal provider for entry and exit mostly come from technical analysis, such as charts, patterns and indicators. It’s possible to find forex signals based on news and economic data, but they’re very rare. Also, don’t forget that many signals are generated by algorithms, not human analysts or technicians.
Introduction to forex signals
Forex signals, like entry signals for other instruments such as commodities, cryptocurrencies and others, give specific instructions on what to do but not the reason(s) behind them. A trading signal might say something like this:
buy stop 0.1 cable at $1.24 target $1.27 stop $1.235
This forex market signal is an instruction which tells you exactly what to do but doesn’t explain why. Many forex signals are like this, but the format can vary.
Trading signals are mainly for people who can’t or won’t analyze financial markets actively by themselves. That might be because of a lack of knowledge, a lack of confidence or simply a lack of time. To some extent, signals for forex pairs can also help if you’ve struggled with trading the forex market and want to follow the lead of a more experienced or successful trader. However, keep in mind that this scenario doesn’t guarantee success with forex trades, and it's important to understand forex trading signals.
Types of signals
The most common type of signal is based on technical analysis, typically applied through a specific algorithm. Forex trading signals rarely use fundamental analysis, such as monetary policy or major economic news releases.
Many providers of forex signals use a strategy called martingale. This method originated from a popular betting ‘strategy’ which requires doubling the bet after every loss. It assumes that the money available is infinite and eventually the profit will cover all the previous losses.
The specific trading strategies used by forex signal providers vary greatly. Entries, take profit and exits might be based on static or dynamic support and resistance, technical indicators, traditional patterns, candlesticks, all of these together,or a wide range of other things.
Some forex trading signals might tell you the volume you should trade and specific entries, stops, and targets, while others might simply say ‘buy cable now’. If you want to use signals from MQL5, you usually receive access immediately after paying and can automatically copy them in the Signals tab in MT5.
Sources for forex signals
One of the most popular sources of trading signals is Telegram, but you can also find signals on Whatsapp, Viber and other instant messengers. A trader might find a forex signal service online or meet a signal provider in person then subscribe to their channel and use the signals offered. Remember that you are responsible for your financial decisions and their results, good or bad. Any reputable provider of signals will remind you of this with risk warnings and disclaimers.
Good signal providers of forex signals on Telegram or elsewhere will publish results, both positive and negative.
You can equally use MQL5 for signals which can be more convenient as it’s integrated with MT5. To use these automated trading signals you just need to pay for them and run them automatically on the trading platform. Keep in mind that Exness does not provide signals and we are not responsible for the results of using signals from the MQL5 community. However, you can access a detailed step-by-step guide on subscribing to signals with MT5 through your Personal Area once you’ve registered a trading account with Exness. You can also subscribe to signals from MT5 mobile.
Another option is to use the signals from Trading Central which are available through your Personal Area with Exness. These aren’t typical forex signals because they provide possible targets in both directions, offering only a ‘preference’ for which direction to trade. However, they can help to provide context and you can use the preference as a signal.
You can access free forex signals in the form of preferences from Trading Central in your personal area with Exness.
Advantages and challenges of trading currencies with signals
Just like any other tool, using a signal service or provider comes with advantages and disadvantages. It’s wise to be cautious when using forex signals. They’re not always 100% reliable. Therefore, perform technical analysis as well as fundamental analysis before making major trading decisions.
Advantages of forex signals
Trading currency pairs with signals can save you a lot of time. They can make it easier to find potential market opportunities, assess risk, and monitor trades – all of which can take many hours out of your week, especially if you’re a high-frequency trader.
Overall, signals are more reliable than randomly trading. They can also help reduce the emotional part of trading. If you strictly follow somebody else’s plan, there’s potentially less room for greed or other negative emotions to affect your trading performance.
Challenges of using signals
On the other hand, a plan offered by forex signal providers might not suit your risk tolerance. This is especially true of any forex signal, or other type of signal, that dictates the volume to be traded.
When forex signals fail, which they all will at some point, at least temporarily, you won’t understand why. Signals don’t explain why a certain position is being recommended, so you can’t analyze or correct any potential errors.
Doing your own research
Exness doesn’t offer signals because we believe that you should be responsible for your decisions. We encourage you to gain the knowledge needed to make the best choices for your circumstances. Using forex signals without question is like buying a car just because someone online suggested it; most people would do at least some research before making such a decision.
If you had any background in investing before you became interested in trading, it’s common sense not to blindly follow someone else’s advice. If you do decide to trade with signals, it’s always a good idea to understand why a position is recommended, whether it’s suitable for you, and what you could do if it doesn’t go as planned.
Alternatives to forex signals
Using signals in combination with your own research and analysis can be an effective trading strategy for you as a trader. However, you might also benefit from the alternatives to signals offered by Exness.
These alternatives might not be as easy and straightforward to apply for beginners. However, if you invest some time and effort into learning about trading, the alternatives might be a better fit for you. These alternatives explain the reasons behind trade ideas and actively track performance.
Exness’ weekly market outlook
Exness’ weekly market outlook is a video that comes out usually every Wednesday. This weekly YouTube video explains a possible idea for a specific trade, the fundamental rationale behind it, and what to watch out for if you decide to take that position. These videos are not forex signals but trade ideas which provide context.
The weekly market outlook provides a simple idea for forex trading, as well as for other markets, and offers the reasoning behind it.
Each week the presenter starts by analyzing the technical aspects and possible direction for an instrument. Then they explain why they think an idea is valid and highlight the key upcoming data and events that might change the situation.
We also provide a weekly review video of the previous week’s performance. You can use Exness’ market outlook for free and we encourage you to leave comments on our YouTube or Instagram videos.
The weekly recap for Premier clients
Exness Premier’s analytical team has been creating weekly recaps for more than three years. The focus is on key markets such as forex markets, gold and silver, crude oil, indices, shares, cryptocurrencies,, natural gas and metals. Each report contains three trading ideas with an average accuracy of around 70%.
The ideas in the weekly report for Exness’ Premier clients are not forex signals but trading opportunities; they also cover a range of markets other than forex.
We run a walk-forward test of all the ideas in the weekly report using a simple swing trading strategy. The consistent result has been an annual profit of at least 90%. In other words, a trader who followed all the ideas from the beginning could have tripled their money.
Please remember that trading performance in the past doesn’t prove or guarantee success in the future. As with forex signals, ideas in the weekly report don’t always work. However, each idea does come with an explanation and market analysis, enabling you to check its validity and make your own decisions. The weekly report is part of the analytical benefits available to all of Exness’ qualified Premier clients.
Exness’ quarterly reports
In addition to the weekly report, Exness also produces quarterly outlooks for Premier clients. These are released in the first month of each quarter: January, April, July and October. A few days after an exclusive release for Premier clients, each outlook is made available for anybody to download, on the Premiers’ page.
Exness’ quarterly outlook can be an excellent alternative to trading signals because it explains the reasons for all ideas in detail.
The quarterly report is an in-depth analysis of what happened in the previous 3 months, and the possibilities for all major instruments over the medium term. It offers ideas for forex trading and other markets instead of specific signals, because there are no specific entries or exits but explanations of why certain probabilities are favored. As with the weekly report, any qualifying Premier client of Exness can receive the quarterly outlook as soon as it’s released.
Frequently asked questions
Are forex signals reliable?
The simple answer is that it depends on the method used to generate a particular forex signal or group of signals. However, even when a certain provider has been consistently profitable in the past, it’s generally a terrible idea to rely blindly on signals. It’s important to do your own research and manage risk.
Remember, no signals are reliably accurate all the time. Another part of the problem with many signals is that they don’t consider your individual circumstances, including your balance, risk tolerance, or other factors.
For example, an active trader with a $200 balance might risk $10 on gold around the American job report for a potential profit of $30. However, if you’re a conservative trader with a $200,000 balance, you definitely wouldn’t risk $10,000 for a potential $30,000 gain under the same circumstances.
What is the best signal for forex?
At Exness, we believe that the best signal for reaching your investment objectives is a knowledgeable, patient and calm trader with realistic expectations. You can become this kind of trader by being willing to learn, practicing frequently, and carefully evaluating your results. While you build your knowledge and experience, you can use automated or other forex signals with caution.
Generally, the best forex signals for currency pairs aren’t very specific. A trading signal that requires a certain volume is probably only suitable for a small number of forex traders. Every trader, including you, is different from other traders. The differences include psychology and personal financial situation as well as trading knowledge, trading strategies, balance, instruments traded, and different trading styles.
Are there free forex signal services?
Yes, there are various options for free forex signals. You can use the preferences from Trading Central if you have a trading account with Exness. These are very close to the ‘traditional’ experience of using trading signals but also give you the option to trade either way based on your analysis of the news.
Exness also offers a number of alternatives to signals as described above: the weekly market outlook, the weekly report and the quarterly outlook. These have the potential advantage of being more detailed than typical trading signals with potentially more trading opportunities to evaluate and choose.
Using forex signals with caution
Like anything else in trading, there is no such thing as “best” forex signals. No trading signal should be trusted blindly without reference to anything else. Even if you’re using stereotypical ‘do this now’-type signals and they’ve been successful in the past, you should still check their validity.
If you’re a new trader, you can test the difference between using trading signals and using Exness’ alternatives on a demo trading account or Standard Cent account. Exness’ market outlook could be a great way for you to learn about correlations between financial markets, what drives currency pair prices and various other important factors, even if you don’t end up acting on the ideas.
You can find all the key information in one place with Exness’ market outlook and see which instrument might be most likely to move. Watch the outlook every week to see how its ideas perform and consider whether the latest idea is worth trying out.
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This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.