How to choose the best forex signals

The world of forex trading is an exciting one, offering several opportunities for profits. However, where there is profit, there is also risk. Fortunately, there are several tools to help traders navigate the volatile forex market by making informed trade decisions.

Forex trading signals are one of the most popular and easily available tools to choose when trading. It is a trade recommendation, based on careful analysis of various factors, letting you know when and how to trade a particular currency pair. It suggests entering into a trade in a forex pair at a specific price, either to buy or sell, and even provides a target level at which you could potentially generate profits.

choose forex signalsThere are two kinds of forex signals available for traders: automated signals which are generated by trading bots, algorithms and expert advisors (EAs), or manual signals that are published by a team of analysts and professional traders who study the market before putting out their ideas. While some offer signals for free, others charge a fee for subscribing to their services.

With so many available options, how do you find the best forex signals? There are many good services to choose from, but if I had to pick one that checks all the boxes and is my go-to signals tool, then FX Leaders would be the best forex signals, in my opinion. Take a look at some of the key things to consider before finding the ideal signals that work for you.

Reliability: Before signing up for forex signals, ensure that their provider has a good track record by analyzing past performance reports to understand their rate of success. Steer clear of signals providers that do not offer details on their track record.

Reliable forex signals will produce consistent results, turning profits frequently, though not necessarily always. How do they do this? By ensuring that the team of analysts and/or traders behind them is professional, highly experienced and shares effective forex signals that are derived through in-depth analysis of technical and fundamental indicators and price action.

Limited drawdown: High quality signals yield exceptional performance in terms of equity growth with negligible drawdowns, which means that they will have fewer consecutive losing trades and have a steady equity growth curve. In addition to the number of winning vs. losing trades, you should also look into the size of both kinds of trades while making your decision.

Drawdown is a factor of risk-taking capabilities of the analysts who publish the signals. A risk-averse team behind the signals will publish safer forex signals with potentially limited profitability. What you need is a signals provider that is able to strike the right balance between risk and profitability, which goes back to the previous point of having an experienced team of analysts working on the signals.

In-depth analysis of technical and fundamental indicators: The best forex signals are generated after comprehensive analysis of a range of factors that can drive movement in a currency pair. This includes fundamentals like financial and/or political news, market sentiment, volatility as well as technical indicators. Ensure that the signals you use leverage technical strategies like candlestick patterns, Fibonacci indicators, horizontal levels, Elliot Wave, MACD indicators and more to arrive at the trade plan. While analyzing technical indicators, be sure to check out if the analysis offered spans across various timeframes as well when identifying trends. Timeframes in forex trading can vary from seconds, minutes, hours, days and sometimes even months.

Ultimately, keep in mind that the more effective the trading strategy, the higher the likelihood of profitability. Additionally, if the signals provider can offer a reasonable explanation behind the trade ideas recommended by the forex signals, even better. This would help you understand the various factors influencing the trades and, over time, make you an even more experienced trader.

Diversity of instruments and timeframes: As a forex trader, you may choose to trade a select few currency pairs or would like to mix it up by trying your luck trading multiple forex pairs. No matter which way you choose to go, it helps to subscribe to a service that offers forex signals for a wide range of financial instruments, so you have the option to increase your level of diversification and spread out the risk.

It also helps if the forex signals you pick offer a healthy distribution across intraday, swing trading and position trading opportunities. Just like with a variety of instruments to trade, you can also choose to experiment with different timeframes for holding your trades and increase your chances for profits.

Frequency of forex signals: This point is an easy one: to make the most of forex signals, make sure you get enough of them through the day to pick and choose from. Select a service that issues forex trading signals on a regular basis, because the higher the number of signals, the more reliable their performance is likely to be.

Let’s simplify this with an example. When a forex signals provider claims a win rate of 70%, the rate is more reliable across a higher number of trades executed. The more the number of signals published and trades executed, the higher the likelihood that the win rate would match the long-term average claimed.

An additional benefit of selecting forex signals that are published frequently is that even if you miss a couple of trade ideas because you are away or due to time zone differences, you still have the option of receiving the next idea in time to place your trade without waiting for too long. This is especially useful if you want to distribute your risk by placing multiple trades instead of focusing on a limited number of options.

Hours range: The world of forex markets is active 24 hours a day, 5 days a week. It doesn’t matter what part of the world you are based out of, as long as you receive adequate forex signals during your active trading hours. For instance, let’s say that you like to do most of your trading during the Asian session. In such a scenario, signing up for forex signals that are published during the US session would be of almost no use to you. Ensure that the service you pick offers a good number of signals during your trading session, so that you can obtain the most value from them.

Timely alerts: This one’s a bit of a technical factor, and not based on the quality of the signals, but it still matters quite a bit. Pick forex signals that send you alerts about upcoming and active trade opportunities in a timely manner so that you never miss out on a promising trade. To reap the most profits, you have to execute a trade idea at just the right time, and if your signals service cannot update you at the right time, you may lose out on chances to earn more profits.

While the above factors gauge the quality of the forex trading signals, the ones you choose to use should also be easy to comprehend and apply. Some signals offer easy integration with forex brokers, so that with just a click of a button, the trade ideas can be copied into your trading account and executed. In the case of signals that you need to copy, ensure that you understand the format of the signal and that it communicates all relevant information in an effective manner. Any information in a forex signal that you fail to understand would work against you and prevent you from making the most of such a tool.