SIGNAL FOREX

Understanding the importance of forex signals in making decisions – ForexLive


How to capitalise on forex signals


People provide forex signals to traders to give the best ideas, interpretation, and guidance as
the markets open. For most people, it is easier to gain money while trading
charts and make buy or sell decisions no more than once a day.

The signals are
made to be as useful as possible. Most of the time, the tool they use within
the signals is the identification of exact prices or narrow price ranges where
the market might turn. Generally, people know this as ‘support and resistance,
but they can also think of them as pivotal points.

The Use of
Forex Signals

All signals start
with a discussion of the prospect that the previous day’s signal generates any
open trade in the same currency pair. After that, the piece goes on to give the
best times of the day in which to open any new trade, and they might risk the
position size on a trade that day. Then, it will determine possible support and
resistance levels with an accompanying illustrative chart. Going with the
signals indicates taking note of these levels and observing during the suggested
hours to see if the price hits any of them.

If the prices hit
a resistance level after going up, traders wait to see a bearish turn in the
price. And this means they believe it is going to go down. Then, when the price
touched a support level after going down, they wait to see a bullish turn in
the price – meaning traders believe it will go up. The problem now is how to
identify a turn in the price when it has a high probability of becoming the
best point in entering a winning trade.

Identifying
a Price Turn

As the candlestick
completing the turn closed, what traders will do next depends if they are
entering a long trade where they want the price to move up or a short trade
where they hope for the price to move down.

In the long trade,
it’s understandable to place a buy order one pip above the turn candlestick’s
high. And this is with a stop loss one pip below the lowest price reached in
the move. On the other hand, in a short trade, the best way is to place a sell
order one pip below the turn candlestick’s low. And this is with a stop loss
one pip above the highest price reached in the move.

Now, for a trade
to move forward, the price needs to reach the level where the order is set.
Typically, the best trades occur fast. The longer the time elapses before it
hits the price, the less attractive the trade becomes – ‘decaying’ over
time. 

So, the best thing
to do when the trade entry has not been triggered an hour after entering the
order (during the next one hour candlestick), it makes sense to cancel the
trade.

One more reason to cancel
the trade is when the price reaches the stop loss before the entry becomes
triggered because this means that the support or resistance level became
unreliable. To do this, it is vital to check
the screen
from the time of entering the trade
until the entry is triggered or until the time limit for an entry expires so
traders can cancel the trade manually.

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