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Forex Signals: Do They Really Enhance Trading Profits?

With around $7 trillion in volume being processed on a daily basis, forex traders are not exactly short on opportunities to make money. Going long (buy) and short (sell) on the most popular currency pairs, like EUR/USD and GBP/USD, are just some of the trades they can carry out in the FX market. This is primarily down to built-in market features like high liquidity levels, and continuous open trading sessions from Monday morning to Friday night.

Hence, regardless of whether one resorts to self-trading or a reliance on forex managed account services, the primary challenge is to keep profit levels consistently in the green — no easy task considering the hundreds of seemingly unconnected factors that influence market movements. It is an incredible challenge for a small team of experts, let alone an individual, to keep track of all the fundamental metrics that have an impact on price fluctuations.

In a nutshell, the prerequisites of a consistently profitable trader in the FX market are competency in a variety of tasks, deep knowledge of a range of subjects, and an ample supply of free time. In view of such demands, it is no wonder that forex money management strategies from around the world have collectively embraced the concept of forex signals to make traders’ lives easier.

But what exactly is a forex signal? Let’s find out.

A System of Signals

A forex signal can be defined as an analysis or a piece of information on a currency pair used by a trader to help decide whether to buy or sell it at any point during trading hours. It usually consists of technical analysis, charting tools, updated economics data points, or current events. Various signals are usually packaged together to form a system of forex signals that combine to dictate a buy or sell decision. While some trading signal systems are available for free, others can be accessed for a monthly fee, and a limited few are developed for internal use by top forex fund managers.

The whole concept came about as a solution to the single biggest doubt that gnaws at the insides of every trader: identify an opening and exploit it before the window of opportunity closes. In order to tackle this, a trading signal serves to transform complex pieces of interrelated data points into a simple “buy” or “sell” recommendation that has to be carried out within a specific range of price and time. No matter whether a trader is about to dip their toes into the market for the first time or an old hand at it, a signal system can help turn their good forex money management plan into a great one.

But before we delve into how forex trading signals raise profits, it is vital to understand the various types of signals and how they compare against each other.

Category of Signals

Apart from whether forex trading signals are available for free or for a fee, they can also be categorised in the following ways.

1.         Manual & Automated: This signal categorisation is based on the point of origin. Manual forex signals are said to be generated when a professional market observer or an experienced trader or a team at a forex fund management company compiles them. Conversely, trading signals fall under the automated category when a computer software, powered by algorithms that analyse market price fluctuations, produces them. Automated signals are presumed to perform better because they come without the additional weight of emotion that hampers many trades.

2.         Entry & Exit: Another way to categorise signals is based on the type of detail they provide. For instance, certain forex signal providers restrict themselves to publishing market entry signals, recommendations on when to open a trade position, while others publish only market exit signals, recommendations on when to close an open trade position. This separation is mostly true for signals on financial assets over long periods of time. Intraday signals, however, almost always contain both entry and exit recommendations.

Now that the different categories of trading signals have been established, let’s assess how their usage has the potential to enhance a trader’s profit levels.

Signal Equals Profit

To begin with, the positive impact of forex signals on new traders cannot be underestimated. Without the benefits of managed forex trading to lean on, any newbie’s journey into the dynamic and volatile world of forex is liable to be quick and short. With the help of forex signals, however, new traders get a chance to learn how the market operates without burning a big hole in their pockets. In fact, by attempting to understand the logic behind any recommendation they receive, they can make steady profits even as the pace of their learning process accelerates. TradEmpire, for instance, is a leading forex signal provider that places additional features like interactive charts and analyses of an extensive list of currency pairs at a new trader’s disposal.

Secondly, another benefit that signals bestow upon traders is to allow them to experiment with different strategies. If they were to rely solely on their own skill or knowledge of the market, then the number of potential opportunities they can exploit with a certain degree of confidence would be akin to a drop in an ocean. But when equipped with different types of analyses and updated data that signals provide, traders can step out of their limited area of expertise — their comfort zone, so to speak — to tap top quality opportunities in all kinds of assets at any time.

Also, forex signals grant traders that most precious of all commodities: time. Although the FX market is open from Monday morning to Friday night and comes with significantly more potential money-making trades, most traders have professional and personal obligations to severely curtail their trading time — thereby limiting trading opportunities. If left to their own devices, even the best forex managed accounts can only take advantage of a fraction of the opportunities in any given week. But fortunately, by providing detailed information on a currency pair, trading signals blow those barriers apart and create enough time for traders to carry out only the most important task of all: execution of the trade.

This article has hopefully provided a strong understanding of forex trading signals for you to kick on from. A good forex signal provider will have an immediate and lasting impact on your profit levels, and you need not look any further than TradEmpire to fulfil all your needs.

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Complete Guide to Dealing with Currency Volatility

Multinational companies based in North America and Europe welcomed 2022 rather grimly, what with a highly reputed Currency Impact Report (CIR) revealing nearly $12 billion in total impact to earnings from FX currency volatility in Q3 of 2021 alone. CFOs suddenly came under fire for not doing enough to mitigate risk despite threats to organizations' financial stability and supply chain.

The most obvious effects of currency volatility are sudden and intermittent variations in exchange rates. Even some of the best forex managed accounts have been known to fall prey to this phenomena. Hence, if you are to achieve your financial goals, it is vital that you appreciate the raw, unpredictable nature of forex volatility.

This article will shine the spotlight on FX volatility, show you how to recognize it, help distinguish it from risk, and reveal some strategies for you to counter it.

Meaning

In the simplest terms, volatility is an expression of the frequency and magnitude of variation over a period of time in a currency’s value. A currency’s volatility is judged based on how much its value deviates from the average. Traders dropped into a highly volatile market are caught in something of a double-edged situation: Large and erratic price movements not only raise their trading risk, but also provide them with excellent opportunities to hit the jackpot overnight.

One of the easiest ways to visually represent a currency pair’s volatility is to plot its value variation over a certain period of time on a chart, and then juxtapose it with its Average True Range (ATR), the most trustworthy measurement of volatility. Let us consider a real-world scenario for a moment.

Displayed above is a chart showing variation in the value of New Zealand Dollar/US Dollar over the past 5 years, and its corresponding ATR is indicated by a red horizontal line — almost straight throughout and a demonstration that NZD/USD is a stable currency pair.

Contrast that with the chart displayed below showing variation in the value of Bitcoin/US Dollar over the same time period. Its corresponding ATR represents the farthest thing from a straight line — the red line slopes up both gently and sharply, tell-tale signs that BTC/USD is a relatively volatile currency pair.

Types

When it comes to an options trade, especially popular among top forex fund managers, volatility is widely measured through two different methods: Historical volatility and implied volatility.

Historical volatility measures price variations of a security over specific periods in the past. Since it looks back in time it’s not quite popular among traders, whose primary interest lies in the future. When a security’s historical volatility rises, it means its price will also fluctuate more than normal; when it drops, it means any uncertainty surrounding the price has vanished.

Implied volatility, on the other hand, is more popular among traders because it provides an indication of how volatile the market will be in the future, or the anticipated volatility of the price of an option. Its output cannot be claimed as exact science, but just as an expression in terms of probability. Instead of relying on past performance, practitioners of implied volatility rely on the current and future potential of the option — i.e. demand and supply levels.

Differentiation from Risk

In many trading circles as well as in managed forex trading, the unpredictable nature of the forex market has erased the distinction between volatility and risk. Just to be clear, they are two different concepts.

Management of risk falls within your sphere of influence; market volatility falls outside it, unless you are the biggest trader in the world. On any given trade, you get to choose exactly how much you are willing to risk or put on the line, and how to manage it; in case of volatility, market forces have the ability to upset even your best laid plans.

At the same time, volatility and risk are also strongly related. As discussed earlier, volatile currencies are something of a double-edged sword and have a tendency to attract risk-takers, and where there is one, a herd is bound to follow. Hence, always be fully aware of the risks posed by a trade during a period of high volatility. As cliched as this sounds, rely on your own judgement rather than following in the footsteps of others, something made easier if you have a sound forex money management plan of your own.

Tips to Deal With High Volatility

There are some more forex money management strategies that can be pursued to maximize the value of your trades or, more importantly, at least limit the damages you sustain during a period of high volatility. Integrate the following into your trading plan and test them rigorously for the best results.

1.         Charts & Indicators: Rather than relying solely on ‘gut instinct’, pretty much every forex fund management company employs special teams whose sole purpose is to pour through charts and make sense of indicators in an effort to anticipate future price movements. Although including them in your workflow won’t guarantee profits, they are sure to improve your overall decision-making.

2.         Aware of World Events: Forex price fluctuations are heavily influenced by developments in real-time from all over the world, both politically and economically. If you are to somehow stay one step ahead of the market, then you should be constantly aware of what is taking place in any major country, at any given time.

3.         Stop-loss is Your Best Friend: Whenever it feels like the market is going crazy and the whole world is out to snatch away what’s yours, the only friend that will stand by and help you is the stop-loss mechanism. Regardless of whether you make your own trades or employ forex-managed account services, it is the best way to ensure that your losses stop at an acceptable level. It takes on even greater responsibility if you are trading with leverage.

Trading during volatile market conditions is a juggling act even the most experienced traders cannot keep up for long. So take in the information provided in this article and do your best to eke out profits or minimise your losses, and if you still feel overwhelmed by the circumstances, know that the most courageous thing you can do is to take a step away from trading.

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TradEmpire LLC provides retail traders and institutions with exceptional liquidity, service and innovative technology to trade in forex industry

TradEmpire is one of the most renowned Forex Broker, offering trading solutions for traders by providing cutting edge technology and superior liquidity. Our core team has significant experience in the Forex industry. Our technology experts have used the best possible technology options in order to provide a best trading experience to our clients.

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INTRODUCING BROKER PROGRAMME - Tradempire

INTRODUCING BROKERS

The partnership programme offers a unique package of benefits with significant advantages. INTRODUCING BROKER Forex program opens a window of opportunity to become part of one of the world's most significant financial markets.

INTRODUCING BROKER PROGRAMME

As an Introducer, all you have to do is refer clients to TradEmpire and you will be rewarded for it via commissions. Each time your referred clients makes a trade, you will receive a commission and as long as they keep trading, you keep earning. There is no limitations on the commission which you receive and you can withdraw your commissions anytime with no restrictions. No fees or charges are applied on the IB account. IB BENEFITS Genuine support No commission restrictions Unlimited withdrawals OPEN LIVE ACCOUNT

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Tradempire Trading Account Opening Process and Account Types

Tradempire partnership programme offers a unique package of benefits with significant advantages. IB program opens a window of opportunity to become part of one of the world's most significant financial markets.

REGISTER FOR AN ACCOUNT

It will only take 3 simple steps to open forex trading account and enjoy the best-in-class trading experience

1. OPEN YOUR ACCOUNT

Complete the Live Trading Account registration from. The trading account details will be mailed to your registered Email.

2. FUND YOUR ACCOUNT

Deposit funds directly into your trading account through debit cards, credit cards and bank transfer

3. START TRADING

Trade on every device(PC, Android, iPad and iPhone) and from anywhere

MICRO ACCOUNT:

A micro trading account is simply a trading account that allows traders to place orders in micro(0.01 lot) and mini lots (0.1 lot). Most brokers offering standard accounts will also offer mini accounts as a way to bring in new clients who are hesitant to trade full lots because of the investment required.

STANDARD ACCOUNT:

This account provides stable spreads with commission-free trading which are a great fit for all traders. Highlights include market execution and no re-quote. The standard account includes the Leverage of 1:100 or above based on the trading conditions.

PROFESSIONAL ACCOUNT:

The most prominent trading account with zero spreads and with best trading conditions. Traders can contact our executive support team anytime with no extra charges.

SWAPFREE ACCOUNT:

No swap charges are applied for this trading account. Traders can hold the positions as per their needs and no extra charges will be applied. For more details please visit our trading accounts page  https://tradempire.com/forex-trading-account