Forex signals: Can they be trusted for trading currencies?

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.

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.

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.

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.