A successful forex trader doesn’t just make trades based on a whim. He has a system that generates forex signals. These signals tell him when it’s time to buy or sell a foreign currency. You can either use your own trading software to generate such signals, or you can employ the services of a company that specializes in providing their customers with trading signals.

Using your own software is not difficult. You in fact get many quite decent software trading packages for free on the Internet. The ones with the top features will be commercial versions though, which are aimed at the professional trader. What you have to do then is to program the software with a set of rules and based on those rules it will provide you with trading signals. In order to do that, you will have to familiarize yourself with concepts such as fundamental indicators, technical indicators and chart analysis.

It’s not really as complicated as it may sound. Once you have a good quality trading software package, you can start trading on a demo account simply by using the moving average. Many traders use this approach. When the price of the currency starts trading above the moving average, they buy. When the price drops back below the moving average, they sell. To fine-tune the system a little bit and get better results, especially when it comes to exciting a trade, you can use the cross-over of two different moving averages as a trading signal. A good example is to buy when the 6 period exponential moving average moves above the 23 period EMA and to sell when it drops below.

Alternatively you can decide that all this sounds too complicated and that you don’t have the time to study all the technical jargon. Your other option is then to sign up with a company that sends out these trading signals based on their own interpretation of where the market is going. The good ones will tell you how they reached their trading signals, so you don’t have to act like a robot and you will learn a lot about the market this way.

The advantage of such an automated trading signal system is that you don’t have to know anything about the forex market to follow it. The flip side is that different signal generators use different systems to calculate their trading alerts, so chances are good that some will work and some won’t.

The tricky part is therefore to find one that generates quality trading alerts that will make money for you over time. In this regard it’s no use to rely on historical records or reviews by other people. History never repeats itself in exactly the same way and many companies pay writers to write good reviews of their products nowadays.

There is really only one way to find out: test the system yourself. Find someone offering a 30-day money back guarantee, or a free trial period. Then use a demo system (NOT real money) to test their forex signals over that period. If you consistently make money, you can then start using the signals to trade with real money.

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