Forex signals are a great way to make money in the forex market. Even if you eventually want to trade on your own, forex signals (VantageFX) allow you to make money while you learn and can even help with the learning process. There are two types of forex signals: manual signals and automated signals, we’ll discuss each in a little more detail below.
Manual Forex Signals
Manual forex signal services sent the user a notification; usually by email, SMS or Twitter, telling the subscriber to open or close a trade. Most services will also provide stop loss and take profit levels and risk per trade for each position, but not all of them, so it’s important to do a little research on the signal service before committing to anything. In general, you should avoid signal services that don’t provide stop loss, take profit and risk levels, because without this info you will find it very hard to replicate the service’s results. Thankfully, most manual signal services offer some sort of free trial or money back guarantee.
The advantages of a manual signal service are that you remain in control of which trades you take and as you are actually placing trades yourself, you will gain valuable experience identifying and placing profitable trades. On the other hand, if you do not take all the signals your signal provider issues, you may inadvertently skip the good trades and only take the losers. In general, it is best if you place your trust in the signal service and take all the trades they issue, after all, this is what you are paying them for! You may also miss trades simply because you are asleep or not at your terminal. To avoid this problem, most manual signal services operate on higher time frames like the 4 hour, daily and weekly charts and place trades a fair distance from the current market price using limit or stop orders, rather than executing trades at market.
The best manual signal services will also often provide the reasoning behind a particular trade and a supplementary chart – this is why manual signal services are a great option if your goal is to end up trading solo.
Automated Forex Signals
Automated forex signals, as the name suggests, are completely automated. Your account will automatically replicate every single trade the signal service takes. If you just want to make money and you are not so concerned with the thinking behind a trade and the process involved, an automated signal service is probably the right option for you. Having said that, automated signal services require an extra level of due-diligence: as trade entry, management and closure processes are completely automated, you need to be certain that you are subscribing to a profitable signal and that the signal provider is managing their (and your!) account responsibly.
The advantages of an automated forex signal service are that you won’t miss any trades and it is possible for the automated service to trade more frequently and on lower timeframes. This is because the process is completely automated and they don’t have to worry about sending out notifications and giving the customer time to prepare for a trade. The primary disadvantage when compared to a manual service is that you are not involved in the trading process at all and you probably won’t gain much insight into why the signal provider is taking a particular trade.
At the end of the day, both types of signal service have advantages and disadvantages so it is important you know what you are looking for. Do you want to learn to trade yourself and understand the process and thinking behind a profitable trade? Or do you not have much time to learn to trade and you just want exposure to the forex market? No matter which type of service you settle on, it is important you carry out due-diligence when searching for a signal provider – if the service is worth its salt, they should be able to show you 3rd-party-verified profitable trading accounts – be wary of any signal provider that can’t!