Most of us, particularly those who are new to trading, have a very basic understanding of foreign exchange and how the process of changing money between currencies exist. Some with a more rounded knowledge of economics might know the reasons for exchange fluctuations and why currencies gain and lose value constantly. The idea of forex trading being accessible to those outside of the 1% is quite new, so there is an increasing desire to learn more about forex signals and how it all works.
What is Forex?
Because countries both import and export goods and this requires a way for them to pay each other and to pay companies across countries, a method and way of converting currency exists. The foreign exchange market is that way. The foreign exchange market is an absolute giant, easily bigger than any stock exchange and trading markets. Because of the difference in time zones, this market is always open and always trading.
What Are Forex Signals?
Because of the size of the market, forex trading is very lucrative. It can, however, be quite a time-consuming pursuit because you need to carefully examine the market in detail to get the best returns from it. Forex signals are tools that can make this examination and, in fact, the whole process of trading on the foreign exchange market much easier and quicker.
At the core, forex signals are buying and selling indicators which inform traders about where good or promising entry and exit points are in the market. Because they are being pushed to you, they can save many hours of trying to spot the entry and exit points for yourself. A good currency trading platform will include forex signals that you can use if you want to get into the world of forex trading.
Some Forex Signals Indicators You’ll Need to Know
A rudimentary understanding of foreign exchange is still encouraged to get the best returns on your time spent in the forex markets and understanding how forex signals are created and the indicators used can help you. Some of these indicators are:
- Simple Moving Average (SMA) – Each currency will have a simple moving average, which is calculated from the currency’s charts. If a currency’s value rises above this simple moving average, it will signal that it’s a good time to buy the currency and similarly if it falls below, it’s a good time to sell it.
- Moving Average Convergence Divergence (MACD) – The moving average convergence divergence is essentially a trend analysis which quickly identifies and shows the relationship between moving averages at different intervals. The MACD is calculated using a 26 day average.
- Bollinger Band – The Bollinger band is a statistical chart which serves to quickly and visually represent the volatility of a currency over time.
Forex signals could definitely be considered essential for those who want to find a good, reliable way to enter or exit forex markets without an intimate knowledge of the global markets. Armed with only a working knowledge of how to trade forex and a good forex signals platform, forex trading isn’t the mystical unknown it once was.
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