What are Forex Trading Signals? – FX Guide
Good Forex trading signals can greatly enhance your profits in Kenya, while poor Forex signals can rob you of your money. To determine which Forex signals are worthless and which are valuable, it is important to distinguish them.
To determine which signals are relevant and reliable and should be avoided, it is necessary to know some common signals on the market. However, before you can find the best signals for yourself, you must understand Forex trading signals. In this article, you will find the exact way to find and use forex signals in Kenya.
What are Forex trading signals?
From the trading platform, Kenyan traders broadcast their transactions to other traders. Broadcasting trade transactions serves to obtain additional profits from trading. The signals provider charges a subscription fee for traders who want to copy their signals.
When traders trade in the Forex market of Kenya, they are often faced with whether they should invest in trading signals. Now you can purchase trading signals online in abundance.
There are some of these free offers, but resources allow you to purchase signals for a fee. Signals of this nature can range from a few dollars to several hundred dollars per month.
Most of these proposals are considered the product of accomplished authors who can generate dependable income for the trader.
In addition, they assert that they cannot trade by themselves with their profitable signals since they do not have enough money to open a trading account or something like that. Due to this, they decided to sell their super-signals to traders at a very reasonable price of $200 a month: pennies.
However, they are all essentially the same. Undoubtedly, such proposals are designed to enrich the authors at the expense of the gullible dreamers seeking great riches without exerting excessive effort. If such signals are so good, why would anyone want to sell them? Trading on your own is more profitable.
Finding money for trade won’t be difficult if the authors can prove their signals are effective. Thus, such proposals won’t generate any benefits.
Are Forex signals effective?
The Kenyan forex market is very complicated and constantly changes, so even if the signals work correctly, it will not be possible to get rich with them. As a result, we can conclude that it is impossible to make money from such signals.
Thus, buying signals and trading with their guidance is not recommended for novice traders.
How to choose good trading signals?
We recommend you pay attention to the following things if you still want to try to use the signals:
Is it free or paid?
While free signals are more accessible, they have a much higher risk of losing a deposit. But paid signals do not always guarantee success. There is no way of knowing what the future holds.
In case you are going to subscribe to a trading signal as well, you should also use the rule “the greater the leverage, the higher the risk.”
Additionally, your money is at risk, too, as the trader (signals provider) is at risk as well. This is why it is best to use lower leverage. Be sure to check the leverage your forex broker offers. Normally, this depends on what type of account your broker offers.
Profit per month
The importance of this indicator cannot be overstated. It is determined by dividing the original amount in the account by the percentage. Based on a given trading signal, this statistic can indirectly predict future events.
Even though the previous point is important, it is insufficient to objectively establish whether a trading signal is reliable. The percentage represents the number of provider losses on the main balance.
Profitable transactions as a percentage
Based on the number of open positions, this indicator shows the percentage of transactions with income.
No of subscribers
Signal providers who have a greater number of subscribers are more reliable. A lot of people wouldn’t subscribe to him if there were no reason to do so. So his signals still result in profits for others.
What do the best signal providers offer?
The following three items should always be included in a comprehensive trading strategy:
- Entry location
- Stop-loss location, i.e.,
- Profit target
All three types of information make perfect sense for top Forex signal providers to include in their signals.
In some cases, not all three parts of the signal are provided simultaneously. For example, it is not uncommon for Forex signal providers in Kenya to provide the entry information for the trade first and then reveal the profit target for the trade later on.
Nevertheless, the best Forex signal providers are always required to provide a stop loss with the trade entry. Risk control is an integral part of successful trading, and successful traders of Kenya can’t do that if they don’t know when to exit a trade when it goes against them.
Does the signal provider have the option of moving the stop loss?
Yes, it should be moved in the direction of trade, but only if the trade is good. Typical trading practices include moving the stop loss to breakeven or higher when a trade reaches profit to capture some gains if the trade reverses.
Such practice is completely legitimate. However, signal providers should not place the stop loss opposite the direction of the trade (or else they will increase the trade’s risk) because this will make the trade riskier. Trading rule 1: control the risk!
Signal providers may determine the profit target in advance, but it may emerge as the market unfolds, depending on the trading strategy. When you calculate the reward to risk for each trade in advance, you can calculate the profit target.
An example of a risk-reward ratio would be 2 to 1 if trade with a stop loss of 50 pips and a profit target of 100 pips were opened. Trading successfully always means you want to have a greater reward to risk ratio than 1, which means you do not want to risk more than you are willing to gain.
Finding the best signal providers
How do you determine a top Forex signal provider in Kenya? Comparison of signal providers should be based on two main factors: the quality of the signals provided and how easy they are to follow. We’ll look at evaluating performance in detail next.
A track record is the best way to judge performance. Therefore, top Forex signal providers should maintain a track record of all of their signals published (without leaving any out) to assess their performance.
Signal providers often use the demo or live accounts to demonstrate their products, and they publish track records based on the account performance. Because it’s a close simulation to real-world trading, it’s a great way to verify their performance.
Signals are never mysteriously omitted from their performance when it’s logged into a broker’s account in hindsight. It is as if someone were testing your signals for you on a demo or live account. You will get perfect trade fills on a demo account. Slippage is common in live accounts, reflecting performance more accurately. The Kenyan providers of these signal services may post examples of their best signals, such as “Check out this terrific Euro trade last week that made more than 100 pips.”
Published examples are most often selected to advertise a service. However, do not take their track record for service as an indication of quality!
A signal provider may keep a written record of the number of pips earned rather than a demo or live account to track performance. It is better to have this data than none at all than not knowing what they do.
The dollar value of each pip will vary depending on which Forex currency pair you are trading. Therefore, you will need to adjust your position size for every trade to match their pip track record realistically, or you will have to accept some divergence in dollar terms between your performance and theirs.
Accessing the risk control of the signal provider
Evidence should be provided that the signal provider can handle changing market conditions and control their risk. Taking into account the duration of any drawdowns can give some insight into this situation:
What is the average time required for signals to return to profitability after a losing streak? First, you should look at the Kenyan Forex signal provider’s biggest loss scenarios and then ask yourself: Would you be prepared to follow their signals if such a problem occurred again?
To determine the level of risk control, you should consider the average size of the winning trades and compare it with the average size of the losing deals. Signal providers have a greater chance of earning money if their win rate drops if they lose more trades than they win.
Signal providers often boast about their high win rates for their signals. However, this is not necessarily a complete picture. We will say that of every ten trades, eight are usually profitable. Their win rate is 80%. You could have still lost money overall, even if the high win rate is due to their two losing trades losing much more than the average winning trade.
If a signal provider does not specify that the report is from a live account that can be verified, then the track record is only hypothetical. Trades in the real world require an understanding of fills, slippage, spreads, missed trades, etc. Unfortunately, there isn’t always a way to match the track record of a signal provider, which brings us to our next question: how can you take advantage of Forex signals effectively?
How to use Forex Signals?
A signal provider’s services will be implemented according to two factors: how they deliver the signals to you and your ability to act once you receive them.
There are two main ways forex signals are delivered: through a live room environment or an alert delivered to your device.
Sending you signal alerts
Some signal providers use apps like Telegram, Twitter, or Facebook groups to communicate. It’s convenient to receive messages using messaging apps because you can do it on any device, from a smartphone to a laptop, and they’re free as well.
Furthermore, they relay customer information quickly to signal providers. Mobile trading is available at most Forex brokers, so you can follow and trade the Signals from anywhere using your phone.
A live trading room environment
During the transmission of signals, signal providers have a live room where they share audio and visual feeds. It’s an immersive experience of trading over the shoulder of an expert while sitting in a virtual trading room. You can ask questions in many live rooms, and some live rooms are set up to teach how to use the signals.
When it comes to short-term day trading style signals, a live trading room is excellent because you must often take market orders at the very start to capture the move or place pending orders just minutes before the price reaches a certain level. There is little room for delay with either method.
By providing signals, Forex signal providers can help you take advantage of the expertise of another trader and receive precise instructions on what to trade, where to enter, and when to exit a trade.
Their job is to analyse the market and make trade decisions for you. You can also learn from following a signal service. Taking trading signals in Kenya forces you to make decisions about position sizes and learn how to place orders on your broker’s platform, such as executing different order types.
If you eventually choose to trade for yourself, these are valuable skills to learn. But, unfortunately, forex signals are not enough to teach you to trade by themselves.
Make sure that you review the track record of the Forex signal provider in Kenya before signing up and confirm they provide all three key pieces of a signal: entry, stop loss, and profit targets. Then, when taking signals from the service, make sure you’re available when they’re published and ask questions about who’s behind it.
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Heinrich is a forex and CFD enthusiast with a passion for writing good informative quality content. He strives to showcase the best forex brokers in Africa. Join him on his Journey!
Content Writer | Market Analyst
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