An entry Forex signal tells you when to get into the market and trade. The quality of signal you receive should tell you whether you need to pursue it or not. Here are a few things to consider about entry signals and how they work.
What is an Entry Signal?
As the name suggests, an entry signal is one that tells you to get into the market. Pretty profound, no? For example, you might receive a signal that says to buy the EUR/CAD pair right away.
At that point, you can get onto your trading platform and place a buy order in the appropriate lot size.
Where They Come From
You could potentially receive Forex signals from several different sources. Some people use indicators on their trading platforms that give them trading signals. Other people pay for a subscription service that sends the signals via text message, instant message or email. Regardless of the source, an entry signal is basically the same thing. It tells you to get off your duff and take action. Whether or not you listen to the signal is another matter entirely.
What to Do?
When you receive a signal, you have to take into consideration whether you will act on it. You first must look at the source of the signal to determine if you want to trade it or not. If you are paying money for a signal service, chances are you do have a certain amount of faith in the provider and you will want to trade. If you are simply getting the signal from some free online signal provider, you might not have as much faith. If your trading platform is giving you the signal, you may not be sure of whether you should trade it.
Factors to Evaluate
You first have to look at the track record of the source that is providing the signal. While you can trade the Forex market with any signal, you want to wait until you find signals provided by a professional trader or some other source that has a history of winning trades. You can also look at other factors like the Forex spreads with your broker and whether any news announcements are coming up in the near future.
If you decide that the Forex signal is legitimate, you can immediately open up your live trading platform and enter the trade. Besides having an entry point, the signal should also give you some indication of where to take profit or a loss.
On the other hand, if you are not sure about the signal that you have received, you may want to place the trade in a demo account first. You can try out the signals for a certain amount of time on your demo account before putting any of your hard-earned cash at risk.