What are the Components of a Forex Signal?

The Forex Market is the abbreviated form of ‘Foreign Exchange Market’ that determines the foreign exchange rates for each and every currency. It is a global marketplace for the traders to trade different currency pairs that include buying or selling or exchanging currency pairs at determined or current prices. The main functions of the Forex Market are to simplify currency conversions, provide forward exchange to manage risk factors and allow the traders to speculate their investment in the market to earn a good profit.

What are Forex Signals?

Forex signals are the trade recommendations for the traders that can be sent through different mediums like emails, Telegram, WhatsApp, etc. These trading signals are one of the best ways to get the price movements of different currency pairs and market movement tips online.

Generally, most of the traders rely on the most genuine and real time Forex signals to earn a good profit in the Forex Market. It is because these trading signals help them to determine the right time and specific price of buying or selling a currency pair.

Basic Components of a Forex Signal

Forex signals are basically trade recommendations for the traders that guide them when to enter or close a trade in the Forex market. The four basic components of a Forex signal are following:

  1. Currency Pair – Forex signals have each and every detail about a particular currency pair that a trader wants to trade. The traders will get a clear picture on different currency pairs about their pricing, historical data, trends, etc. with this information and the traders will trade a currency pair accordingly.
  2. Trade Recommendation – It is one of the important components of a Forex signal that help the traders to make a wise decision about buying or selling a currency pair. The trade recommendation depends on various factors.
  3. Entry Price – It is the price at which a trader enters into a particular trade whether it is buying or selling. However, the decision of entering into a trade at a specific price can be complex for the traders but it becomes easier for the traders through Forex signals.
  4. Exit Price – This component further categorised into ‘Take Profit’ and ‘Stop Loss’. Both are the price limits that have been set by the traders. In ‘Take Profit’, the traders will get to know the exact price at which they need to exit a trade and take the profit. In ‘Stop Loss’, the traders will get information to set the stop losses in the trading account that help in reducing the potential losses.

Types of Forex Signals

Forex signals can be classified into three types that are as follows:

Manual vs Automated Forex Signals

Manual Forex signals are generated by a human being that can be a seasoned trader or an expert trader. Automated Forex signals are generated by a computer software or a system that generates trading signals by tracking and analysing price action of different currency pairs in the Forex Market through a set of coded algorithms.

Paid vs Free Forex Signals

This classification of Forex signals is totally based on the charges taken by various signal providers. Paid Forex signals are the signals that have been provided to the traders against a monthly subscription fee whereas free Forex signals are available at free of cost.

Entry vs Exit Forex Signals

The signals that determine the time and price to open a trade in the market are known as Entry Forex signals and the signals that determine to close an open trade are known as Exit Forex signals.