Forex Trading Signals

Technical traders use Forex trading signals to profit from price movement in currency pairs. In trading foreign currencies a trader buys one currency with another. The vast majority of Forex trading includes the US dollar. Forex trading signals are based upon analysis of market history. Because price patterns repeat themselves it is possible to read a pattern as it develops and profit by buying or selling currency at the right time. Traders read Forex trading signals when trading at a computerized trade station when trading online. Traders can also subscribe to a Forex trading signals service. In this case an outside party reads the technical signals in a currency pair and alerts the trader as to the opportunity involved. For the trader who is busy trading one currency pair a signals service can allow him to profit from another evolving trade even though he was not able to follow that given currency pair throughout the day.

The use of technical analysis goes back centuries to both rice trading in ancient Japan and to trading of tulip bulbs in Holland. In each case, traders recognized that there were clear and predictable market price patterns. By following these patterns and trading accordingly these traders were able to remove any guesswork from trading. They were able to remove market psychology as a factor in choosing when to buy or sell. The same technical analysis signals work today in trading stocks, futures, options, commodities, and in trading Forex. Forex trading signals are no different from the signals used so long ago in trading rice in Japan or tulip bulbs in Holland. Some trading signals predict that a currency will rise and some that it will fall. Others simply indicate market indecision prior to a price turnaround. Because of the complexity of Forex trading Forex trading signals are often more accurate and useful than basic fundamental analysis of currencies.

Technical Forex traders know that the market quickly digests and discounts fundamentals as they occur. Whether it is the statements of the US Federal Reserve Board Chairman or nonfarm payroll reports the market reacts quickly and the news is already discounted. Those able to read Forex trading signals will then benefits from the brief market inefficiency that follows breaking news. They will let history be their guide and buy or sell based upon price movement signals as opposed to attempts to anticipate other fundamental changes in the market.

There are a variety of ways to show Forex trading signals. Once of these systems comes from trading rice in Japan so long ago. It is called Japanese Candlesticks. This relatively easy to read system consists of symbols. The opening and closing price for the day is represented by a rectangle, the candlestick. The high and low for the day are represented by lines extending up from and down from the candle. These candle wicks are called shadows. There are a rather large number of patterns that can be represented by this simple tool. It is reliable and easy to read making it popular with many traders.