Using Forex Signals for Trading

Written by Miro Nikolov

Miro Nikolov

Miro Nikolov is the co-founder of TradingPedia.com and BestBrokers.com. His mission is to help people make profitable investments by giving them access to educational resources and analytics tools.

, | Updated: September 15, 2025

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• Jump to:
• What are Forex Signals
• How to Read the Signals
• Manual Forex Signals
• Automated Forex Signals
• Common Forex Signals
• Signal Providers
• Main Advantages
• Factors to Consider
• Finding the Best Signal Providers
›

To become a successful Forex trader, you need extensive knowledge. Whether you like it or not, you will have to spend many hours reading comprehensive literature on the subject. Practising your skills on different demo accounts is also essential.

If you put enough effort into learning, you will slowly but steadily become an expert in Forex trading. Your profits will inevitably start to rise. Before you get there, however, you must learn how to differentiate between the various types of signals available on the Forex markets.

Signals are of vital importance for all serious traders because they facilitate informed decision-making. Once you master Forex trading with signals, you can be confident you are ready to open a live account.

In this article, we explain what Forex trading signals are and how to read and implement them. We discuss the most common types of signals you will encounter, their main benefits, and the factors you must consider before you start using them. We also include information on how to find the best providers of Forex trading signals.

What are Forex signals and how they aid traders’ decisions

A signal can best be described as a recommendation on when to enter a specific trading position for a Forex pair, normally at a certain price and time. The suggestion can be generated by human analysts, trading robots, or trading software.

A person or a programme constantly monitors the markets to detect favourable trading conditions. Once the analyst or software determines the time is right to enter the Forex market, it alerts the users of the respective signal service by sending a signal. The signals also contain entry and exit points.

This means seasoned analysts or trading robots do all the hard work for you, so you don’t have to. All you must do is enter the signal they have sent into your Forex account and wait for the outcome. It is important to note that the entire process takes place in real time.

Signals are delivered to Forex traders via email, text messages, RSS web feeds, or even updates on Twitter. Some providers send their signals through mobile applications such as Viber and WhatsApp.

The bottom line is that you receive the signal in time to make well-informed decisions about your positions. This obviously saves you time because there is no need to watch the markets like a hawk at all times.

How to read Forex signals

Now that we have explained what signals are, we will provide an explanation of how beginner traders can read them. To start with, a signal normally contains the name of the tradable asset (a currency pair, an index, a stock, etc.), the direction of the position (long or short), and the entry level expressed in pips, that is, where to go long or short.

The stop level tells you how to adjust your stop-loss order if the price moves in an adverse direction. The target indicates how you should adjust your take-profit order provided that prices move in a favourable direction.

Of course, the exact information signals contain varies between providers. Some offer more detailed information and include extra commentary in their signals. Below are two examples of free signals for the USD/CHF and the GBP/USD pairs. The GBP/USD signal is for a long position and the USD/CHF signal is for a short position.

To break things down further, you can see that the call to action for the USD/CHF pair is to sell (buy for the GBP/USD pair), with a stipulated stop-loss at 0.9799 and a take-profit at 0.9749. Therefore, you should open a short position in this pair when its price approaches 0.977.

Sometimes the current market price (CMP) is also included. The CMP is not always featured because it is generally understood that traders should buy or sell a given pair immediately after the signal is issued and should do so at the current market price.

However, the CMP can be useful if one receives the signal with a small delay. This gives you the chance to compare the price when the signal is issued with the pair’s price at the moment you submit your order.

As you can see, reading Forex signals is not as complicated as it initially seems, despite their number-heavy nature. Whether or not one uses stop-losses and take-profits largely depends on their trading style, strategy and, above all, experience.

Seasoned day traders sometimes refrain from setting such parameters. They rely on their in-depth knowledge and trading experience to determine the right time to stop a trade.

Stop-losses and take-profits help Forex novices build consistency and make better-informed decisions. A beginner should never adjust these parameters on the fly because this would interfere with their trading strategy’s methodology.

Manual Forex signals

This approach requires traders to spend long periods in front of their desktop screens. They search for and analyse different signals to decide whether to go long or short on a given currency pair.

Such decisions are largely influenced by the trader’s individual interpretation of the signals. Obviously, this approach can be extremely time-consuming and is mostly suitable for full-time traders who possess enough know-how and skill to assess the markets accurately on their own.

An experienced trader is capable of analysing price movements in a way that software programmes simply cannot. A human being can sense when a market is behaving in a bizarre or unpredictable way and, therefore, can handle their positions accordingly.

Human assessment of the Forex markets is not limited to code and programmable settings alone. Experienced traders prefer manual signals because these allow them to fine-tune their strategies according to the current market environment.

Automated Forex signals

Automated signals gained significant traction among Forex traders in the early 2000s and are particularly beneficial for those who are new to the markets. This signal format is exactly what its name suggests. Here, there is no need to analyse market conditions and seek out signals manually.

Instead, the Forex trader instructs a piece of software or a trading robot as to which signals it should search for. Such is the case with the MetaTrader software and its Expert Advisors (EAs). The EAs are trading robots capable of automatically generating Forex signals and interpreting current market conditions in real time. They automatically open or close the trader’s positions accordingly.

There are also semi-automated signals where favourable trading opportunities are only highlighted by the software. However, it is up to the human trader to determine whether or not to enter the recommended positions.

Automated signals have two main advantages. First, they completely eliminate emotions and stress that could negatively impact human decisions. Second, using them saves traders a great deal of time.

There is no need to remain chained to your desktop computer for extended periods, scouring for Forex signals on which to base your final decisions. A trading robot is capable of processing significantly more information than a human being and in less time.

In turn, this enables traders to manage multiple currency pairs at the same time and monitor their charts around the clock without missing out on any important signals. Nevertheless, combining manual with automated trading is probably the best course of action. Many well-versed traders prefer to utilise a hybrid of the two.

The most common Forex signals

There are various types of trading signals, but the three main ones we will focus on are day-trading, news, and positional signals. We briefly explain them in this section so that you can grasp the idea. Which one you decide to use depends on your style and what trading strategy you intend to implement.

The first type of signal is the positional signal, mainly suitable for position trading, where positions remain open for prolonged periods – days, weeks, even months. The main idea here is to try to profit from long-term trends on the Forex market.

Such traders assume that once a given trend begins to manifest itself, it is likely to continue in the future. Trend followers usually base their decisions on technical or fundamental analysis, but can use a combination of both at times.

Second on the list are Forex day-trading signals, which are the polar opposite of positional signals. They take advantage of current market momentum on a daily basis. Using such signals can help you boost your profits in the short term.

Obviously, day-trading signals are updated multiple times within 24 hours. With them, you are able to predict short-term market fluctuations more accurately and make an informed move.

Another type of signal is the so-called news signal. Many people do not pay enough attention to these, but the truth is that news is one of the most powerful weapons you can use in Forex trading. Let us explain why.

The financial markets are heavily influenced by important economic events, which can greatly affect price movements. For this reason, you have to follow the news and subscribe to different newsletters.

Consult economic calendars to keep track of the most important financial events, as these can lead to serious spikes in currency pair prices. News trading signals rely on this knowledge and can be very profitable for those who use spike-trading strategies. Below are the parameters Forex signals commonly contain:

• The ‘Action’ is easily the most straightforward parameter of a trading signal. It simply tells you whether you should enter a long (Buy) or a short (Sell) position.
• The ‘Stop-loss’ (SL) parameter indicates the exit point of a given trade. It is essentially an exercise in damage control, designed to protect traders’ capital in the event of unexpected adverse market movements. An automated signal closes the position at a predetermined price before your losses start to mount.
• The ‘Take-profit’ (TP) parameter is the opposite of the stop-loss. The position is closed, either manually or automatically, when a trade reaches the profit level recommended by the signal.
• The ‘current market price’, or CMP for short, is another common parameter you are likely to encounter when trading with signals. Not all Forex signals are direct calls to action; some merely convey important information. The CMP enables you to compare a currency pair’s price at the moment the signal was issued with its price at the time of your order’s submission.

Who provides Forex signal services?

Forex signals are offered by brokerage firms, dedicated signal providers, or professional traders who analyse the markets on their own. This is usually a paid service, although some brokers and providers also offer signals for free. In certain cases, you may be charged extra to receive signals for exotic, rarely traded currency pairs.

Sometimes the signals are supplied by pre-programmed robots (Expert Advisors) within a piece of trading software. In MetaTrader 4, for example, you can attach no more than one EA robot to a single chart. Nonetheless, it is possible to run over a hundred EAs within the same trading terminal as long as you open an individual chart for each Expert Advisor.

Some signal providers prefer to use human analysts to prepare their signals, while others rely mostly on software and robots. However, trading parameters are still entered into the software by human beings. If the analyst changes the values for a specific currency pair, the software will look in a different direction. Consequently, the results of the analysis and the signal’s recommended parameters will also differ.

The second approach is not without its advantages because, unlike human analysts, trading robots are devoid of emotions. A robot will never enter a trade out of greed or close a position prematurely because of fear.

Many of the largest Forex brokers treat their customers to free signals, sparing them the hassle of paying third-party signal-service providers. However, this service is typically available only to clients who hold live accounts and keep them active.

In addition to signal access, major brokerages offer a host of other useful features. Here are some of the services that are usually provided:

• Stop-losses, or exit points, on one or more currency pairs
• Graphs and charting support
• One-to-one coaching
• Account management
• A trial period for signals, either at no cost or at a lower price
• A range of educational resources
• A complete trading history to make your analysis more accurate

Main advantages of implementing signals in Forex trading

The use of signals when trading Forex comes with several advantages, especially when one is a beginner. First and foremost, signals allow you to expand your knowledge and sharpen your Forex trading skills. With their help, traders can deepen their understanding of the markets and learn about new trading strategies.

Signals facilitate quick learning because they give you a good idea of how price fluctuations affect your investments. Observing how more experienced traders enter or exit certain positions is particularly useful for beginners.

Many novices trade Forex pairs on the side while holding regular jobs. This makes it impossible for them to remain chained to their computers throughout the day. Signals enable such people to save time and effort when it comes to market research and analysis.

There is no need to spend hours on end studying charts and graphics before you reach a final decision. Signals will alert you when conditions are ripe for a specific currency pair. You can gain more exposure to the Forex markets by replicating the positions of successful traders.

Diversification is yet another advantage of using signals. With so many signal-service providers out there, it is easy for traders to learn about different styles or strategies and use them to expand their trading portfolios.

Additionally, the use of signals significantly minimises risks and helps you make informed decisions. After you develop your skills sufficiently, you can even sell your own signals to fellow traders, generating extra earnings in the process.

3 factors to consider before you start using signals

Many beginners assume using signals is a quick-fix for success, but this simply is not the case. Signals provide important information about the markets but cannot entirely negate the risks associated with foreign exchange trading. Several factors bear consideration before you start using the services of signal providers.

• It is essential to understand that no two signal providers are the same; some offer higher-quality services than others.

  Certain providers include only basic information about the call to action along with TP and SL levels, while others deliver detailed charts and commentary that could prove useful to traders. The bottom line is that you need to know exactly what you are signing up for before you rely on the signals supplied by a given provider.

• Interpret the market conditions on your own. Do not forget that signals are merely recommendations. Using them is no excuse for the absence of a proper understanding of the market environment. Take the time to inform yourself about current market conditions and their limitations before you act on the signals you receive.
• Give some thought to your individual risk tolerance. Foreign exchange trading is a volatile venture, even more so when one does it on margin with leverage. There is always the possibility of losing large amounts of capital in two shakes of a lamb’s tail.

  The huge swings inherent to pairs like XAU/USD, for example, can wipe out your entire balance in a flash when you leverage your positions. A trader should take some time to evaluate what risk level they are comfortable with before they act on a trading signal.

Finding the best signal providers for Forex trading

As we said earlier, you must approach signal-service providers with caution. Some of them are not as reliable and accurate in their predictions as others. Do your research with due diligence and consider the following criteria before you make a pick.

• Ensure the signals offered by a given provider correspond to your individual needs and trading style. Traders who implement scalping strategies would be more comfortable with a service that provides scalping signals. A position trader, on the other hand, is more likely to prefer a service that sends them long-term signals. Check how many trades the respective provider sends out per day. A larger number typically indicates the provider relies on short timeframes for market analysis and would be more suitable for short-term traders. If only a few signals are sent during the week, you are probably looking at a long-term signal service where the recommendations are also based on fundamental analysis.
• The time zone is another key factor that bears consideration. Short-term signals should be acted upon as soon as possible or else they will be of no use. If your chosen signal provider hails from a different continent, you will end up receiving notifications while you are fast asleep. Short-term signals are practically useless if you fail to get them on time.
• Pay attention to the provider’s track record. This will give you an accurate idea about the quality of the service and the provider’s performance. Compare and evaluate different options before you make your pick. Factor in their overall success rate – a provider whose signals are accurate 80% of the time is better than one whose signals are accurate 50%-60% of the time. Reading feedback from other signal users can also prove beneficial.
• Consider the availability of additional services. Some providers only dish out basic information about their signals, such as entry/exit prices and SL/TP levels. The signals of others are accompanied by additional market and chart analysis.

  This gives traders more confidence because they can see exactly what the signals are based on. The charts usually contain important support and resistance levels on which the recommended SL and TP are based. This information can significantly boost your learning curve and assist you on your path towards becoming an independent trader.

• Check for educational materials like free webinars, training videos, regular market outlooks, news, and watchlists. The availability of such material indicates the signal provider cares about the people who subscribe to its services.