What Are Forex Signals?
Learn about what Forex signals are and how they work
What Are Forex Signals?
Forex Signals are trade alerts that presents an opportunity for traders to enter a trade on a currency pair, usually at a specific price and time, with specific take profit (TP), and stop loss (SL). Forex Signals are usually generated either by a human analyst or trading algorithms supplied to a subscriber of a forex signal service.
How Forex Signals Work?
Although format may vary, this is how a forex signal would generally look like:
EURUSD
BUY LIMIT 1.1100
TP: 1.1220 (120 pips)
SL:1.1040 (60 pips)
PENDING ORDER
Currency pair = EUR/USD, GBP/USD, USD/JPY
Order: Buy Limit / Sell Limit / Buy Stop / Sell Stop
Take Profit: Target Price
Stop Loss: Downside Risk
Order Type: Pending Order / Market Order
Order Types: Pending Order vs. Market Order
The two major types of orders that every trader should know are the Pending Order and the Market Order.
Pending Orders
A Pending Order is can be either a Limit Order or Stop Order. Pending Order allow traders to buy and sell currency pairs at a predefined price in the future, and the order will not be filled unless price reaches this level.
Limit Orders
Buy Limit = Entering into a buy when price falls to x.xxxx price.
Sell Limit = Entering into a sell when price rises to x.xxxx price.
Stop Orders
Buy Stop = Entering into a buy when price rises to x.xxxx price.
Sell Stop = Entering into a sell when price fall to x.xxxx price.
Market Orders
A Market Order is sometimes referred to Instant Execution. It is when a trader buy or sell a currency pair at the best available price in the forex market. It is the fastest and most reliable way to enter or exit a trade as it is executed at current market price.
Market Order Buy = Entering into a buy at the current market price.
Market Order Sell = Entering into a sell at the current market price.
Stop Loss and Take Profit
Stop Loss = Price where trade gets closed out at a loss to prevent further losses.
Take Profit = Target price where price is anticipated to reach.
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