Jenna Arnold has always been fascinated by the stock market and the world of trading. Having dabbled as a part-time trader while at university studying English Language, she leveraged her insights into this world into a full-time career as a writer specialising in trading and broker reviews. Jenna joined TradersBest.com last year and now heads all of our trading content, working remotely from her home in Massachusetts.
It’s the biggest marketplace in the world and integral to the global economy. Whether a day trader, swing trader, or you’ve never touched trading in your life, forex has certainly touched yours. But what is Forex trading in 2021?
There is more than one way to trade forex and using trading signals has become one of the most popular and effective ways of successfully trading forex online. Let us, at TradersBest, take you through the basics of forex and why you should incorporate trading signals into your forex trading strategy.
Forex – or foreign exchange – means trading one nation’s currency for that of another. For example, trading Canadian Dollars (CAD) for Pound Sterling (GBP). Forex trades occur on the foreign exchange market known as the forex market and the market is the largest in the world. In 2019, the forex market was valued at a daily trading volume of $6.6 trillion. Forex trading occurs 24 hours a day, 5 days a week.
TradersBest is a great platform for gaining expertise and advice in the forex market and AtoZ Markets can help new traders invest in forex using automation. While investment banks, central banks, multinational corporations and hedge funds invest in the forex market, most people think of the individual retail investor as a forex trader. However, retail investors make up some of the lowest volumes of forex trading.
Retail investors can use fundamental data – such as trading the news – to generate triggers to invest, but technical analysis reigns supreme as the best way to identify forex investment opportunities. Honestly, one of the best ways to identify those triggers is by leveraging forex trading signals provided by organisations such as AtoZ Markets.
Get AtoZ Markets Premium Trading Signals
+30 Premium Trading Signals
Unlimited access to indicators
QA session with an AtoZ Mentor
Sign Up Now!
Types of pairs
Forex is always traded in pairs – i.e one currency to buy another. To date, there are 180 official currencies across the world. However, there are only a handful of traded currencies that are commonly traded. These are known as major pairs and include: Australian Dollar, US dollar, Pound Sterling, Euro, Japanese Yen, Swiss Franc, Canadian Dollar and the New Zealand Dollar.
When reading currency pairs, the base currency – in most scenarios, your currency – is the first currency listed. For example, USD/AUD. The second currency is known as the quote currency. Currency pairs that are not typically associated with the US dollar are referred to as minor pairs and generally have wider spreads with less liquidity than the major pairings.
Currencies that come from emerging markets – such as the Mexican Peso, Hungarian Forint, or Turkish Lira – are called exotic pairs and while they are a risky investment, they do have the potential for large returns owing to massive price fluctuations.
Trading Forex
There is some inherent risk in trading forex and there are layers of complexity. In most major parts of the world, forex trading is regulated, in others it is not. So many environmental, economic and political factors can affect currency pairs when trading forex. As retail investors, we need a good level of understanding of these factors and how to analyse how these factors may affect our trading strategies. Once that knowledge is acquired – by using education platforms like TradersBest or signal providers like AtoZ Markets – there are only a few short steps to trading forex.
Learn Forex
While there is a lot to learn about forex trading, there are ways of making the experience practical and enjoyable. For example, use a free demo trading account to practice trades and technical analysis. You can make mistakes and it won’t risk any of your real capital.
Besides learning the fundamentals of forex – how the economy works and real-life world influences on the global markets – you’ll also need to learn technical skills too. How to read charts to determine price movement and predict trends. Of course, buying a subscription to a signal provider like AtoZ Markets can help novice traders in this department.
Find a broker
A retail investor can’t start trading without a broker. This could mean a broker app, website, or a professional personal broker. There are a near-infinite number of trading apps available online in 2021, and some of the best apps have been reviewed at TradersBest. We, at TradersBest, suggest a micro forex trading account with low capital requirements for those starting out. There will be more room for error and you can always advance in the future.
Develop a strategy and trade
With your education and some time spent on a free demo account, you should be ready to develop a trading strategy. This simply involves developing a goal and using a combination of technical and fundamental analysis to determine trading opportunities. Of course, this is where using trading signals can be of assistance; either to confirm your analysis findings or to point you in the right direction with a trigger alert.
When that opportunity arises, jump on it by executing a trade. Trading signals should always have an exit strategy and risk management information to avoid any potentially heavy losses. TradersBest recommends that you never execute a trade without a clear strategy and that you never trade with emotion. Trading signals are designed to take the emotion out of trading.
Example of a forex trade
Imagine you wish to trade Canadian dollars and US dollars. The market will be seen as CAD/USD and a price action will be seen too – such as 0.94950/0.94960. If you were to purchase $20,000 CAD because your technical analysis predicts CAD/USD to go up, with a margin of 3.00% as a deposit, the trade would look like 3.00% x [20,000 x 0.94955] = $567.50 CAD.
Now, if that prediction was current and the price rises to 0.95540/0.95550, you could sell your long position for a profit. Your profit would be calculated as ([20,000 x 0.95540] – [20,000 x 0.95550]) = $114 CAD.
What are forex trading signals?
Forex trading signals are human generated or automated triggers to buy or sell a particular currency pair based on certain parameters. Automated forex signal trading gained significant momentum around 20 years ago and in 2021 trading signals can be instantly delivered to your mobile device through leading providers like AtoZ Markets.
A forex trading signal typically leverages technical analysis, like moving average indicators or head and shoulder charts, to determine the best entry and exit points for trading a particular currency pair or pairs.
Using forex trading signals
There are two distinct ways to use forex trading signals. The first is to receive trading signals that will reveal trading opportunities without having to do any research yourself. It’s basically like free trading advice and can be particularly beneficial for new traders. Signal providers like AtoZ Markets can provide new signals every day for traders looking for an edge they haven’t identified themselves.
The second way is for experienced traders to apply trading signals to support their own research – some experienced traders can even develop their own trading signals for this purpose. In this case, the trading signal is a nod to say that your idea of the market sentiment is in the right direction – the signal will either prove your research or will show that you were, in fact, wrong.
Types of forex markets
There is actually more than one type of forex markets available to the retail investor. The major forex markets are known as:
The most commonly traded forex market by retail investors is the spot market. This is where the fastest transactions will occur. Spot markets place buyers and sellers together in an environment that allows immediate transactions. In fact, the spot market accounts for nearly a third of all currency exchange. Other participants in the spot market include commercial banks, central banks and brokers.
Why trade forex using signals?
There are plenty of reasons to use trading signals to enhance your forex trading strategy. Experienced traders can double check their work using trading signals, or seek opportunities in new sectors whilst concentrating on their usual areas. New traders can obtain a significant advantage as they learn to understand the markets fully. Here are the distinct pros and cons for trading forex using trading signals.
Advantages
Using trading signals as a beginner trader, especially a part time trader, is especially beneficial. You’ll only need a basic understanding of technical analysis to understand the information contained in a forex trading signal and they can cut out a large amount of work that a new trader may not be experienced enough to complete themselves. Experienced traders benefit from a means to strengthen their own analysis of a market’s sentiments by using trading signals to confirm what they already know.
Considering that the forex market is 24/5, that is a lot of time to analyse and an extensive range of time for opportunities to present themselves. Many traders won’t have the time to consider these long hours and may miss fantastic trading opportunities. Forex trading signals are a time saving tool and can be used to the point that all a trader will need to do is execute the trade.
Disadvantages
Forex signals are still subject to market risks and they are not always accurate. For new traders, it isn’t a great idea to rely solely on trading signals as they’ll become overly reliant on them. A novice trader can’t expect to ever become experienced and knowledgeable if all their strategies are purely devised by trading signals.
Blindly following trading signals have their own risks too. Free trading signals are especially risky if you have not properly vetted the source and if you have not tested the signal first. There are quite a lot of scam trading signals online and new traders need to keep their wits about them to avoid being a victim. Alternatively, the best way to avoid a scam signal is to only receive signals from trusted sources like AtoZ Markets.
Novice traders may also use forex trading signals incorrectly. Without proper education, signals are useless. A trading signal is an alert to take action. That means the trader needs to react quickly. If they do not, they could miss the opportunity and the results could be a failed trade with loss of capital.
Get AtoZ Markets Premium Trading Signals
1. Choose your AtoZ Markets Premium plan
2. Learn how to use the signals from our guide
3. Open a trading account with a reliable broker
4. Copy the daily trading signals
Sign Up Now!
Best forex trading signal provider
The most experienced and trusted source of trading signal recommendations is TradersBest. With decades of financial experience from all sectors, our experts live and breathe trading signals and trading advice.
When it comes to trading signal provider reviews, trading advice, and learning about trading signals, TradersBest must be the number one player in the game. TradersBest recommends AtoZ Markets as the best trading signal provider for forex trading in 2021.
AtoZ Markets Premium Trading Signals
Register with AtoZ Markets and claim your 14-day trial. With the trial, you’ll receive 14 days of free trading signals including forex. Subscribe to receive up to 15 trading signals a day, sent directly to your Telegram app or mobile device. The win percentage of AtoZ Markets trading signals is a seriously impressive 70%. This is because of an algorithm, perfectly curated for analysing technical data.
AtoZ Markets is dedicated to producing high quality automated algorithm-based trading strategies through fast performance and industry expertise. Trading signals from AtoZ Markets can be implemented into any trading platform – such as MT4 – and all trading signals are entirely objective with a focus on executing orders – perfect for forex traders.
Conclusion
The largest and most liquid market in the world is the foreign exchange market. Forex is one of the most important components of the global economy and retail investors can take advantage of market movements between currency pairs for profit. Retail investors can use brokerage apps to buy and sell currency pairs immediately and those same apps support the use of automated and manual trading signals.
Trading signals are perfect for forex trading. Forex trading requires fast responses to price movement and trading signals are designed to provide immediate price alerts based on predicted parameters. Both new and experienced traders can take advantage of the forex market using trade signals.
Forex Explained – FAQ
💲 How important is the forex market?
There are many tradable financial instruments that are integral to the global economy and even more vital to the local, domestic economy. The forex market involves hundreds of currencies from around the world and the value of those currencies can be affected by so many unique factors. The financial markets are part of an interconnected industry, and the importance of the forex market cannot be understated.
📱 Is it easy to trade forex online?
In 2021, there are many ways to trade a vast number of financial instruments. Once an industry that only the very wealthy could aspire to enter, retail investors now come from all walks of life, and most do not even need to leave their own bedroom. Many different apps, websites and platforms exist for everyday retail investors to trade diverse assets in an intuitive way.
💻 Where can I find forex signals for free?
Forex signals can be delivered through many different means and many different sources can create and deliver forex trading signals. In 2021, it is important that trading signals are highly accessible and no trader should find it difficult to obtain high quality trading signals with ease. By accessing these varied platforms, traders can find forex signals that can enhance their trading strategies.
💴 What currencies trade in Forex?
While there are many currencies in the world, not all are traded and not all are traded at any level of regularity. The vast majority of forex traders exclusively trade in a very select number of currencies and those pairs account for most of trading in the forex markets. Brokers may vary in what currencies are available to trade on their platform and traders may want to make sure their exotic pair is available if they wish to trade it.
🦺 Is it safe to trade in forex online in 2021?
There are many security and safety factors to consider when trading forex online in 2021. Different brokers will leverage different security features for their platforms and, depending on your jurisdiction, there are different levels of insurance protections in place. It is up to the individual trader to determine if they feel safe with a particular broker but there are many different means of ensuring that your broker of choice is indeed safe.
