Using Forex signals

Forex signals play an important role in currency trading.  Used in conjunction with forex charts, the signals tell FX traders when it is the best time to buy or sell.

These signals form an important of automated forex trading because by sending out these indicators they spare the trader the effort of having to monitor the market himself throughout the entire trading session.  They are particularly useful, therefore, for people who trade forex only on a part-time basis.

Professional FX traders can also use them, especially when trading with multiple currency pairings.

There are various types of forex signal available.  Stochastic signals appear as an oscillating line which appears on a forex chart.  They appear as a visual alert against a graph between zero and 100. The stochastic line oscillates according to price movements.  Broadly speaking, if the line moves above the 80 mark it serves as an indicator for the trader to sell.  Likewise if it dips below 20, the message is to buy.

Another form of forex signal is the Moving-Average Cross alert.  This involves two lines plotting across the forex chart, with one moving more slowly than the other.  Each line represents a period of days, often one will be for seven days, and the other for thirteen.  If the faster line crosses the slower one, that is a signal to buy.  When the slower one crosses the faster line, the signal then is to sell.

Using a similar principle are MACD and Breakout signals.  They also involve lines crossing the price area forex charts to indicate the best times to buy and sell.

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