Forex Trading Signals

One of the most common subjects we get asked about are forex trading signals and which ones we use on a regular basis.

As you might know, there's a ton of different forex trading signals that people look at! Because of this, I think it's important not to get overwhelmed by the different signals and try to follow each one.

Instead, you should try to establish about 5 different signals that you pay attention to. I find that looking at any more than this and you will get conflicting signals and your trading decisions can easily become clouded.

Remember, forex trading signals don't have to be the only thing you use when making a trading decision. Instead, use them as one of the factors you consider when looking at the market.

As an example, I always have the 200 day and 100 day moving averages on a daily chart. I pay attention to when these two moving averages cross - for example the 100 day moving average crosses through the 200 day moving average downwards - meaning the 100 day moving average is now below the 200 day.

This fx trading signal would make me have a look at shorting the currency pair I was looking at, although I would have to look at the "big picture". If other factors are tempting me to sell, then I may fairly well take a shot and go short.

I like to have a few forex trading signals that all confirm the same trade. This leaves me much more confident that I will enter a winning trade.

I built one trading model that use a combination of three different types of signals. It looks at moving average crosses, momentum technical indicators and overbought/oversold indicators. If all three aligh in a certain way, it will generate a trade recommendation. I've had some great success with this system and it demonstrates how using more than one signal at a time can be very helpful.

We're going to continue to dive into the world of forex trading signals in future columns and hope this introduction has wet your appetite!