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WE SPEAK TO IAN COLEMAN ABOUT FOREX SIGNALS

In this edition of Experts Explain, Ian Coleman, former Chief Market Analyst at Signal Centre, discusses how forex trading signals can be used to improve your trading skills.

Ian started his financial career at the age of 18 working as a Junior Swiss Broker at Godsell Astley and Pearce in London. This involved matching foreign exchange deals between banks. He quickly moved through the ranks and was Desk Manager at the age of 29. His passion is Foreign Exchange. The highlight of his career was winning The Best Research House for FX in 2015. Ian continues to study and gains enjoyment teaching others what he has learnt during his 30+ years in the financial markets. Ian holds a diploma from the Society of Technical Analysts.

How to use forex trading signals to improve your trading skills

The global pandemic has seen an unprecedented number of new retail investors playing the market. According to Charles Schwab, 15% of current retail investors began playing the market in 2020 while JMP Securities reported 10 million new clients in 2020 and 7.8 million new retail clients in January and February 2021.

This boom has led to a new generation of traders with high expectations for opportunities to ‘get rich quick’ and as a result more and more unregulated trading ‘experts’ and ‘advisors’ promising to deliver guaranteed winning signals have flooded social platforms.

What are forex trading signals?

Trading signals are ideas or recommendations to ‘buy’ or ‘sell’ a financial asset at a predetermined level. Such signals will normally be combined with a take profit level and, what is known as a stop-loss, to limit your potential downside.

Where do they come from?

There are two different types of signal provider. The first type is fully computer-generated. The ideas will normally be set around certain parameters. If A, B and C happen, then Sell. The criteria could be anything from a technical based study to a volume spike or earnings report.

The second type of signal is produced by an analyst or trader. Care should be taken to ensure that these individuals are qualified. Do they hold the Society of Technical Analysts diploma or other credited financial qualifications?

How can you find the best signals to improve your trading skills?

Signals should come with an explanation of how the idea was derived. This then helps with your trading education and skills.

Take care when choosing a signal provider. It might be worth enquiring how they are remunerated for their service. Are they paid a set fee? Do they earn broker commissions? Take extra care if the latter is the case. They may generate more signals as they get paid every time you trade. The more you trade, the more they get paid!

Use these steps to ensure you’re only looking at forex signal providers that will work for you

CHECKLIST

1. Make sure you’ll receive signals while you’re active

2. Ensure you can use a demo account

3. Check on their track record for providing accurate data and positive returns

4. Only choose a forex signal provider offering insights as well as actions

5. Make sure the signal provider offers signals that work for you

6. Consider the extras

7. Are they regulated by a governing body?

8. Are the signals updated?

9. Don’t put all your eggs in one basket

EXPLANATION

It’s important to recognise different time zones so that you know when you’ll receive your signals. Are you trading the European session, US or Asian Pacific?

Get a feel for the quality before you commit and do this with multiple providers to contrast and compare. Do they offer a free trial?

Ensure the signal provider is known for accuracy. Does it have a verified track record showing their performance?

Actions are good but understanding why they’ve been recommended is better. Education as well as analysis.

Not all signals are the same; you need to find signals that work with your style. For example, whether you are technical, fundamental, scalping or swing, you’ll need to match yourself with a service that’ll help!

Some providers will offer education and other perks that can help you as a trader.

Are they regulated by the Financial Conduct Authority (FCA), or other regulated body? This gives you the peace of mind that the signal provider has to adhere to certain guidelines and that any complaints will be taken seriously.

Trading can be a nerve-wracking experience when you set out on your journey. It is good to feel that your signal provider has your best interests in mind. You have taken your first trade signal and set your stop loss and target. Then what? Using a signal provider that offers regular updates can ease that anxiety. They might suggest closing the trade early or moving the stop loss to breakeven.

Don’t risk too much on one trade.

CHECKLIST

EXPLANATION

1. Make sure you’ll receive signals while you’re active

It’s important to recognise different time zones so that you know when you’ll receive your signals. Are you trading the European session, US or Asian Pacific?

2. Ensure you can use a demo account

Get a feel for the quality before you commit and do this with multiple providers to contrast and compare. Do they offer a free trial?

3. Check on their track record for providing accurate data and positive returns

Ensure the signal provider is known for accuracy. Does it have a verified track record showing their performance?

4. Only choose a forex signal provider offering insights as well as actions

Actions are good but understanding why they’ve been recommended is better. Education as well as analysis.

5. Make sure the signal provider offers signals that work for you

Not all signals are the same; you need to find signals that work with your style. For example, whether you are technical, fundamental, scalping or swing, you’ll need to match yourself with a service that’ll help!

6. Consider the extras

Some providers will offer education and other perks that can help you as a trader.

7. Are they regulated by a governing body?

Are they regulated by the Financial Conduct Authority (FCA), or other regulated body? This gives you the peace of mind that the signal provider has to adhere to certain guidelines and that any complaints will be taken seriously.

8. Are the signals updated?

Trading can be a nerve-wracking experience when you set out on your journey. It is good to feel that your signal provider has your best interests in mind. You have taken your first trade signal and set your stop loss and target. Then what? Using a signal provider that offers regular updates can ease that anxiety. They might suggest closing the trade early or moving the stop loss to breakeven.

9. Don’t put all your eggs in one basket

Don’t risk too much on one trade.

If it seems too good to be true, it probably is

The market is flooded with poor information from unregulated providers that leave the user exposed and vulnerable to making ill-informed decisions and ultimately taking a miscalculated risk

Make sure you can spot a scam with this checklist:

  • Too good to be true
    The promise of untold riches, sitting on the bonnet of a Ferrari, wearing a Rolex watch are all tell-tale signs. If they could really earn this amount of cash from trading, why are they bothering to tell you?
  • Signal providers that offer to take over your trading actions
    This is a big red flag! They are likely to ‘churn’ your account. Churning is the excessive trading of an asset in a client’s brokerage account to generate commissions. It should be noted that this activity is illegal in the UK and should be reported to the FCA.
  • Unrealized losses
    Does the performance look too good to be true? Are there any drawdowns or losses? On some trading accounts, unrealized losses are not highlighted in the running performance. A signal provider could be hiding large losses.
  • Drawdowns
    No trading system is completely fool-proof and mild drawdowns are a part of trading. However, any drawdown in excess of 20% of the account balance should be a cause for concern. This means that too much risk is being taken and sound money management is not being adhered to.

How to use trading signals

A GROUNDBREAKING FCA REGULATED PROVIDER

Why we use Signal Centre

Trade Nation partnered with Signal Centre in 2018. The company has a long track record having been established in 2007. In addition, Signal Centre is the only UK based signal provider that is overseen and regulated by the FCA.

Signal Centre applies technical analysis to a range of indices, currency pairs and commodities to empower traders to access high quality, rich data signal insights.

In the most recent feedback from Signal Centre clients, over 80% of traders preferred to utilise and engage with Signal Centre’s new dashboard as opposed to another non-FCA regulated competitor.

Steve O’Hare MSTA, Director at Signal Centre, said:

“We’ve worked intensively alongside some of the best AI and fintech data academics to develop a trading tools platform that cuts through the noise of often misleading trading information straight to the heart of signal reporting.

“The pandemic and the explosion of cryptocurrencies has had an unprecedented impact on the uptick of new and often inexperienced clients playing the market. As an FCA authorised and regulated company it’s our responsibility to ensure we are continuously evolving our service to provide market clarity while applying surgical precision to our technical analysis.”

Financial spread trading comes with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread trading works and whether you can afford to take the high risk of losing your money.