A successful forex trader doesn’t just make trades based on a whim. He has a system that generates forex signals. These signals tell him when it’s time to buy or sell a foreign currency. You can either use your own trading software to generate such signals, or you can employ the services of a company that specializes in providing their customers with trading signals.

If you want to generate your own trading signals with the help of your trading software, you absolutely have to become familiar with the basics of the forex market first. You have to learn about technical indicators, fundamental indicators and money management. You also have to understand how to interpret charts such as the candle-stick chart and the bar chart.

It doesn’t have to be as complicated as it sounds. All you need is a good analysis package that can draw charts of the various indicators. You then have to decide which indicators you want to use to generate trading signals. Many traders are very fond of the moving averages. They are used by both day traders and long term investors to make trading decisions. A simple example is to buy a currency when its price moves above the EMA (Exponential moving average) and to sell it again when the price drops below the EMA. A more sophisticated technique is to use the cross-over point of two moving averages: if the 6 period EMA moves above the 23 period EMA you buy. When it drops below you sell.

The least complicated alternative is to sign up with a company that uses similar techniques to arrive at a trading signal and then email their recommendations to their members. If you can find a company that explains clearly how they arrived at the forex signal, this might actually be the best way to get started because you will learn to understand the reasoning of professional traders. This is a much better option than someone just sending you a trading signal without any explanation of how it was arrived at.

Many of these companies have online forums where they discuss the way they arrived at their current trading signal. You can also talk to other traders and share your experiences. This way you will get to know the market much better than by just blindly following trading signals.

The difficult part is to find a company that will provide you with signals of a consistently high quality. No trader can make money all the time, but it’s better to make a large number of decent profits and perhaps a couple of small losses than making large profits followed by even larger losses. Historical records doesn’t help you much in finding the right company, since history is seldom repeated in the same way than before. And reviews are nowadays often written by paid writers.

The best way is to choose a provider of forex signals with a free trial period and then use their alerts on a demo trading system (not real money) for a period of thirty days. That way you can see for yourself if you make any money with the system. Only after that should you start trading with real money.

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