Forex Signals and Their Importance to Forex Traders

In order to understand forex signals (also known as FX signals, currency trade signals, or more properly, foreign exchange signals) we must first understand the idea behind trade signals, as the said signals are but a subset of these.

Trade signals in general are information feeds from trading sources. In the latter half of the 19th century up to the 1960s, such signals were often conveyed through the means of ticker devices that made use of telegraph, then later radio and telephone infrastructure that was already in place. Much of the data sent consisted mostly of price quote for the price of stock or currency at given periods of time, due to the limitations in technology. Computer networks later on supplanted tickers and there was much more data and data types available for traders to process, analyze, and utilize, though usually only trades with sufficient capital had access to these networks. Fortunately however, the lowered cost and high accessibility of computers coupled with high rates of internet technology adoption by past generations has allowed traders with even small amounts of capital to access real time information on trade signals (including forex signals) from a wide variety of sources.

It is also quite interesting to note that the format used today to display trade signals and forex signals in particular is a direct descendant of the old ticker machine tape formats. You can often see these trade signals on runners on television channels that specialize in business news.

Knowing this, forex signals are types of trade signals that are focused on the currency exchange market. They are necessary; otherwise foreign exchange traders will not have any information regarding what is available for trade in a timely manner. If there were forex signals, it might be very difficult or even impossible for a trader to decide whether to buy or sell currencies, or even enter or leave the foreign exchange market when it is needed. Using forex signals will facilitate will make possible informed decisions on what actions a trader should make when it come to the foreign exchange market.

Forex signals are used by all kinds of traders, not just those playing the foreign exchange market. Importers and exporters in particular, also need to pay attention to exchange rates so that selling and buying products and services could be done at opportune moments when money could be saved and the cost of trading cut. Clearly, parties that have direct interests in the foreign exchange market also have it in their interests to closely monitor and otherwise make use of forex signals. Such parties obviously include currency traders, investment banks, central banks, and all varieties of institutions that have currency exchange interests.

Casual or novice traders do not particularly need any specialized technology in order to be able to receive or make use of forex signals. However for serious forex trading, there exists a wide variety of technology, most of it proprietary and some available online, that not only allows traders to receive forex signals, but also allows them to analyze better trends and movements so that more profitable decisions could be made more reliably. The power to make use of the said signals in such ways was once the domain of large institutions. Now it can be said that such capabilities to exploit forex signals are well within reach of anyone with reliable internet access.