The Forex market sends signals to traders indicating the most opportune time to buy or sell a currency. However, unlike a traffic light, these signals are not clear-cut red or green lights. Forex signals are conveyed in a more esoteric fashion and require complex analysis to decipher. Both fundamental and technical events can trigger a given signal, and these signals have the propensity to change faster than you can type.

It is theoretically possible to manually discern the multiplicity of Forex signals that emanate from the currency markets on an hourly basis. What you need to know about trading using Forex signals ranges from macro-economic events and trends to technical expertise in reading charts and spotting patterns. Traditionally, small retail traders had no choice but to manually formulate their trades and were at a great disadvantage trading against institutions that could avail themselves of automated trading software.

Fundamental Analysis is when Forex signals are influenced by a given sovereign’s economic circumstance. There are many factors that go into determining the strength or weakness of a particular country’s currency, including inflation outlooks, trade deficits, unemployment rates and GDP estimates. Substantive information and statistics are released around the world in a never ending news flow.

The second facet of Forex signals relates to Technical Analysis. Technical analysis involves the complex charting of small fluctuations of a given currency’s valuation against its peers.  Various patterns of recent activity trigger either Forex signals to buy or to sell. The trick is to recognize the applicable pattern quickly and take advantage of the short-term projected movement that the given Forex signal portends.

After reading this, you might come to the conclusion that trading based upon Forex signals is complicated and requires years of study.  You are both right and wrong within this conclusion.  As indicated, to manually track all the salient macro-economic statistics around the world while keeping eagle eye out for technical Forex signals requires both substantial time and expertise.  However, there is another alternative that allows traders to capitalize on Forex signals without the grueling work and years of study.

Experts have taken their years of experience and have crafted software that quickly captures all you need to know to trade based upon Forex signals. Automated trading systems can absorb macro fundamental events in addition to being able to recognize technical patterns and act upon them in nanoseconds. Nowhere is the old saying “the early bird gets the worm” more applicable than in the Forex markets. Those seeking to manually effectuate Forex signal-based trades often find themselves only armed with a slingshot in a battle against cruise missiles.

The most important thing you need to know about Forex trading signals is that you cannot go it alone. Unfortunately, many novice Forex traders learn this lesson the hard way. Many automated Forex signal-based trading programs allow for a free practice account, which allows you to quantify expected results before risking any of your hard earned money. The choice is clear between guesswork and science when it comes to Forex signals. Do not let yourself end up on the wrong end of that continuum.