A signal provider is someone who grants access to the data on their trading activities allowing others to copy them on their own accounts. Signals can be provided either for free or on a commercial basis. It is common for signal providers to partner with brokers on an Introducing Broker model.
Signal providers share information and recommendations about trading activities related to:
- Which forex pair you should trade
- Whether to buy a forex pair or to sell it
- When to enter the market
- When to exit the market
This activity is regulated and although it is generally not taking into consideration the individual circumstances of the target audience, the recommendations are still classified as general advice. Therefore, the person providing the signals generally needs to hold their own financial services licence to do so. The trading signal is generated either by an experienced trader or financial analyst or alternatively by a forex robot.
A forex signal by definition is a trading idea or suggestion for placing a trade on a specified currency pair or financial instrument, usually at a specific price point. The signal is distributed by a specified signal provider or service, email, push notification, or social network group.
Many technical analysis traders and automated trading systems use trading signals based on technical analysis. This gives them the ability to efficiently determine when to open or close a position based on historic data and price action.
Signal trading can improve a trading strategy as it mitigates the risk of making assumptions. It is a great way for new traders to enter the market and in some cases, private signal providers require their community to trade with a specific broker, so the business model also serves as a good source of client referrals.
Sign up for an account with BlackBull Partners to get started as a signal provider today.