Smart Way to Use Forex Signals and Analysis

    One of the appealing aspects of the Forex markets is the ability to scale what you are doing with larger capital bases.

    shares-vs-currency-investment 

    No matter if you have a $10,000, $100,000 or even a $1,000,000 capital base, the Forex markets can handle your size.

    Smart traders know this and work tirelessly to create trading strategies that can be scaled up as their capital increases.

    In this post, we are going to look at the smart way to use Forex signals and analysis, so you can think towards scaling up as your capital base grows.

    We’ll consider two options. The first is using Forex signals to generate trade ideas for your trading and the second is testing so you can scale your portfolio once you are comfortable with the results.

    Subscribing to Forex signals for trading ideas

    One of the smartest ways to use Forex signals and analysis is to generate trading ideas.

    It goes without saying that trading Forex is risky and you can lose more than what you start with.

    But you also can control the amount of risk you have on each trade.

    One of the challenges when starting is coming up with trade ideas that make more money than they lose.

    This is why subscribing to Forex signals and analysis is an excellent way to get many new trading ideas.

    Of course, the Forex signal provider is not going to give you their exact strategy, but they will outline the ideas and concepts of each of their trading systems.

    You can also reverse engineer each trade, looking for things like:

    • Common entry criteria
    • How they lock in profits when the position moves in their favour
    • Their method for exiting when the trade goes against them
    • What they recommend when it comes time for position sizing and money management

    Subscribing to Forex signals is ideal to help you come up with new trading ideas. Most signal providers have spent years developing their signals through rigorous testing and tweaking.

    Testing with a small amount of risk

    Let’s say you decide to subscribe to a signal service, but you trade an amount that is insignificant to your overall portfolio.

    For instance, you may have $100,000, and you would normally be happy to risk 1% per trade or $1,000.

    But to test the waters, you decide to risk 0.05% or $50.

    $50 risk on your $100,000 is a relatively insignificant amount.

    Your goal is to get enough data to have confidence so you can scale up based on your usual risk allocation.

    So, you need to have enough data to make sure the system isn’t lucky or unlucky.

    In this case, a good sample size is 30-50 completed trades.

    Of course, historical trades, even when done in real-time, are no guarantee of future returns but they can give you the confidence to step up your position sizing based on live results.

    If the system is positive and you are generating returns, you may consider scaling up to your regular risk per trade.

    In conclusion, subscribing to Forex signals and analysis provide new trading ideas and the potential to test and scale up your capital allocation when you feel comfortable.

    Australian-Dollar-Liquidity-1

    For the full breakdown on why Australians should invest in Forex Signal Service, check out our article: What are Forex Signal and how they work?

     

    We welcome you to give our team a call to discuss your investment goals and objectives.

    You can call Walker Capital Australia on +61 2 8076 2210, and we’ll see how we can help you achieve your investment goals.