Forex Signal Generator: How Do They Work To Make A Profit In The Forex Market?

Forex Signal Generator based on Technical Analysis

Everyday, there are millions of people trading the forex. Some people use forex signal generator to help them make trading decisions. Using forex signal generator requires some education in technical analysis and may be more suited for the intermediate to advanced traders. How this works is usually within the trading platform, theres a feature that allow one to implement trading systems by using a combination of technical indicators.

Here are the 3 most common technical analysis patterns that trader use to generate forex trading signals:

1) Price Range

As any experienced trader will tell you, the daily, weekly, monthly price range of a currency is crucial in making sound trading decision. Whenever, theres a time that the price of a currency pair breaks beyond a certain point, it is very likely that it will bounce back a little bit before a consolidation pattern form. One example is the USD/JPY pair, in the last 6 months, most trader knows that it is very difficult for the yen to break below 80 yen/dollar or go above 85 yen/dollar.

Japan has the 3rd largest economy in the world and it is heavily export dependent. If yen is to go any stronger against the dollar, it will have a negative impact on the profitability of Japanese company when they reconvert their profit back into yen within their oversea operations. During the Japanese earthquake, we did see the yen breaking all the way below 76 yen at one point and in any case, it is most likely that it will bounce right back to above 80yen due to government intervention which happened within a week and a half or so.

Price range allows trader to determine when a particular currency is reaching a resistance and support point in which price will struggle to either break the range due to economic or political events or remain inside the price range.

2) Simple Moving Average / Price Action

In forex trading, price action is the key to make sound trading decisions because price action tells you exactly at what price the currency pair is at. Using a system of moving averages drawn based on historical price action, trader can determine the stage of a particular trend rather it will continue on or slowly reversing in pattern. Moving average also helps to identify a break or rapid volatility whenever price action goes sporadic. In this case, there are opportunity for high probability trade as price action is likely to find itself back into equilibrium.

3) Chart Pattern

Most traders who trade the forex will be using trading platform which provides currency charts in various time frame to guide their analysis. Chart patterns are predictable pattern that will most likely occur when certain conditions are met. The most common chart patterns are the triple bottom, triple top, double bottom, 1-2-3 top, continuation pattern, and W patterns. Chart pattern occurs because forex is such a big market, no single institution has power to control the outcome of the market. As a result, it usually becomes a self-fulfilling prophecy on the part of the trader to anticipate common patterns that occur in the market.

These 3 technical elements are the most common analysis traders look for when they want to make a profit in the forex market using a forex signal generator .