No matter whether you’re new to the world of cryptocurrency or you are an experienced trader, it’s common to feel lost. With markets fluctuating at rapid rates and so many variables to consider, keeping on top of your investments can be tough for even the most seasoned of traders. That’s where trade signals can help.
Imagine having your very own team of professional traders working for you and providing tips on when it’s the perfect time to buy and sell and for what price. Well, put simply, this is exactly what you’re getting when you use professional trade signal services.
By using the information provided by crypto trading signals, new traders can start to understand the crypto market for themselves, as well as buy certain coins at the best possible prices and protect themselves from losses by selling at just the right moment. For more experienced traders, these signals can help you to better understand profitability and improve market-reading skills. But how exactly do these signals work, how reliable are they, and are they even legal?
In this blog, we explore the world of crypto trading signals, offering answers to some of the most common questions and providing some handy tips along the way.
Put simply, trading signals are market predictions which present themselves in number form. Based on a predetermined set of criteria, a signal could tell you everything you need to come to an informed decision when either buying or selling a security, asset or cryptocurrency.
Different trade signal experts specialise in different markets, trading platforms and exchanges. For example, AltSignals primarily deals in cryptocurrency trading signals for the Binance Futures and Forex exchange platforms. However, all signals typically work in the same way. Either human generated using technical indicators, or produced using algorithms based on recent market action, once a new significant market trend or pattern is identified, a user of trade signals will typically be sent a text, email or notification on their chosen device by their trade signal provider. Once this signal has been received, they can choose to buy or sell if the signal is relevant to their portfolio.
For example, a signal could recommend purchasing Bitcoin (BTC) for £10,000 and then placing an automated ‘take profit’ order if the price of BTC increases and sees your investment rise to a certain level - say £10,500. The signal may also advise setting a ‘stop loss’ order which would ‘cash out’ your investment should the price of BTC drop and reach a preset amount, for example £9,500.
Yes, trading signals are completely legal. While companies that not only provide traders with signals but also manage traders on their behalf require certified financial provider status, expert companies that simply conduct market research and pass on trading signals based on their findings are totally legitimate.
With this in mind, traders should be cautious about getting involved with scam signals providers who want to manage their investments without certified status, as well as those firms who offer trade signals completely free of charge. This is because these companies tend to be more concerned with subscriber numbers and data harvesting rather than the accuracy of data.
However, trade signals that are provided for educational purposes (rather than official financial advice) are fully legal and can be incredibly useful. Companies such as AltSignals can do the research for you and act as your mentor, helping you to better understand crypto markets and allowing you to make your own, better informed decisions.
Nothing in the financial world is a certainty, however, this isn’t to say trading signals are not reliable. As is the case with every aspect of trading, the reliability of the trading signals you receive will all come down to where you are getting them from. As mentioned above, there are scammers, spammers and fraudsters operating as trading signals providers who do not care about the accuracy of their signals as long as you sign up. But equally, there are also a lot of reputable companies, such as AltSignals, that can provide reliable signals.
The key to finding a reliable trading signals company is research. Make sure the companies you get your signals from are trustworthy, have a proven track record and are not afraid to show examples of what they have achieved in the past.
Receiving handy trading signals each day is all good and well, however, if you don’t understand how to read or interpret them, they won’t be much help. As a rule of thumb, each signal will consist of the following:
- The ‘Action’ - This is basically a call-to-action which encourages you to either ‘Buy’ or ‘Sell’ the security, asset or coin in question.
- The ‘Pair’ - this is a list of two different currencies, with the value of one quoted against the other for context.
- The ‘Stop Loss’ (S/L) - This is essentially an exit point which is designed to protect your investment. When actioned, the S/L is the preset price at which you are pulled out of a trade when losses start to occur.
- The ‘Take Profit’ (T/P) - This is the opposite of the Stop Loss. When actioned, the T/P is a preset price at which your investment is essentially sold or ‘cashed out’ when a certain level of profit is hit.
- ‘Current Market Price’ (CMP) - This is designed to help you compare the price of the currency pair at the time the signal was issued with the actual price at the time of submitting the order.
For example, a signal may read:
‘Sell USD/GBP at CMP 0.9408 - S/L 0.9439 - T/P 0.9378’
If we break this signal down, the signal is to ‘sell’ with the pair in question relating to US dollars and British Pounds. The CMP is 0.9408, and the signal is advising you to set a S/L at 0.9439 and a T/P 0.9378.
While this is all the information some trade signal providers will give, some companies, such as AltSignals, ensure their signals are delivered in a more user-friendly way, with all information included presented in an easily understandable and translatable format.
As discussed above, nothing in finance is a certainty. However, if you do your research, select a trustworthy trade signals provider with a good track record, and you are prepared to be bullish when needed, trading signals can work and help make your investments very profitable.
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