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Good Forex Trading Signals – The Filtering Process

Discussion in 'Forex Discussions' started by painofhell, Feb 11, 2016.

  1. painofhell

    painofhell Content Contributor

    Jun 24, 2015
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    Filtering Bad and Good Forex Trading Signals.

    A particular Forex trading strategy may generate hundreds of price action entry signals. Some of them are bad, and some are good Forex trading signals. Therefore, it’s really important to filter good price action’s signals in order to maximize your profits and mitigate the losses. Below is how to filter price action’s for good Forex trading signals.

    1. Look for a Signal with a Protruding Tail. A protruding tail creates a false-break of a support/resistance level. Whenever you have a key support/resistance level, watch out for a false-break/protrusion.

    2. Long-tailed Pin Bar. A long-tailed pin bar works really well in trending markets and as counter-trend signals, as a high-probability Pin Bar. Usually a long tail signifies a strong rejection of a price action.

    3. Wait for a Breakout Confirmation. As a Forex trader, you should never bet on a breakout. Instead, you should wait for a confirmation that the breakout was valid. And see that the most recent close was above or below the breakout level.

    4. Continuation Signals after a Pullback to Support/Resistance. Always try to look for trends and then retracements within those trends. Furthermore, try to figure out signals that form from “value” areas, indicating that the particular trend might continue.

    5. Avoid Signals Formed in Tight “Chop”. Trading signals formed during a thick consolidation, or a “chop”, is typically not recommended. Try to look for a clear breakout or some momentum before entering the market.

    6. Look for “Confluence”. You should try to utilize obvious hot points in trading sessions, when two or more levels intersect each other.

    7. Avoid Signals Formed Out of Nowhere. If a particular signal seems to have formed out of nowhere, and without any confluence, it’s recommended to be avoided.

    The most important thing is to train your mind in a way where it would feel natural to take a right decision in any possible trading scenario. This is really tough, and only experience and practice can help you to achieve such a mindset. But once you have it, you can generate good Forex trading signals in a constant way.
  2. sininfinity

    sininfinity Trusted Member

    Apr 4, 2014
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    For breakout strategies there are several setbacks. Aggressive method will get wrong trades, conservative method would make one loose more opportunties. But hence, it is necessary to have a good system that gives profit.
  3. Sharon Higgins

    Sharon Higgins New Member

    Oct 29, 2014
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    I don’t really prefer using signal services, I believe we will only go away from the real goal and that’s with manual trading, if we’re to be successful then we got to make sure we learn to trade and don’t rely upon anyone else or we will suffer badly, at least in long run. I have never found signal service good instead I take help from analysis and that’s provided by my broker OctaFX which is a very special company with providing us with daily market news and analysis service, so simply following that is enough for me to lead into good profits and that too with high level of consistency as well and that’s what makes me seriously comfortable too!

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