How to read a forex signal (and use it without guessing)
What the entry, take profit, stop loss and expiry on a forex signal mean, how to place the order, and how to size it from the stop.
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A forex signal is a trade plan written down before the trade happens. It is only useful if you follow all of it, not just the direction. This article goes through each part of a ZForex signal and what to do with it.
The five parts of a signal
Every signal on ZForex has the same parts:
| Part | What it tells you |
|---|---|
| Pair and side | Which market, and whether to buy or sell. |
| Entry | The price at which the trade should start. |
| Take profit | The price where the trade closes with a gain. |
| Stop loss | The price where the idea is wrong and the trade closes with a loss. |
| Expiry | The time after which the plan no longer applies. |
The side alone is not a signal. “Sell EUR/USD” without levels leaves the two decisions that matter most to you: where you get out when you are right, and where you get out when you are wrong.
Entry: wait for the price
The entry is a price, not a moment. If the signal says sell EUR/USD at 1.10250 and the market is at 1.10180, the plan is to wait until price comes back up to 1.10250. Selling now at 1.10180 changes the trade: your stop is further away than planned and your target is closer.
Most trading platforms let you place this as a pending order, so you do not have to watch the screen. A limit order waits for a better price than now; a stop order waits for a worse one. Pick the one your platform offers for that direction and level.
If price never reaches the entry before the expiry, the setup is cancelled. That is a normal result, not a missed opportunity. On the track record these show as “Cancelled, entry not reached”.
Take profit and stop loss: set both at once
Enter both exits with the order, before it fills. Two habits cost traders more than any single bad signal:
- Moving the stop further away when price comes close to it. The stop was placed where the setup stops making sense. Moving it turns a small planned loss into a larger unplanned one.
- Closing early at a small gain and letting losers run to the stop. That reverses the arithmetic the plan was built on.
The small price scale on each signal card shows the three levels at their real distances, so you can see at a glance how far the stop is compared with the target.
Size the trade from the stop
Position size is the one part of a signal that only you can set, because it depends on your balance. The rule is simple: decide how much of your balance you are willing to lose if the stop is hit, then size the trade so that the stop distance equals that amount.
An example with round numbers:
- Balance: $5,000. Risk per signal: 0.5%, so $25.
- Stop distance on the signal: 23 pips.
- On EUR/USD one standard lot moves about $10 per pip, so $25 / 23 pips is about $1.09 per pip.
- That is roughly 0.11 lots.
If the stop is wider, the position gets smaller, and the money at risk stays the same. Keep no more than three signals open at once, so a bad day stays a small one.
Expiry: the plan has a shelf life
A setup is based on market conditions at the time it was posted. The expiry is when those conditions are considered stale:
- Not filled by the expiry: the order is cancelled.
- Filled but neither target nor stop reached: the trade is closed at the market price at the expiry time.
Write the expiry next to the order, or set a reminder. Most platforms can cancel a pending order at a set time.
Compare the levels with your broker
ZForex prices come from one data feed. Your broker’s prices can be a little different, and spreads widen around news, at the daily rollover and when markets open on Sunday. Before placing an order, check that the entry is still a sensible distance from your broker’s current price. If the market has already moved far past the entry, skip the signal.
A short checklist
- Is the signal still open and not expired?
- Is price still on the right side of the entry?
- Did you enter the order with both take profit and stop loss?
- Is the size based on the stop distance and your risk per trade?
- Do you have fewer than three signals open?
If any answer is no, there is no trade. You can follow new signals on the home page or get them as notifications in the Android app.
Forex trading carries a high risk of loss. This article is general information, not financial advice.