How It Works
We believe in complete transparency. This page explains exactly how our trading signals are generated, including all technical indicators, fundamental analysis, and risk management calculations.
Our methodology combines proven technical analysis with real-time economic data to provide you with actionable trading signals backed by data, not guesswork.
Signal Generation Overview
Every trading signal is generated through a systematic analysis process that evaluates multiple factors:
Technical Score
Based on 9 technical indicators: RSI, MACD, SMA (20/50/200), ATR, Bollinger Bands, Volume Analysis, Stochastic, ADX, and RSI Divergence.
Fundamental Score
Economic calendar events impact assessment. High-impact events within 2 hours trigger AVOID signals to protect capital.
Risk/Reward Score
Calculated from ATR-based stop loss and take profit levels, plus Bollinger Band position analysis for optimal entry points.
Trend Score
Multi-timeframe trend analysis using SMA alignment (20, 50, 200) to identify long-term, medium-term, and short-term trends.
Overall Score Formula:
Overall Score = (Technical × 0.6) + (Fundamental × 0.2) + (Risk/Reward × 0.1) + (Trend × 0.1)
Signal Type: BUY (score ≥ 6, technical > 5), SELL (score ≥ 6, technical < 5), HOLD (4 ≤ score < 6), AVOID (high-impact event within 2h)
Technical Indicators Explained
RSI (Relative Strength Index)
Period: 14 | Overbought: 70+ | Oversold: 30-
Calculation Method: Wilder's Smoothing
RSI measures momentum by comparing the magnitude of recent gains to recent losses. We use Wilder's exponential smoothing method (not simple moving average) for more accurate readings.
RS = Average Gain / Average Loss
RSI = 100 - (100 / (1 + RS))
Signal Impact:
- RSI < 30 (Oversold): +2 to technical score → Potential BUY signal
- RSI > 70 (Overbought): -2 to technical score → Potential SELL signal
- RSI 30-40: +1 to technical score
- RSI 60-70: -1 to technical score
MACD (Moving Average Convergence Divergence)
Fast EMA: 12 | Slow EMA: 26 | Signal: 9
Calculation:
MACD Line = EMA(12) - EMA(26)
Signal Line = EMA(9) of MACD Line
Histogram = MACD Line - Signal Line
Signal Impact:
- Histogram > 0: +1.5 to technical score → Bullish momentum
- Histogram < 0: -1.5 to technical score → Bearish momentum
- MACD > Signal: +1 to technical score
- MACD < Signal: -1 to technical score
Simple Moving Averages
Short-term: 20 | Medium-term: 50 | Long-term: 200
Trend Analysis:
- Price > SMA 200: +2 to technical score → Long-term uptrend
- Price < SMA 200: -2 to technical score → Long-term downtrend
- Price > SMA 50: +1 to technical score
- Price > SMA 20: +0.5 to technical score
Multi-Timeframe Trend:
We analyze three timeframes: Short-term (SMA 20), Medium-term (SMA 50), and Long-term (SMA 200). When all three align in the same direction, it indicates a strong trend.
ATR (Average True Range)
Period: 14
Purpose: Measures market volatility
ATR is used to calculate dynamic stop loss and take profit levels based on current market volatility. Higher ATR = more volatile market = wider stops.
Stop Loss & Take Profit Calculation:
BUY: SL = Entry - (ATR × 2), TP = Entry + (ATR × 3)
SELL: SL = Entry + (ATR × 2), TP = Entry - (ATR × 3)
HOLD/AVOID: Neutral levels (equal distance above/below entry)
Risk/Reward Ratio = |TP - Entry| / |Entry - SL|
Entry Price: Always from last quote (bid/ask) API, NOT candle close
This ensures all timeframes use the same entry price for the same pair
Bollinger Bands
Period: 20 | Standard Deviations: 2
Calculation:
Middle Band = SMA(20)
Upper Band = SMA(20) + (2 × Standard Deviation)
Lower Band = SMA(20) - (2 × Standard Deviation)
Signal Impact:
- Price at Lower Band (position < 0.1): +1 to technical score → Oversold, potential bounce
- Price at Upper Band (position > 0.9): -1 to technical score → Overbought, potential pullback
- Used in Risk/Reward calculation: Buying near support or selling near resistance adds +2 to R/R score
Volume Analysis
Compares current volume to 20-period average
Confirmation Logic:
- STRONG: Price move with volume > 1.2× average → +1.5 to technical score
- DIVERGENCE: Price move with volume < 0.8× average → -1 to technical score (warning)
- Unusual Spike: Volume > 2× average → Additional confirmation
High volume confirms price movements. Low volume during price moves suggests weak momentum and potential reversals.
Stochastic Oscillator
%K Period: 14 | %D Period: 3
Calculation:
%K = ((Close - Lowest Low) / (Highest High - Lowest Low)) × 100
%D = SMA(%K, 3)
Signal Impact:
- Both RSI and Stochastic oversold: +1 to technical score → Strong BUY signal
- Both RSI and Stochastic overbought: -1 to technical score → Strong SELL signal
- %K > %D (bullish crossover): +0.5 to technical score
ADX (Average Directional Index)
Period: 14 | Measures trend strength (0-100)
Trend Strength Classification:
- STRONG: ADX > 25 → +1.5 to technical score
- MODERATE: ADX 20-25 → +0.5 to technical score
- NO_TREND: ADX < 20 → -0.5 to technical score (ranging market warning)
Direction:
- +DI > -DI: +0.5 to technical score → Bullish direction
- -DI > +DI: -0.5 to technical score → Bearish direction
RSI Divergence Detection
Lookback Period: 20 candles
Divergence Types:
- Bullish Divergence: Price makes lower low, RSI makes higher low → +1 to +2 to technical score
- Bearish Divergence: Price makes higher high, RSI makes lower high → -1 to -2 to technical score
- Strong divergence (RSI < 40 for bullish, RSI > 60 for bearish): Double impact
Divergence is a powerful reversal signal indicating potential trend changes. It occurs when price and RSI move in opposite directions.
Fundamental Analysis
Economic Calendar Integration
We monitor economic events from major forex countries and assess their impact on currency pairs. Each event has an Impact Level (HIGH/MEDIUM/LOW volatility) that indicates expected market volatility, and a Trading Risk Level (EXTREME/HIGH/MEDIUM/LOW) that indicates the risk of trading during that time:
Impact vs Risk:
- Impact Level (shown as "Impact: HIGH/MEDIUM/LOW"): Expected market volatility/pip movements from the event
- Risk Level (shown as "EXTREME/HIGH/MEDIUM/LOW Risk"): Risk level when trading during that event
- High-impact events often have high risk, but some medium-impact events can also be risky depending on market conditions
EXTREME Risk Events
- Non-Farm Payrolls (NFP)
- Interest Rate Decisions
- Fed Funds Rate Announcements
Impact: -3 to fundamental score, triggers AVOID signal if within 2 hours
HIGH Risk Events
- CPI (Consumer Price Index)
- Inflation Reports
- High Volatility Events
Impact: -2 to technical score, reduces confidence
MEDIUM Risk Events
- GDP Reports
- Retail Sales
- Medium Volatility Events
Impact: Neutral, monitor closely
LOW Risk Events
- PMI Data
- Low Volatility Events
- Minor Economic Indicators
Impact: +2 to fundamental score (safe trading conditions)
Event Timing Rules:
- High-impact event within 2 hours → Signal changes to AVOID (confidence = 0)
- High-impact events in next 24 hours → -3 to fundamental score, warnings added
- No high-impact events → +2 to fundamental score
Trading Strategy Recommendations
Based on event analysis, we provide clear trading advice:
AVOID Trading
Triggered by: NFP, Interest Rate Decisions, Fed Funds announcements
- Close all positions before release
- Wait 30-60 minutes after for stability
- Expected impact: 100-200+ pip moves
CAUTION Required
Triggered by: CPI, GDP, High Volatility events
- Reduce position sizes by 50%
- Use wider stop losses
- Expected impact: 30-80 pip moves
MONITOR Closely
Triggered by: Medium Volatility events
- Trade with normal risk management
- Watch price action during release
- Expected impact: 15-40 pip moves
OPPORTUNITY
Triggered by: Low Volatility events, no major news
- Safe to trade during release
- Good for scalping strategies
- Expected impact: 5-15 pip moves
Confidence Score Calculation
Confidence scores range from 40% to 95% and indicate the strength of our signal recommendation:
Base Confidence: 50%
±25% Formula: (technicalScore - 5) × 5
±10% Formula: (fundamentalScore - 5) × 2
±5% Formula: (riskRewardScore - 5) × 1
±10% Long-term: ±5 | Medium-term: ±3 | Short-term: ±2
Confidence = 50 + (Technical - 5) × 5 + (Fundamental - 5) × 2 + (R/R - 5) × 1 + Trend Alignment
Trend Alignment = Long-term: ±5 | Medium-term: ±3 | Short-term: ±2
Final Confidence = Clamp(Confidence, 40, 95)
Note: AVOID signals have confidence = 0 (overrides calculation)
Risk Management
Stop Loss & Take Profit Calculation
ATR-Based Dynamic Levels:
Instead of fixed pip values, we use ATR (Average True Range) to calculate stop loss and take profit levels that adapt to current market volatility. This ensures stops are neither too tight (causing premature exits) nor too wide (excessive risk).
Stop Loss
BUY: Entry - (ATR × 2)
SELL: Entry + (ATR × 2)
Multiplier: 2× ATR ensures stops are placed beyond normal market noise
Take Profit
BUY: Entry + (ATR × 3)
SELL: Entry - (ATR × 3)
Multiplier: 3× ATR targets realistic profit levels
Risk/Reward Ratio:
R/R = |Take Profit - Entry| / |Entry - Stop Loss|
Minimum acceptable R/R: 1.5:1 | Our default: 1.5:1
HOLD/AVOID signals: R/R = 1.0 (neutral)
Bollinger Band Position Bonus:
- Buying near Lower Band (support): +2 to Risk/Reward score
- Selling near Upper Band (resistance): +2 to Risk/Reward score
- Buying at Upper Band (resistance): -2 to Risk/Reward score (risky)
- Selling at Lower Band (support): -2 to Risk/Reward score (risky)
Signal Types & Decision Logic
Signal Classification
BUY Signal
Triggered when:
- Overall Score ≥ 6
- Technical Score > 5 (bullish indicators)
- No high-impact events within 2 hours
Direction: STRONG (score ≥ 8) or NEUTRAL (6-8)
SELL Signal
Triggered when:
- Overall Score ≥ 6
- Technical Score < 5 (bearish indicators)
- No high-impact events within 2 hours
Direction: STRONG (score ≥ 8) or NEUTRAL/STRONG (6-8, based on technical score)
HOLD Signal
Triggered when:
- Overall Score between 4-6 (neutral)
- Low score (< 4) - market uncertainty
- Mixed signals from indicators
Direction: NEUTRAL (score 4-6) or WEAK (score < 4)
Note: HOLD signals use neutral SL/TP levels (equal distance above/below entry). UI shows warning instead of trading levels.
AVOID Signal
Triggered when:
- High-impact event within 2 hours
- NFP, Rate Decisions, Fed Funds
- Confidence: 0% (do not trade)
Direction: NEUTRAL
Important Notes:
- We prioritize capital preservation: Low scores result in HOLD, not risky contrarian trades
- BUY/SELL signals include Entry, Stop Loss, Take Profit, and Risk/Reward ratio
- HOLD/AVOID signals show warning message instead of trading levels (neutral levels calculated but not displayed)
- Entry Price: Always from last quote (bid/ask) API, NOT from candle close - ensures consistency across timeframes
- Signals are valid until the next timeframe period (15m: 15 min, 1H: 1 hour, 4H: 4 hours, 1D: 24 hours)
- Minimum 200 candles required for accurate SMA200 calculation
Data Sources & Updates
Price Data
- Source: Massive.com API
- Entry Price: Last quote (bid/ask mid price), NOT candle close
- Why: Ensures same entry price across all timeframes for same pair
- Update Frequency: Every 15 minutes
- Timeframes: 15m, 1H, 4H, 1D
- Candle Requirements: Minimum 200 candles for accurate indicators
- Caching: 15 minutes (signals), 30 minutes (prices)
Economic Calendar
- Source: RapidAPI Economic Calendar
- Update Frequency: Every 12 hours (upcoming events), 48 hours (historical events)
- Coverage: 30 days ahead + 14 days historical
- Countries: US, EU, GB, JP, DE, FR, CA, AU, NZ, CH
- Features: Market data (Actual vs Consensus), Historical events, Internal linking to pair pages, URL-based filtering
- Caching: 12 hours (upcoming), 48 hours (historical)
Visit our Economic Calendar page to see upcoming events, historical results, and trading strategies for each event.
Supported Pairs & Timeframes
Currency Pairs (9 pairs)
Euro/US Dollar
British Pound
US Dollar/Yen
US Dollar/Swiss
Australian Dollar
US Dollar/CAD
NZ Dollar/US Dollar
Euro/British Pound
Euro/Yen
Timeframes (4 options)
Data: 14 days | ~1,344 candles
Data: 30 days | ~720 candles
Data: 60 days | ~360 candles
Data: 250 days | 250 candles
⚠️ Important Disclaimer
While our signals are generated using proven technical analysis methods and real-time data, forex trading involves substantial risk and is not suitable for all investors.
- Past performance does not guarantee future results
- Always use proper risk management (never risk more than 1-2% per trade)
- Our signals are recommendations, not financial advice
- Always do your own research and analysis before trading
- Consider your risk tolerance and financial situation
We provide transparency in our methodology so you can make informed decisions. However, you are solely responsible for your trading decisions and their outcomes.
Ready to Start Trading?
Now that you understand our methodology, explore our live signals and economic calendar to make informed trading decisions.