Should you Trade with Forex Signals?
Truth be told, most services that market themselves as forex signals experts promising a luxurious lifestyle are no more than smoke and mirrors. Unfortunately, for a beginner willing to invest in forex, the deal sounds way too good to pass up and they jump on the early retirement wagon. Free forex signals aren’t that great either since as we all know, you get what you pay for. Admittedly, trading profitably with paid or free forex signals isn’t unheard of, but you should always be wary of signing up with a provider who is not being forthcome with their trading history. Always request to see a proven record of live trading results.
Trading with forex signals
Forex signals are trading alerts that can be sent via email/text. Usually, there is a knowledgeable trader that provides the trading signals after identifying upcoming opportunities in the currency markets through his own technical or fundamental analysis. At times you may find that the signals are sent by an EA or Expert Advisor which is a programmable robot developed to send out signals if certain criteria are met.
Keep in mind that forex signals are essentially trading advice and ultimately, it’s up to you if you are going to incorporate it into your trading platform. You can pick and choose which trades you want to take and customize each trade including entry, exit price and lot size.
Trading signals should include the following info:
- The currency pair you should trade
- Market entry point
- Profit target and stop loss level
Beginners are always tempted to invest in such services because they quickly find out that trading forex is much harder than they initially expected. The problem with forex signals is that they seldom seem to provide an educating experience for the customer. The ones that do try to explain the analysis behind each signal are few and far between, but they are the ones that are actually successful and the ones you should be striving to follow. Trading forex has a steep learning curve and investing your time and hard work is essential if you want to start making consistent trades instead of gambling your money away.
Trading signals can be found anywhere online. In social media, forums, and even directly in your trading platform. In MT4 for example, you can find thousands of free forex signals to follow. Each one showing a recent history of trading performance, including the number of followers, total profits to date and maximum drawdown. These factors should always be considered before signing up for a forex signals service as they will help you determine the signal’s reliability and of course if it’s in line with your investment strategy. The trading signals service on MT4 is quite straightforward for novice traders because you can automatically copy the trades easily without ever leaving the platform.
What to watch out for
Lack of trading performance. As already mentioned, a reliable service that utilizes a consistently profitable trading strategy will have no qualms in sharing their historical data and their performance over time. Don’t worry if you see some losses in there too cause that’s just part of the game. Actually, this is how you can distinguish some scammers as they are more likely to hide most if not all losses to appear more profitable and entice more customers.
High pricing with upfront fees promising high success rates. If you find a provider that asks for your money first without offering a trial period, start running. You wouldn’t want to invest in service without making sure that you are getting your money’s worth. Reliable forex signals providers will usually give you a demo of their service for free or for considerably reduced cost so you can evaluate their trading signals for yourself.
Forex broker affiliates take advantage of newbie traders by offering free forex signals and the only thing they ask in return is that you sign up with their broker with the link they provide. Each trade you make increases their commission and therefore it’s advantageous for them to spam you with trading signals. As long as you are trading, they will be making money regardless if you are winning or losing.
Finally, stay away from newly released services. If you have been paying attention so far, you should know that having a proper sample size of previous trading performance is a must. As such, it is imperative to avoid new forex signals on the market, no matter how cheap or successful they have been for the last two weeks. These services usually can have hundreds of endorsements from users on their website, but these are most probably fake as well so don’t be fooled. Always check through multiple reputable websites for authentic reviews before committing to sign up for a forex signals provider.
When you eventually find a service you are comfortable with, I would also recommend to first try it out on your broker’s demo account. If the provider knows what they are doing, you should be able to start seeing positive returns by trading using their signals and confirm that their analysis is indeed accurate.