What to know before signing up with a forex signals provider
While forex signals can provide an accessible avenue to the forex market and ease a beginner into the subtleties of trading; there are some precautions retail investors need to take in order to ensure high quality service.
Finding reliable and actionable forex signals has its own difficulties but its an important step towards protecting your investment in the long run. For a beginner in the markets, the most important requirement for a signal provider is to have a steep growth curve in his performance records. As long as everything points to the upside, the investor without a doubt will soon become a paying customer.
Unfortunately, however, it’s not beyond forex signals providers to manipulate their trading records in order to appear more profitable and enticing for prospective customers. Especially since their objective over time leans towards attracting more subscribers instead of pumping out quality trading signals and minimizing their risk exposure and drawdowns. In fact, unnecessary risks are sometimes the status quo, as in order to recoup losses from a bad trade, the provider is more likely to take poorly planned high-risk entries.
How to distinguish between good and bad trading signals
If your forex signals are coming from a professional trading with years of experience in forex, risk tolerance will likely be substantially lower than you would normally expect, and profits will be modest to reflect the low risk taken.
Typically, scammers have quite a few tricks under their sleeve to trick potential customers into subscribing while still appearing as profitable in their track records on the MetaTrader platform or TradingView.
- As already mentioned, a losing streak won’t look good on the records of a provider of forex signals and in order to correct this; he may increase his position sizing to boost his gains. This multiplies risk many times over but in case the trades go according to plan, it will look great on the chart.
- Some traders can even manipulate trading history by closing profitable positions in multiple micro lots and show their profits in pips instead of actual numbers. This can make a profit of 20 pips show up as 100 if partially closed in 50 different micro lots.
- Some investors also reported that their forex signals providers were actually trading on a demo account, taking huge risks without caring about losses since they could always create another account and make it look exorbitantly profitable.
A reliable and reputable provider of trading signals, on the other hand, will always provide you with transparent historical performance records including his currently open positions. A trial period is also usually on offer to demonstrate the signal’s accuracy and profitability and you can always request for further information before signing up. If you are interested in forex signals available directly in the MetaTrader platform for example there are multiple metrics to confirm the reliability of the signal like the Growth percentage over time, how many weeks the trading signal has been up and running and the amount of subscribers, equity and total balance.
You need to be thorough in your research when selecting a forex signals service because it’s quite easy to be baited by falsified records. Look for properly diversified signals that have been running for a good amount of time without hitting excessively low drawdowns.
Optimizing results on your end
Regardless of the trading signals you receive, it’s also prudent to look for ways to tweak the trades in order to maximize your returns while also being careful with your stop losses and profit targets.
For instance, keeping tabs on your leverage and cutting down your ratios can minimize the amount of times you get margin called by your broker. Always try to trade within your limits while considering if the reward is worth the risk. Risk only a small percentage of your account and ignore recommendations pointing otherwise.
Don’t let losses run in hopes of a reversal. Stop losses are there for a reason and even if your provider can handle waiting for the market to turn around, you could be burning through your investment.
If you are still confused or have any questions, remember that most brokers provide their own market analysis insights and even free forex signals services for their customers. Even if you are focused on learning how to trade manually by yourself, it’s incredibly beneficial to utilize all the information you can get. Since it’s in the broker’s best interest to satisfy their clients needs for proper education and market analysis; most of the time you can be certain that the information is valid.
Forex signals are tremendously helpful for beginner traders, but a certain degree of caution is advised as the industry is rife with scammers. The benefits include fast-tracking your education about the markets, diversification in different markets that you wouldn’t have the time to analyze for yourself and of course better returns in the long run. As long as you take your precautions before signing up with a provider, trading signals can offer a great stepping stone into the financial markets.