What are Forex trading signals?
Forex trading signals are broadcast by a trader of his transactions to other traders from the trading platform. The sense of the broadcast of trade transactions is to obtain additional profits from the trading. For copying Forex trading signals, other traders pay a subscription set by the signals provider.
Many traders are faced with whether they need to spend their capital on the purchase of trading signals to trade in Forex. On the Internet now you can find many offers to buy signals. Some of these offers are free, but there are enough resources that offer to buy a signal for money. The price of such signals ranges from a few dollars to several hundred dollars a month.
As a rule, in the description of such proposals, it is written that the authors have done a tremendous job and such trading systems can bring a stable income to the trader.
They also assure that they can’t start trading by their forces with their profitable signals because they don’t have enough money to open a deposit on the trading account or something like that. Therefore, they decided to share their super-signals with traders, thus offering to buy them for mere pennies: about $200 per month.
But all these offers are practically the same. Of course, the authors of such proposals want to enrich themselves at the expense of gullible dreamers who wish to become rich without excessive effort. This begs the question: why would anyone sell such signals if they are so good? After all, it is more profitable to trade by yourself!
If the authors assure the effectiveness of their signals, then finding the money for trade won’t be difficult. Accordingly, the benefits of such proposals are reduced to zero.
Are Forex signals effective?
But if we assume that the signals work correctly, then with the help of them it is still impossible to get rich, since the Forex market is a rather complicated mechanism that is continually changing. Thus, we can conclude that it is almost impossible to make money on such signals.
Therefore, it is not recommended for novice traders to buy signals and trade with their help.
How to choose good trading signals
But if you still want to try to use the signals, we recommend you pay attention to the following things:
Pay or free signal
Free signals are more affordable, but the probability of losing a deposit with them is much higher. However, there is no guarantee that the paid signal will be good. The Forex market is an unpredictable thing.
Maximum leverage
The rule used in trading “the greater the leverage, the higher the risks” is typical in case you are going to subscribe to a trading signal as well. The fact is that the trader (signals provider) is also at risk, but at the same time, your money is in danger. Therefore, the lower the leverage, the better. Check what leverage your forex broker offers clients. For example, on JustForex it can be adjusted up to 1:3000. It depends on the type of trading account.
Profit per month
Of course, this is one of the most important indicators. It is measured as a percentage of the amount that was in the account from the very beginning. This is a statistical indicator that can indirectly predict the further development of events with a given trading signal.
Maximum drawdown
The previous point is important, but it is not enough to objectively establish the reliability of the trading signal. This criterion means how many per cent of the main balance is provider’s losses.
Percentage of profitable transactions
This indicator shows how many transactions were conducted with income and is expressed as a percentage of the total number of open positions.
Number of subscribers
The more subscribers a signal provider has, the more reliable he is. After all, numerous people would not subscribe to him just for no reason. This suggests that his signals still bring a profit to others.
