Forex signals are recommendations on how to trade in the forex market. A human trader or a trading algorithm provides these forex signals. The signals will usually come with a directional bias for selling or buying, an entry price, a target price, and a stop-loss price. In the early days, forex signals were sent via text, email, or tweets. However, you can now sign up to a forex signals provider and copy their trades automatically to your account. Forex signals are provided via three main types of platforms. These are:
- Web platforms
- Mobile platforms
- Desktop platforms
When using a forex signals platform, you can mirror the signals being sent by a human trader or a trading algorithm. The basic idea here is that the forex signals provider is doing all the work for you and you only need to open an account with them.
What are the Benefits of Using Forex Signals?
Numerous benefits come with using forex signals. Here are some of them:
To Save Time
As a beginner trader, you might not have the time to trade throughout the day since you also have to put on the table via your regular job. By being able to replicate the strategies of more experienced traders, it can help you spend more time in the forex market trying to make a profit.
One of the reasons why people use forex signals is to educate themselves about how the forex market works. By closely watching how expert traders execute their strategies, beginner traders can home their skills and understand how to form winning strategies.
There are many forex signals providers today and you can access as many as you like. Some forex signals providers specialize in a narrow set of currency pairs. By accessing different forex signals providers, you can diversify your trading strategies, methods, timeframes, and currency pairs.
To Make a Profit
Besides using forex signals, you can also sell your own forex signals. This could provide you with an additional income to top up your earnings from the forex market.
While using forex signals has some clear advantages, you should be aware that there is a downside to using forex signals. One of the main downsides is that you might over-trust your signal providers and therefore not have a solid risk-management strategy in place. Besides that, some of the signals providers are scammers, which will lead to never making a profit when using them. Consequently, it is important to conduct due diligence when picking your signals provider. Fortunately, you will have statistical data that you can analyze on your own when picking a signals provider.
How to Pick a Good Forex Signals Provider
Whether you are using a demo account or a live account, it is important to conduct enough research before you pick a signals provider. While this is not a guarantee for success, it can help you to decide whether a given forex signals provider is worth following or not. Here are some of the statistics you can analyze when picking your signals provider:
These are the years that the trading signals provider has been operating –the longer the better.
Growth refers to the percentage growth that the signals provider has seen in the lifetime of the account – the more the better.
This is the amount of capital, which follows the signals provider –this figure might not always be available to the privacy settings of the followers.
These are the number of followers that copy the signals provider.
This refers to the maximum percentage drawdown, which the signals provider has produced.
This statistic shows the number of times that gross profit has exceeded the gross loss- the bigger the better.
Most subscribers usually just check the highest percentage growth and they fail to check out other important statistics. For example, a signals provider with many weeks may not have as large a very high growth. However, you should still consider them since they have demonstrated stability over the long haul in varying market conditions.
It is worth noting that when you subscribe to a trading signals provider, their signals will be copied to your account where your real money is located. It is thus worth taking as much time as you need to find the best forex signals provider. However, if you are confident about your results trading in the forex market, you too can become a forex signals provider and make an extra income from sharing your trading strategy.
Using forex signals can have the potential to grow your portfolio, especially when combined with the best forex vps provider. These signals can be accessed on both MT4 and MT5 platforms, which are the most common platforms used by traders.
Keep in mind that you will have to conduct a lot of due diligence if you want to find a reliable forex signals provider. Whether they are a free signals provider or they come with a fee, you need to conduct a lot of research. To do this, analyze as much of the data they provide in the signals window. Take time to go through each statistic to ensure you understand what it means.
Most traders only pick the highest performing signals providers. However, current success is not a guarantee of future success. As a result, a trader should balance high performance in the short term with long-term stability. You should also consider using the signals provider in a demo account. This will give a good idea of what you can expect when you switch over to using them in your live account.
Another way to decide which signals provider to pick is by visiting various forex-trading platforms. Here, you can ask for feedback on the signals provider you have picked. Additionally, you can read past comments on your signals provider of choice. Until you are fully comfortable with a signals provider, do not make pick them.