Do Forex signals really work?
Forex signals are probably one of the most sought after service by forex traders. For the most part, it is the beginner traders or those who do not have enough knowledge of the forex markets who look to using a forex signals service.
These days, one can subscribe to a forex signals service for as little as $5 a day for a currency pair. A quick search on the Internet will reveal quite a few forex signals services, each one promising to make you hundreds of pips a day or a week.
Most often, it is the lure to make these profits (with little effort from the trader themselves) that leads people into subscribing to the signal services. This begs the question whether forex signals really work.
Let's explore a bit in detail.
Types of forex signal services
The term forex signals, is rather vague and covers a wide range of services. Briefly put, forex signal services can be classified into a purely signal service or a full-service.
In the first type, which is mostly where you do the work, the forex signals provider will send you the entry, stop loss and take profit levels. It is the duty of the forex trader to then place these orders on their trading terminals.
Such types of signal services are typically cheaper. You can either get the signals by email, or SMS or get alerted in real time when you login to the signal provider's website.
In some cases, you can also get additional features such as what lot size to use and how many contracts to open as well.
The more advanced the forex signal services become, the higher are the costs as well.
In a full-service signal, it is like an intermediate service between placing your order yourself or using a forex fund manager. A full service forex signal subscription can be completely hands-off.
You will most likely implement a script or an expert advisor to connect to the forex signals service provider. Here, traders are automatically placed. Depending on the service, you will either make use of a virtual private server (VPS) or use one provided by the signal service provider.
This way, once the set up is completed, you do not have to bother much as the signals and trading is fully automated.
What to look for when choosing a forex signals service?
These days, anyone with a decent website can claim to be a guru when it comes to running a forex signals service. It can be easy for traders to forget doing their background research into the forex signals provider and simply sign up and pay for the service.
Some of the key things to look into when using a forex signals service are:
History of the signals provider
It is always best to trust a forex signals service provider who has been in business for at least a few years. This will tell you that the signals provider is well established and has been able to consistently meet the requirements and run a proper business.
The longer a forex signals service provider has been in business, the better the prospects that they will continue and will make a profit for you in the long run.
Statistics of the signals provider
It is also important to look at the trading statistics of the signals provider. Remember that it is very easy to adjust the statistics for a trading account especially when there is no way to verify the results. Therefore, look for statistics from websites such as MyFxbook.com where results and trading statistics are automatically taken from the MT4 trading terminal.
This will build an additional level of trust from the signals provider that you want to choose.
Know what you want
Do you want to use a forex signals service where you are content with getting the trade signals on your phone or by email? Or do you want a full service (and don’t mind paying the additional fees) to use a VPS and automate the signals service?
Knowing what makes you comfortable when choosing a forex signals service provider can help to keep your costs down.
At the end of the day, there are quite a few bad apples when it comes forex signals services. However, that does not mean that forex signals do not work. They do. The point is that you, as a trader should spend time into researching for the right forex signals provider before you can commit your trading equity.