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CO10 - What are trading signals in forex?

"Forex trading signals have been making the buzz in recent years. It is a rather new concept where a forex signals provider offers to sell their trading signals. Traders who wish to sign up for this service are able to pay a subscription fee following which they receive the signals which they can use on their trading accounts. As the technology evolves, now a days the forex trading signals are automated to the point that you do not need to stay glued to your trading systems all the time. Using various tools, the forex trading signals provider can automatically execute the trades on your account, depending on your settings and your risk tolerance. Forex trading signals might seem like an easy way to make money in the forex markets, but the risks are quite high. You are essentially risking your trading capital into the hands of an unknown trader. For the forex trading signals provider, the monthly subscription fee is paid regardless of whether the trading signals ended in a loss or a profit."

If you have researched on various websites about forex trading, chances are that you might have come across forex signals. As the name suggests, forex signals are basically trading signals that tell you when you buy or sell.

Forex trading signals are developed based on a mechanical trading system. Many automated trading systems such as expert advisors or indicators can be coded in order to alert the trader about buy and sell conditions in the market.

Forex trading signals can also be sent via a trader and in this case there is no mechanical trading system in place. To be able to use most of the forex trading signals, traders have to purchase a subscription. The subscription is a monthly fee that you pay.

In return, the forex trading signals provider sends you the trade signals, which comprises of the entry price, stop loss and target price. Depending on the signal service that you use, you can get from just one signal a day to as many as 15 if not more.

The forex signals are either sent via SMS, email or in some cases you can install a special indicator that will automatically copy the signals from the signals provider without you having to do anything.

For many beginners in forex, the forex trading signals might seem like a good way to trade. After all, you don’t have to do the hard work. You just pay the subscription fee and get alerted to when to buy or sell.

But this is not always the case. Traders fall into the trap that they can easily buy the forex signals and become rich. Reality is completely different. Firstly, you won’t be able to understand what is happening in the markets.

By just buying and selling based on the signals, you are not actually trading but merely copying the trading system from the signals provider. Obviously, if you want to be a successful trader, this is certainly not the right way to go.

Still, forex trading signals are in great demand. This is partly due to the fact that many traders expect to become rich by just signing up to a signals service provider. While it is difficult to get the numbers, if you take a look around, you will find that in the long term horizon of say 5 – 10 years, there are not many forex signal providers.

This is because the forex signals work only in the short term. In order to attract more subscribers, forex signal providers tend to take on more risk and send more signals. This allows subscribers the false illusion of making it rich.

But in reality, forex trading signals are risky. After all, you are risking your trading capital into the hands of someone, on hopes that they will help your trading capital to grow. The growth of forex trading signals started to grow tremendously over the past few years.

It has also morphed into copy trading or social trading as well. Regardless of what name you call it, the concept remains the same. You pay to get the trading signals from a trader and you replicate these trades into your account.

One of the most common reasons that traders make up for using a forex trading signals service is that they don’t have the time. They hope that by copying the trading signals from other traders they are able to make money in the forex markets.

But this is not entirely true. Forex trading signals are risky and you could lose your trading capital. Remember that when you use a forex trading signals, the signals provider is not liable for any losses incurred due to using their service.

Therefore, those who make the reasons that forex trading signals are an easy way to make money in the forex markets are taking a big risk.

Instead of using a forex trading signals provider, it is ideal that the forex trader spend time to learn to trade the markets on their own. This way, you will be able to have better control of your trading, rather than relying on third party signals provider.

Never fall for the trap that a forex trading signals provider will make you rich in forex. While you can see your equity grow at some point, there is a good chance that your account will be at risk in the long term.

There is no better way to trade the forex markets than to take the time to learn about the markets and to trade it by yourself.

Read 979 times Last modified on Thursday, 04 July 2019 11:26