Do Forex signals work : It depends on what you want to achieve from your Forex signals
By Gorica Gligorijevic
- If you want to turn $200 into $15,000 in a few months? No, Forex signals will not work for you.
- If you want to win every trade, every week and every month? No, Forex signals will not work for you.
- It will work if you want to systematically participate in the Forex market over the long term and slowly grow your wealth.
Yes, Forex signals can work for you if you choose the right service.
It is unbelievable how many signals services are impossible to follow in the real world and how many signal followers have unrealistic goals when joining a signals service.
Let’s put this in some realistic frame.
Real signals providers have to go through a test period. Providing signals for other traders take some responsibilities. They must provide personal data, for example, personal and last name, passport copy, address, contact info, etc. It is needed in case of any conflicts between a subscriber and a provider. This data are known only between those two parties, subscriber and provider.
You will recognize the valuable signal provider if you can see that the signal name is fully specified. Your provider has to specify the type of terminal, is it MetaTrader4 or MetaTrader5, also, he or she has to add a broker’s server name. The information also must contain the number of the account that will transfer the signals and traders password for ‘read-only’ mode. If a signal providers service isn’t free, the provider must have been registered as a provider with qualification, meaning passed some tests and examinations, so he/she can be a signal seller giving original practices.
And say we have this situation, to show you how exactly your deposit will play via trading signals service with maximum protection for each participant.
Let’s examine a specific example.
Provider’s balance is $20,000 , leverage 1:100
Your balance is $50,000, leverage 1:200, deposit load percentage is 50%
And assume you are betting on EURUSD currency pair where the exchange rate is 1.1047.
Your balances ratio regarding the defined part of the deposit in percentage terms is
(50 000 * 0,5) / 20 000 = 1,25 (125%)
Let’s examine the leverage. Your leverage of 1:200 is greater than provider’s which is 1:100, hence it isn’t necessary to perform the correction on leverages.
Currency rate of the deposits at the moment of calculation:
1,25 * 1,1047 = 1,3808 (138.08%)
After rounding, the total percentage value is 140% or 1.4 ratios.
Therefore under the settled conditions, provider’s deal with a volume of 1 lot will be copied to your account in the amount of 140% which is the volume of 1.4 lots.
That’s how Forex trading signals work.
If you want to have a good experience with a Forex signals service there must follow these two things:
- You need to use a Forex signals service that is designed so the signal follower can get similar results to the service with relative ease.
- You need to align your expectations with reality and understand what can and what cannot be accomplished by following a Forex signals service.
We all know how this can be difficult. The point is that if you don’t have any previous training experience you will not be able to know what reasonable expectations really are.
We are surrounded by all the hype of quick and large profits and it is really hard not to be misled.
An example of a Forex trading signal
But, the simple answer is: Yes, copying forex signals are feasible with one condition: Forex signals can work if you find the trusty service. You need to find the trusty service that you can trade and that realize your expectations. If not, you will constantly be disappointed and keep searching for something better. The best way to figure out if Forex signals work and the service is suits you is to take a trial.
Types of Forex signals
Signals are basically electronically transferred bits of information that you can opt to receive via your email on your PC or your laptop, as well as your mobile phone. It is no matter where you are, you can receive this critical need-to-know information.
Signals inform you of the best times to purchase or sell the asset you are actively trading in. It also lets you know when you should place profit limit orders or protective stop-loss orders that are critical to your financial good.
Forex trading signals are normally referred to as entry and exit signals. They have to be a result of detailed analysis, research, and tracking. When the signals are transmitted to you, keep in mind that they are only considered as accurate and active for a brief period of time. So, you have to react quickly.
The type of signal is determined by the specific function it may have and how it generally operates.
Technically there are two types of FX signals which are permanently available in the Forex market, and they are:
- Manual Forex signals
- Automated Forex signals
When the first type of signal is used, a trader has to sit in front of the computer for a large amount of time, looking for signals to make a final decision on whether to buy or sell a certain currency.
An example of Forex daily signals
But the most popular type of Forex signal is copy-trading signals.
The clue is in the name, as to how they work. It involves following the trades of other real traders and copying the trades that they make. There are many different copy-trading signal providers. Traders are allowed to enter the service to become signal providers, but there are usually several specific requirements, such as set trading volumes.
Other traders can choose to use the platform and follow these signal providers. Copying another person’s trade can happen automatically, or the signal service will send a notification and then it’s up to the individual trader to execute the trade manually, should they want to. It is usual for this type of signal service to charge a subscription fee or take a commission from a trader’s profit. The signal providers who are being followed charge commission on the profits of the traders that are following them.
This type of signal service has become very popular because all the participants in the business only make money if the traders using the service makes money. The significant about automated Forex signals is that the trader only commands the software to seek what signals to look for. The human psychological pressure is completely removed. There is the software which will automatically interpret what action to choose: buy or sell a concrete currency. Trading in this way can be quite perfect as long as it is done in a proper way and by a genuine expert.
The software can process much more data compared to a human Forex trader.
So, you are able to manage several currency pairs at one time. And you are also able to monitor all the charts you desire 24/7 and without missing any significant signals. But the most successful appliance of signals is utilization a hybrid of both types.
And that is what the most Forex gurus do.
An example of Forex automated signals 1
This type of signals service doesn’t use real people to generate the signals. Instead, these are automated or algorithm-based signals, which scrutinize various charts and make predictions and can be relatively accurate Forex signals. This type of Forex signal uses the same tactics and strategies a manual trader would use, but there is no human emotion involved, just a set of clear-cut rules to follow.
Fundamental and technical analysis, along with a variety of indicators are used to uncover any developing trends.
Trends are predefined and often predictable movements of currency pairs, and once the software has uncovered them it sends a signal to the subscriber and advises them to make the appropriate investment.
Automated Forex signals can be quite accurate, but historically, not all have proven to offer the same level of accuracy. So much so that a large number of traders still prefer signals generated by a real live human being.
An example of Automated Forex trading signals 2
But not all automated signals are made from the same material, and some do make relatively accurate predictions. Many traders, even some of the most advanced, choose to use signals generated by algorithms daily. However, they will tend to evaluate the signal themselves before acting on the prediction.
Both manual and automatic Forex trading signals can be received online.
You can receive forex signals from specialized companies and top forex brokers, generally at a low cost somewhere between $5 to $10 a day and more for monthly rates. Trade signals can also be coupled with fundamental analysis. That will give you another protection in your stock trading. Using trade signals can be precious for you. They will point you out good opportunities but also will alert when they may pass. When you want to buy, check first that the signal offers you a free trial. That will allow you to test the information, and make sure it is good quality before buying it.
To ensure that a trader is obtaining the information that will benefit in the end, they should only cooperate with companies who are willing to provide previous, evaluated results. Moreover, those firms who validate their information are much easier to trust rather than companies who refuse to grant traders a free trial and access to audited results.
That is without the doubt the policy of top Forex signals.
But we have to say, fraud can be a problem when dealing with trading signals. As the forex market attracts a wide and diverse audience, the reliance on information for making financial decisions can be a crucial asset to investors. The possibility exists that some trading signal providers will provide insufficient or inferior information at a premium cost to investors, which can impede or damage an investor’s ability to make the best decision they can in the market.
The best way is to do your own research the trading signals organizations and considering the advantages/disadvantages for each one before making any kind of financial commitment to one of them.