Are Forex Signals Legit?
Forex Signals and other trading services based on automation are a very useful tool for both beginner and experienced traders. One of the greatest advantages for forex traders are these remarkable technical solutions that are inherently available directly in trading platforms as well as from third-party market participants.
Demystifying forex signals
These trading signals, as the name suggests, are essentially trade ideas or alerts that provide insights on where the market is moving and when to enter a trade. There are multiple ways to get access to a subscription and there are free forex signals as well as premium ones available for a fee. Depending on the service provider, you will get alerts via email, text or direct notifications in your trading platform for any upcoming trading opportunities you can act on.
One thing to note is that not all forex signals services are created equal, but you always have the option of trying it out on a demo account first. That being said however, trading signals are just that, a suggestion – and ultimately, it’s up to you if you want to take the advice and copy the instructions in your own account.
Forex signals providers can be professional traders that monitor the markets manually and can be based on price action alone or on technical/fundamentals analysis. Some though are set-up automatically with the use of automated robots which are programmed to watch multiple financial markets simultaneously for any available trading opportunity. As soon as they pinpoint a trend, they notify all subscribers. Keep in mind that these can sometimes be hit or miss.
A forex signal usually consists of the following set of instructions:
- The currency pair or other instrument that is monitored
- Should you buy or sell
- Entry and exit points with specific stop loss and take profit levels
If you find a reliable service that also provides the reasoning behind their trading signals including their analysis if it’s based on certain economic news – this will prove quite useful as a beginner trader since you are bound to learn some tips along the way about how to create your own strategy based on what moves the markets.
Free forex signals and where to find them
As we already mentioned, you will probably be able to find a plethora of free forex signals providers directly in your trading platform. In MT4 for example there is a dedicated tab with trading signals that you can follow and it also provides all the information you need about the service – making the decision about which signal to follow much easier. You can find historical data on the signal’s performance over time since it’s inception. How much profit has it accrued thus far, the maximum drawdown and also the broker the owner of the signal is trading with. This is very important since what you should be aiming for is to be trading with the same broker as the signal provider. The reason is that this way guarantees there won’t be any differences between the two brokers in terms of pricing, liquidity or spreads. If your broker doesn’t provide the exact same prices, you might be entering the trade at the wrong price and while your signal provider may be profitable – you won’t be.
While the MetaTrader marketplace is a great hub for paid and free forex signals, there are multiple other sources that are dedicated to providing such services and they are only a quick web search away. Just make sure that before you subscribe to a trading signal, you have enough information about its past performance and that it has been running for quite some time without too many risks. And remember always check the reviews section for any dissatisfied customers.
Another great thing about trading signals is you are spoilt for choice not only on if you want to act on the signal suggestion but also in changing each parameter to fit your trading strategy or individual preferences. Sometimes, for example, it’s good to keep an eye on the trade and increase the take profit level in order to get some extra pips. If the market is gathering momentum and the signal suggested a modest take profit limit, you can move it up a bit or remove it completely (not recommended for beginners) and see how far it can go.
The same goes for stop loss limits. It’s sound advice to start moving them up as well especially the closer you get to your take profit level. If you are seeing enough gains, just move your stop loss at breakeven and just focus on your exit.
If you are feeling extra optimistic about a trade, you can also increase your lot size. The higher the lots, the bigger the value of each pip and therefore the potential profits but this also increases your risk. As always, it’s recommended to start small and work your way up as you get more comfortable and more experienced with trading a specific financial instrument or currency pair.
Forex signals and even those that are free are indeed a useful tool for all forex traders especially when you have some basic knowledge of the markets and both fundamental and technical analysis. There are thousands of signal providers to choose from so traders are always advised to read reviews first and also check past performance of the signal. Always keeping in mind though that past performance isn’t the best indicator of future results. Do you research and get in touch with your broker’s customer support or your personal account manager if you have any specific questions.