Consider forex signals seriously if you are not yet trading profitably, have limited experience, or just don’t have a lot of time to devote to your forex trading.
From the simple variety of one email a day to the forex mentor who sits with you all day holding your hand while you trade, a portfolio of forex trading alerts can be virtually free and can transform you into a profitable trader by instant.
If, like us, you’ve ever analyzed a chart and placed your own trades, you too have almost certainly sat in front of your screen wondering if you were doing the right thing.
Questions like “Have I entered this trade too late?” and “am I trading in the right direction (long when I should be short)” will surely have entered your mind.
How many times have you wished you had an expert trader with decades of experience guiding your trades, keeping you away from dangerous trades and pointing you towards trades with a higher chance of success?
We were certainly in that position many times in the early days, but we always imagined that the cost of having an expert on hand would far outweigh any added benefit we might get. Turns out we were quite wrong.
There are numerous services available, known as forex signals, forex alerts, or forex tips.
Trading signals come in a variety of formats, tailored to the amount of time you can spend trading. And yes, be careful, there are plenty of scams out there too, but we’ll show you how to avoid them and guide you to the best ones.
Forex Trading Signals – Many Varieties
The main features of forex trading signals to keep in mind are as follows;
- Cost: Free OR monthly subscription
- Complexity: simple “one email a day” OR full service
- Control: you stay in full control OR the signal provider changes your air conditioner for you
- Trading style: eg frequent scalper OR low volume swing trader
A free forex signal might seem like a great idea at first, but as we’ll reveal here, you might prefer to pay for a free subscription service (yes, we know that doesn’t make sense, but keep reading!)
Most Forex trading signals charge a very modest subscription fee, usually in the region of USD $80 – $400 per month (although most are happily on the lower end of this range), while there are also sites websites that provide free Forex signals.
In its simplest form, a forex trading signal will send you a forex alert email once a day with a list of trade setups for the next 24 hours.
Some of these are purely computer generated, some are computer generated and then audited by a human expert, and some are fully researched and generated exclusively by a human expert trader who can add some market commentary to your forex forecast.
Some forex trading signals are high volume scalpers, calling many trades in a day with the goal of getting a handful of pips on each one. Others only call a few trades a day, aiming to make a profit of 20 to 80 pips on each individual trade.
At the more comprehensive service end of the market is the type of forex signal service that gives you a live online feed nearly 24 hours a day, calling forex trading tips as they happen, explaining the logic of the proposed operation and supporting it with an email or even a video clip.
Some forex trading signals will even trade your signals on your own account for you, leaving you to just sit back and watch.
This is similar to what a robot does using forex signal software, but with the added security that it is done by an experienced, intelligent human trader rather than a dumb machine following an algorithm.
Think of full-service forex trading signals, like a forex TV station, running in the background on your internet-connected PC or laptop computer all day long. The stream goes silent when there’s nothing to do, freeing up your time for other priorities in your day, then draws your attention when there’s a trade to place or manage.
You might be surprised, as we were, to find that the prices charged by full-service providers are often very similar to what providers charge for one email per day.
This type of service usually includes an interactive feature as well, allowing you to send your forex mentor a message if you have any questions.
Many forex signal services have very loyal memberships, and some even limit the number of members they will accept.
Free forex signals (virtually)
On the basis that time is money, in our opinion, the amount of time we can now spend on other activities by not slaving over our charts for hours searching for the perfect trading setup, not to mention the improvement in our trading results, has more than you paid for the very modest cost of forex signal subscriptions.
In fact, if you apply this logic, subscription-based services can effectively be free when you factor in the improvement in your trading profits and freeing up your time for other profitable activities.
If you think about it, a subscription-based forex signal service has a built-in incentive to ask for profitable forex trading tips, as their subscriber base would soon evaporate if they didn’t provide profitable forex trading tips. “Free” unsubscribed signals do not have this incentive.
Manage your risk
In any aspect of forex trading, your main goal is to manage your risk. Choosing and trading a forex trading alert should be no different.
Even the best experienced forex signal provider will have losing trades regularly. However, if all winning forex trading signals are taken, the overall result should still be profitable, but not all systems work all the time. Some forex alerts can even have a week or month completely missing.
However, we have found through our own experience that the best way to make consistent profits from forex signals is to subscribe to several different forex trading signals and trade all of their signals. If one of them is having a particularly bad week, the others should make up for it and still give you a profitable week or, worst case scenario, break even.
Always do your due diligence before trading a provider’s forex alerts. Good forex signal services will post their results for the last 6-12 months on their website. Some will even show you details of the actual trades they made. Expect to see profit and loss, that’s the nature of trading. In fact, if the results show only winners, or if the provider is unwilling to show you any results, or provide contact details of some of their customers willing to give a referral, be on your guard.
Most will offer you some kind of free trial or a special discount offer. Please make sure you clearly understand the terms of this offer and the deadline by which you must give notice of termination if you are not satisfied with the service provided.
If you compare the results of the last 6 months of all of the forex signal service providers you intend to use, you should find that, as a whole, they generated a profit.
Past performance is no guarantee of future results, but we have found that if you have a good mix of trading styles in your portfolio of trading signals, you have a good chance of making consistent profits, regardless of market conditions.
Again, think about the cash flow logic of what you’ll be doing here: the subscription costs for each forex signal service are already very modest, and by combining them, you increase the likelihood of consistent profits. Not everyone can get it wrong all the time, and remember that everyone is incentivized by their membership to get it right as often as possible.
Even with experienced traders calling your trades, it is prudent risk management to never risk more than 3% of your starting capital on a trade, preferably just 1%. So, if for example your initial capital (or in other words, the maximum you can afford to lose) is say 5000, the size of the position you take on each trade should be such that if the trade reaches its stop loss, your maximum loss would not be more than 1% x 5,000 = 50.
Using forex signals as trading ideas
Even if you prefer not to follow forex advice to the letter, you can still benefit from your trading idea.
For example, if you get a forex tip to trade long GBP/USD with a stop loss of 40 pips, but when analyzing the charts (after attending a forex training course) you feel more comfortable placing the stop loss , let’s say 63 pips below entry, providing stop protection below a visible area of recent and previous support, which is also below the weekly pivot point, and in doing so you are happy to have a longer range target; then go ahead and do it.
We were surprised to find that when we did exactly this with one of our forex signals tips, our trades actually performed better than theirs. Two heads better than one maybe.
The point is, though, that without the forex market forecast drawing our attention to that particular chart at that particular time, we would never have seen that trade idea.
This also indicates that while it may seem tempting at first to let a signal provider trade your account for you, if you have the time, you may prefer to control it yourself.
If you have gone through a good forex training course and understand the concepts of support, resistance, pivot points, trends, etc., you should always use this knowledge to do your own due diligence on forex alerts. You may find, as we did, that you can improve the overall performance of your portfolio of forex trading recommendations.
free forex signals
This section would not be complete without mentioning forex signal providers who do not charge any subscription fee.
As we mentioned above, even paid subscription services should effectively be free to you by virtue of making enough profitable transactions to more than cover the cost of the subscription.
Also, we prefer to use subscription based forex signals as they have an incentive to consistently call profitable trades as their subscribers won’t stay with them for long if they don’t.
By comparison, free signals don’t have that incentive, so be careful and switch at your own risk.