Profitable Forex Signals
Forex signals may appear to be the most convenient method of trading. A trading signal with an entry price, stop loss and a take profit order that is delivered via email, text message (SMS) or any other popular apps may the required time to analyze the Forex market.
Some forex signal providers even offer their signals for free, which appears to be the best solution for forex trading as no costs are involved. In this article we would like to cover the behind-the-scenes of forex signal services.
Forex Signals Providers
No strategy can continuously generate high profits every day, week or month. When market conditions change due to outside market events the strategy that is used to provide the signals may malfunction and begin generating losses. It is very common and not an indication the forex signals cannot be profitable.
If the signal provider displays a track record where the vast majority of all the signals that were sent are profitable for a period of 2 years (for example) it would often imply the following. The signal provider is refraining from using stops or uses none at all, thus allowing the trade to float in a drawdown until some profit is made.
If the signal provider holds a large amount of traders the risk of a greater drawdown is significantly high. Being in a drawdown will damage any ability to take any action, forcing the trader to swim in the drawdown until a recovery takes place, possibly within several days, weeks and even months.
The reason why signal providers adopt this approach is to ensure a loss is not taken at any cost. The alternative scenario to continuous profits for a 2-year period is simply a falsified track record. The provider may simply forge its signals performance to reflect only profits in an effort to lure traders to sign up for the signals.
A genuine track record will be composed of profits as well as losses with the some ability to verify the authenticity of the generated signals. The same applies for trading signals in other markets and is not limited to forex trading.
Recycling Forex Signals
This method is often used by fraudulent signal providers. The signal provider does not analyze the market on its own but derives the signals from other sources, preferably free of charge. The signal provider then issues the signals to its subscribers for a fee or by signing up through its affiliated forex broker or brokers.
This technique is quite difficult to unearth but to the best of our knowledge it exists in today’s markets. Ultimately however it will be discovered as one cannot hide such a behavior for a long period of time. We at ddmarkets are extremely transparent in our market analysis and the signals that are provided.
We may suggest one method of uncovering such activity. The signal provider that recycles signals may be unable to provide an adequate reasoning for initiating the signal.
If you suspect you are in a service where the signals may not be genuine simply ask the signal provider for a clarification on the expected trend and what may trigger the strength or weakness for the chosen currency pair or cross.
The signal provider is unlikely to have the ability to explain the strategy behind the signal if it is indeed being recycled.
Some traders test multiple signal providers simultaneously with small trades sizes, which may filter poor signal services that are out there in the market.
Why Pay for Forex Signals?
This is probably one of the most popular arguments for using trading signals. It is not a secret the forex signals industry is riddled with scammers. A very effective way to tell whether the forex signal service is a potentially scamming online traders is using the term guaranteed.
There are absolutely no guarantees in the market. One cannot state that he or she will profit hundreds of pips every week or month. There will be profitable periods and there will be unprofitable phases, it is inevitable in any market. The key to success is withstanding the rough periods and containing the market exposure.
Risk management is essential even on the signal provider’s end. By holding a substantial amount of open positions the market exposure increases. Should the market trade against the predicted direction it will end in a disaster. Risk balancing must be conducted by the signal provider to maintain its success in the market.
The signal provider must also know when to remain on hold (sit on the fence) and not engage in chasing the market in an effort to recoup pips that were lost in prior trades.
Why Choose DDMarkets?
Aside providing forex trade alerts in global markets we have our own forecasts for central banks’ monetary policies and expectations of outside market events such as general elections.
We have successfully predicted the brexit, the US elections, the crude oil crisis that occurred several years ago and more. Our subscribers take full advantage over the updates we issue on the market and our trade alerts.
As we provide the technical / fundamental strategy for every trade that issued our subscribers have the benefit of managing the position on their own (should they wish) based on their trading experience.
The strategy for every signal can be viewed in the performance page, dating back to 2014. We hope you benefited form this article and further understand the importance of choosing a forex signal provider.