Buying Forex Signals Online
Forex signals can be obtained from various sources. We will discuss some of the most popular places where traders buy forex signals for trading.
Due to Elon Musk’s remarks on Dogecoin and Bitcoin’s moderate gains more traders are interested in cryptocurrency signals. More forex brokers have added crypto trading into the trading platform to meet the high demand.
One of the most popular tools is automated or social trading. Traders automatically copy forex signals that are executed in a third party’s account. The trading account must be linked via an algorithm to the master account (the trader that sends and trades the signals).
Automated trading is not free. The fee is often taken from the spread or a monthly fee is required. The trader that sends the signals often receives a portion of the fee from the spread, which creates an ulterior motive for executing as many trades as possible.
The fee from the spread is taken regardless of the outcome of the trade. Traders that copied other traders may have noticed some of these ‘professional traders’ executed multiple trades on the same currency pair and wondered why. On most occasions it is to simply increase their monthly revenue that is generated from the spread.
To clarify the commission from the spread, for example, an additional pip is added to the spread. The trader that allows others to copy his trades receives half a pip for every trade that is executed in his followers’ accounts.
Some forex brokers such as eToro for example offer automated trading in this manner. There are other platforms that will require you to setup a VPS, which may be costly.
As there is some motivation to maximize the trading volume rather than focusing on the market, over a course of 12 months it may not be the best approach to forex signals.
Is Social Media the Right Place To Buy Forex Signals?
The other place where traders buy forex signals is from individuals without automated execution. Although automated trading may seem as the ultimate technique for forex trading there can be malfunctions.
Trades can be closed by error, the algorithm may execute multiple trades by accident or simply not work for a certain period of time.
These individuals often publish themselves across social media such as Facebook, Instagram and recently Telegram. Unfortunately, there is no track record for the past trades.
Telegram forex signals groups became extremely popular throughout 2020 and into 2021. The Telegram signals groups replace the need of maintaining a website.
As a result it creates a window for fraudulent activities where one may claim a high success rate where in fact it is inaccurate. Bitcoin is often used as a payment method, which cannot be reversed like with credit cards.
We strongly suggest to avoid paying for forex signals on social media for that very reason due to the high probability of stumbling across fraudulent activities.
The other place the vast majority of trader look to find forex signals is by searching online. Hundreds of websites provide forex trading signals. These type of signals are not automatically executed, they are often sent either via email, SMS or via an app.
The structure of the signals vary from one signal provider to the other. The most basic structure for a forex signal is:
Entry Price (market price or pending order)
Stop loss order
Take profit order
Now this is the part where it becomes more interesting. Many forex signal providers do not use the basic structure of a signal. Instead, they provide multiple take profit orders as TP1, TP2 and TP3.
On most occasions the first TP (take profit) is small, lets say 20 pips for example. TP2 is greater than TP1 (lets say 70 pips) and TP3 is generally over 100 pips. The forex trader that receives signal must decide which take profit order to use, which is very complex.
Breaking the trade into 3 parts might seem most obvious method but it is not. On many occasions the market can trigger TP1 and then reverse lower without correcting higher. The reason why the take profit is broken into 3 parts is very ambiguous.
The signal provider may lack the confident in presenting a single take profit order. By breaking it into multiple parts a profit is most likely to be ‘made’ on most trades.
The size of the stop loss order is often large as the signal provider may attempt to prevent losses at any costs. The result is drifting in a high drawdown where the odds of incurring a greater loss increases.
Below is an example of an automated signal provider that may be reluctant to accept a loss. You may click on the stats to enlarge:
A +1000 pips stop loss along with a very higher exposure to GBP is a recipe for disaster. The trader is now fully dependent on the brexit negotiations.
Losses cannot be prevented in forex trading. Fabricating forex signals results is well-known, the most distinct signal is where you are informed of a high success rate and almost all trades end in a profit.
To summarize, forex signals can be found across social media and by searching online. You must take some caution to ensure you have selected a legitimate forex signal provider. A performance for all signals is a must, the more depth that is provided the better.
In our forex signals we use the basic structure along with the estimated duration of the trade and risk ratio. We should also add that we exercise hard stops to contain losses and display the trading strategy for the signals, which is not provided by many. Our performance dates back to 2014.
We hope you now know where to buy forex signals and have a better understanding on how forex signals work.