How I became a Consistently Profitable Trader!
A forex signal provider is an entity that analyzes the forex market for trading setups and relays these trade signals to its subscribed members via email, SMS, WhatsApp, telegram, mobile forex signals app, and member’s area. A trading signal consists of the currency pair to be traded, the entry price, the stop loss level, and the profit target(s).
Using Free Signals Service versus Using Paid Signal Service
Some signal providers offer their signals free of charge but will require you to sign up with a partner forex broker. So they’re compensated from a percentage of the dealing spread. However, the majority of signal providers offer their signals on a weekly or monthly fee basis. There may be a trial period for subscribers to test the quality of the signals before committing to a paid membership.
How To Correctly Use Signal Service
You may decide to follow the trade signal and initiate the suggested trade or use it to confirm your own analysis of the market such that you trade your own system but only in the direction indicated by the signal provider’s signal. In your trading journey, you are the one who will make the final decision. Do not give this power up. It does not matter if it’s indicator, EA, or even signal service, you can use them but you have to analyze the market and make the decision on your own.
Strategy used by Legendary Traders
Quality over Quantity: Which Timeframes?
What matters is the quality of trade signals received and not how often you get the signals. Different traders have different styles. While scalpers may send several signals per day, swing traders will only send a couple of signals a week. It’s the quality of your trades which makes the difference between a winning and losing track record.
Performance, Reputation, and Reliability
Look for the number of pips gained rather than the percentage gains. In their published performance record, check for consistency over a long period of time — their average pip profit per month, their risk parameters, average win percentage, and other related metrics.
The most important thing when it comes to choosing a Forex Signal Service Provider is their track record. You want to know their track record before you follow their trades. This is your filter. And the best filter is asking for their MyFxbook link. Here’s a video to show you what to look for.
Avoid the trap of attaching too much importance to win rates when evaluating trading signals provider. With a good risk-to-reward ratio, consistent profit can be made with 50%, 40%, or even 30%.
Every trader will inevitably experience periods of drawdowns. What you can do as a subscriber is to:
- risk only a small percentage of your equity on each trade
- use conservative amounts of leverage
- always use a stop loss order, and do not override it
- not trade correlated pairs simultaneously
- try to limit exposure to the markets over the weekend.
There are two main approaches to forex trading — the technical analysis which relies on historic price behavior and fundamental analysis which rely on economic indicators. Follow the one you’re comfortable with.
Manual vs. Automated
There are the discretionary traders and those that use trading robots. The best forex trading signals providers tend to be discretionary in nature.
The most common methods for transmitting trade alerts include Email, SMS, Whatsapp, Telegram, Mobile App, and a Member Area. If you like Real Time Forex Signals, signals that happen in real time without your involvement, you can check out Real Time Forex Signals.
A signal consists of:
- the currency pair to be traded
- trade direction – long/short
- entry price and type of order – a market order, limit order or stop order
- stop loss price
- profit target price – one or more levels.
Demo vs Real
It is a good idea to sign up for a trial with the signal provider and start with a demo account or preferably a small live account to see how closely your performance correlates to the signal providers performance page
Risk Management: Margin and Position Sizing
Limit your risk by trading with only a reasonable amount of leverage. The amount of leverage you’re using depends on your position size which also determines the margin for the trade. The margin is a deposit provided by the trader to their broker which acts as collateral for holding an open position in the market. Choose your position size wisely — don’t risk more than 1 percent per trade.
The hardest part of trading is in managing the trade once you are in a position. One good way to overcome this is to place a profit target and stop loss in the market the moment you enter a trade and leave them alone.
Psychology and Staying Disciplined
The main psychological issues in trading are the emotions of ‘fear and greed’.
Don’t give up a strategy or system without giving it enough time for the odds to play out. Don’t just bail at the very first signs of a drawdown and then go searching for the next one. You will end up frustrated.
No signal provider has the holy grail to trading. Every signal has winning streaks and drawdown periods — don’t be deceived.
The best way to avoid forex signal scams is by using some good old fashion common sense. — if something looks too good to be true, then it probably isn’t.
Be wary of any FX signal provider that minimizes or downplays the risks involved in currency trading. Though you can make very healthy profits trading the forex markets, it is not without risk and you should only trade with money that you can afford to lose.
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