Retail forex trading is the most risky form of investing, yet every day hundreds, even thousands of people turn to forex as a way to make a quick buck. The idea of taking the time to learn the market and trade a demo account for months before risking real money can sound boring and nonproductive, so many seek out a way to start making money now, fast and easy. They seek out trading signals providers, there are hundreds out there with slick websites and claims of hundreds or thousands of pips per month, for a monthly subscription. The question is: Why do these signals providers really exist if they are truly making the amount of pips and profits they claim to be earning?
Trading for others helps you be a better trader
I personally know someone who provides a forex trade signal. I have been trading with her for 2 years now on a daily basis, but she has been trading this market for more than 5 years and she also trades accounts for others. When I asked why she does the trade signals she exclaimed, “It makes me a better trader, making my trades public. I think twice or even three times before entering a trade, I double and triple check myself.” I thought that was a pretty good answer. She also told me that her percentage of losing trades to winners has diminished since starting the service. Not only does she make a few extra dollars by her subscription service, but she also uses it as a tool to keep her own trading in check. Pretty smart.
The best place to find a scam is on the internet
Yes, there are signal providers that are scams on the internet. Some start business knowing that they are a scam and just want to make as much money as possible from unsuspecting new traders before getting caught. Others actually start out thinking they will be great but soon end up making mistakes and making too many mistakes will soon mark you as a scam, whether you are one or not. In my opinion and years of seeing signals providers come and go, most services start with good intentions, but like with most trading systems they work for awhile and then lose their luster.
It is important to do some due diligence before sending money to any signals provider, for example:
1. Get a recommendation from another trader.
2. Check their website thoroughly, find out when they started giving signals and their trading methodology and performance record, and ask for a reference
3. A good provider will have a reduced rate trial offer
4. Money management is key, whether using a signal service or your own trading. Start with a demo first, then gradually add a mini lot, only adding to lot size if the trade signals prove to be consistently good.
At dailyforex.com we strive to provide helpful information to beginning and experienced traders. Therefore, we will be tracking various signals providers for their service and their monthly pip counts, to shed some light on the darker side of forex. Visit our website and join in the forums discussions regarding these services.