How to Choose the Best Forex Signals Provider?
Forex trading offers an exciting avenue for you to grow your capital wisely, but the world of trading is more than just luck and chance. Armed with the right knowledge, experience and tools, you can trade within the tricky and volatile world of forex and operate as a professional trader. While knowledge and experience can be generated over a period of time, the right tools are something that can assist you right from your very first day as a forex trader.
One of the most important tools as far as forex trading is concerned is forex signals, and these are offered by various kinds of signals’ service providers. In this digital age, finding a good forex signals provider can get a little overwhelming as you can be spoilt for choice when you do a quick online search. How do you trust the information being displayed on a provider’s website or the claims they make? Is it worth investing your time and money based solely on what each service provider states or should you dig a little deeper? If so, how do you do this and what do you need to look for?
This guide can help you understand the different kinds of options available in the market so that you can make an informed decision when it comes to picking the right service that you require in order to develop your skills as a trader.
Which types of Forex signals providers exist?
Automated vs. manual
Put simply, there are two types of forex signals’ providers that you can pick from: those that offer manual signals and those offering automated signals. Automated forex signals are derived with the help of trading bots and algorithms that look for repetitive patterns in price charts and make predictions on how a particular instrument could move in the future. Automated forex signals use code created by a team of developers in conjunction with experienced advisors and professional traders to perform complex historical analyses on price charts to come up with trade ideas. Such trade ideas generated by automated service providers may not take into account market volatility or factors that can drive sudden, unexpected price action. This is where the human element turns out to be essential, a key factor of manual buy/sell signals providers. On the other hand, manual forex signals like the ones that we at FX Leaders provide are generated by professional traders and analysts who study the markets carefully and comprehensively, performing fundamental and technical analysis to find interesting trade ideas.
Fundamental vs. technical
Different trading signals providers choose different ways to publish their trade ideas – some depend solely on technical analysis while others use a mix of both fundamental and technical indicators to publish reliable forex signals. There are several kinds of technical indicators that can be used to determine how a particular instrument could move in the future and decide on a trading strategy for the same. However, depending exclusively on technical indicators to come up with trade ideas fails to offer an in-depth analysis into movement and fails to take into account external factors, such as macroeconomics, that also dictate how an instrument could be affected. This is where fundamental analysis comes in – it tries to understand market moving events and their possible impact on the price action within an instrument you are interested in trading. An ideal service provider uses both types of analysis to arrive at trade ideas that are backed by more comprehensive fundamental research and therefore, offer a higher likelihood of being successful.
Free vs. paid
You can also break down forex signals’ providers based on whether they offer their services for free or charge a fee for you to gain access to this information. The paid services can use a pay-as-you-go model based on each signal you access or offer a flat subscription fee for a specific period of time, ranging from a month to a year. Some free forex signals providers offer access to limited information and require you to make payment for additional information or service offerings they may have on their website or app.
Short term vs. long term vs. combination
While some signals providers offer only short-term trading signals that are suited to intraday trading, other providers focus on longer term signals with a validity that can range over a period of a few days to even a few weeks. The short-term signals meant for intraday trading, on the other hand, are valid – as the name suggests, for a shorter time-frame of anywhere between a few minutes to a few hours and typically are valid within a day. Some signals service providers offer a healthy combination of both options, which make the most sense, so that you can try your hand at both intraday trading as well as swing trading. While intraday trading is more volatile in nature, swing trading requires relatively lower fussing over and can be traded with higher capital.
How to check the provider’s reliability?
As we mentioned above, searching for forex trading signals service providers online will yield far too many results, leaving you in a fix when it comes to picking the best one to suit your needs. One of the most important aspects to consider is whether the service you sign up for offers reliable forex signals with a decent level of profitability.
Assessing the reliability of the service provider can be slightly time consuming and take a lot of effort, but is essential, as going with an unreliable provider can cause significant damage to your trading capital and expertise instead of helping you become a better trader.
You can find out how trustworthy a provider is by searching for online reviews, feedback from the trading community, their social media activity, and more. The best forex signals service providers will enjoy the backing of several novice and professional traders standing by their trade ideas, and will have numerous positive reviews and feedback on leading social networks as well.
How to check the provider’s professionalism?
In the world of forex trading, there are no guarantees on profit and risk exposure is inevitable. A professional forex signals’ service provider will never try to trick its users by advertising guaranteed profits and returns. On the other hand, the trusted names in this sector will be transparent about their performance, offering you insight into their past performance by publishing reports on how effective their signals were.
Frequency and diversity in forex signals
The ideal forex signals’ service provider for you should publish an adequate number of forex signals and trade ideas through the day and offer a good mix of trading instruments, including the ones that you like to trade the most as well as other options so that you can diversify your trading portfolio and experiment with new instruments to spread out your exposure. In addition to trade ideas offering a variety of instruments, an ideal provider should also offer a good mix of long term and short term signals so you can try different kinds of trading strategies, such as swing trading and intraday trading.
Clarity into past performance
Their performance reports should offer the following information – how many signals they published over a specific period of time, e.g. one year, the percentage of wins vs. losses, drawdowns, the number of pips generated or earned by their forex signals, as well as details about gains in percentage terms over the past few years.
Of course, keep in mind that past performance is never an assurance for future profits. However, a forex signals’ service provider that is honest about its wins and losses, and gives you the numbers so you can assess its performance is far more reliable than those that make empty, lofty promises of doubling your money.
When tracking the performance of the signals provider, there are a few important things that you need to assess. Of course, the overall profit raked in by their trading signals is a great way to know how useful their service will be for you, but you also need to dig a little deeper to assess their performance. The total number of pips earned by the forex signals is an important measure of how exactly the profits were generated, for instance, did they come from a few pips on high risk/high margin signals or in the form of a higher number of pips from signals with different levels of risk/exposure.
In addition, you should also check to see if the signals provider offers details on their win rate – the number of winning signals from the total number of signals published.
Quantity vs. quality of signals
It would also be helpful if the provider offered a breakdown of the number of signals published and the profit to loss ratio for each kind of instrument they cover. In addition, a deeper insight detailing the breakdown of the trading signals based on buy vs. sell, long term vs. short term and different types of instruments, e.g. forex, commodities, cryptocurrencies and indices, can also go a long way in helping you make an informative decision on selecting the right forex signals service provider.
The best forex signals provider for you should be one that publishes enough trade ideas through the hours when you are most active. For instance, if you like to trade the US session markets, there is no need to go with a provider that pushes more signals during the Asian session, which are too many missed opportunities as far as you are concerned.
In addition, ensure that the provider has a reliable way to alert you whenever a new forex signal is published so you can choose to act on it immediately. The more time you lose in making a trading decision, the lower the possible returns become as other traders may beat you to it.
What to look for on the trading signal provider’s app / website?
Here are a few things to look out for when studying/analysing the right forex signals’ service provider you plan to select:
- Types of instruments covered: A reliable trading signals provider will give you trade ideas across a wide range of assets, including forex, commodities, cryptocurrencies and indices, so that you can widen the scope of your portfolio and gather experience in trading different markets and instruments. In addition to the most popular currency pairs, cryptocurrencies or commodities. It would be nice to have an option to mix it up, should you choose to, with your provider letting you try your hand at trading instruments that need not be as popular or have hgh trading volumes but still offer you plenty of opportunities to earn pips.
- Frequency and diversity in forex signals: The ideal forex signals’ service provider for you should publish an adequate number of forex signals and trade ideas through the day and offer a good mix of trading instruments, including the ones that you like to trade the most as well as other options so that you can diversify your trading portfolio and experiment with new instruments to spread out your exposure. In addition to trade ideas offering a variety of instruments, an ideal provider should also offer a good mix of long term and short term signals so you can try different kinds of trading strategies, such as swing trading and intraday trading.
- Range of hours: The best forex signals provider for you should be one that publishes enough trade ideas through the hours when you are most active. For instance, if you like to trade the US session markets, there is no need to go with a provider that pushes more signals during the Asian session, which are too many missed opportunities, as far as you are concerned. In addition, ensure that the provider has a reliable way to alert you whenever a new forex signal is published so you can choose to act on it immediately. The more time you lose in making a trading decision, the lower the possible returns become as other traders may beat you to it.
- Timely alerts: In the world of trading, information is not only power but is also most useful when received in a timely manner. When it comes to forex trading signals, you need to be alerted or notified about this information as soon as it is published so that you can enter the trade at the right time. Ensure that the signals service provider you pick has an option to deliver timely alerts whenever they publish a new trade idea, be it via email, push notifications on your smartphone, SMS or via mobile app.
- Trading functions: A good signals service will provide detailed information on exactly how and when to place a trade when sharing a promising opportunity. This includes information on entry price in addition to limit and stop orders that can minimize potential losses in case the signal does not go as planned.
- Mobile app: In this day and age when most of us rely more on our smartphones than on computers, quite a bit of trading also happens on the go. If you also like to trade on the move, you need a trading signals provider that can keep up with your dynamic schedule and hand you the information, quite literally, in your palms. Check to see if the forex signals service provider has a mobile app that can provide you instant alerts right on your smartphone whenever a new signal goes live, so you never miss a trade opportunity even if you are away from your desk.
- Easy to understand and navigate user interface: Whether it is an app or a website, ensure that the signals’ provider you pick has an interface that is easy to understand and convenient to navigate. You should be able to locate all the features that you will use on a regular basis, the information should load in a quick manner so that you waste no time while making trading decisions, and its design should be appealing enough for you to want to use it or depend on it regularly.
- Performance report: When selecting the right signals provider, look up information on their past performance. Most of the trusted players will offer this information on their website in a bid for greater transparency and will not withhold information about how well their signals have performed over the past few years. Do note that it is not enough to assess the performance over one or two years as this does not accurately depict volatility. A good measure would be to assess the performance of the signals over the previous five years, as this would be adjusted for market volatility and exempt any exceptional turmoil in global markets due to economic crises, geopolitical tensions, etc.
Choose a forex signals provider and start trading
We discussed above the importance of spending some time to understand and identify the best forex signals service provider for you. Keep in mind that what works for one kind of trader need not necessarily work for you, as you may have interest in a different set of instruments, have varied trading hours or be interested in honing your experience in a different direction than other forex traders. This is why it is essential to consider all aspects of what each trading signals service provider has to offer, and only then make your decision. Once you are confident about your choice, feel free to enter the market and place your trades based on the ideas recommended or use the ideas to enhance your own analysis and discover unique trading opportunities that work for you.
We at FX Leaders offer live trading signals with real-time market updates, which are manually generated by our team of expert analysts located across the major trading sessions. Our signals cover a wide range of instruments across forex, commodities, leading cryptocurrencies and even stock indices. In addition, our premium members gain access to additional services like push notifications and real-time alerts whenever a new signal is published. We have been around for 10 years and have recently started offering long-term trading signals as an offering for our premium subscribers.