Forex Signals Industry Introduction
Many traders nowadays use forex signal services, especially new traders. Forex signals are a type of social trading, and social trading is not a new thing at all. Before trading went online, many people followed successful traders they knew or via media. They would pay professionals for trading tips on hot stocks and currencies. With the progress in technology, more inexperienced people are joining the trading community.
Many inexperienced individuals benefit from using forex signals.
This led to an increasing demand for trade tips from professional traders and analysts. The former professional traders turned trading tips into an industry, and now trading is more social than ever. There are many signal providers who operate in different forms and compete with each other to provide the best service and results. We have divided them into five main groups. The social media and forums group, the MetaTrader community (MQL 4/5), social trading platforms and brokers, automated forex signals, and the signal providing sites.
Social media forums
Social media websites like Facebook, Twitter, and LinkedIn have flourished in the last couple of years. Many traders have seized this opportunity to open forums and blogs in these websites where they share their analysis and trade ideas. If you type the words “forex signals” in the search box of any of these websites there will be many forums and groups coming up in the results. Some of them need a subscription fee and some start out as free, then need the members to upgrade to a gold or silver membership. There are many traders who provide signals in these Facebook and Twitter groups, but without take profit and stop loss targets. To get the targets you have to follow the link of the signal, which takes you to their webpage where you´ll be asked to register and pay a fee. Some of these groups offer signals free of charge, but the quality and the results are not good. Yes, there may be one or two groups who provide good forex signals for free, but they don´t remain free for long.
The MetaQuotes Software Corporation developed the MetaTrader 4 and MetaTrader 5 trading platforms. It also produced their mobile versions and offered the option of following other traders. This was on top of trading based on your own analysis. In 2011 they implemented the trade signals to their platforms. If you look at the bottom of your MetaTrader platform, you´ll see a “Signals” section. After clicking on it, you´ll see many signal providers and their performance charts. When you click on one of them you go to the MQL4/5 community where the performance history and trades are displayed in real time. Most of these signals are available for a subscription fee, but there are a few free ones. This is a good option for some extra income for the successful traders who do not have big accounts.
Social trading platforms/brokers
Brokers have seen the increasing demand for trading signals on financial instruments. Many have started to catch up with the signals industry. They build social trading platforms where traders can see other traders’ history and statistics. They can follow the most successful ones, known as leading traders. You can build a portfolio of traders and follow them either through manual or automatic signals. One of the most famous brokers in this category is eToro, but there are many others like TradeCrowd, Tradeo, etc. This kind of service is like the MQL4/5 signals. The difference is that you can follow traders for free while on the MQL4/5 network you have to pay a registration fee to the signal providers.
Automated Forex signals
During the last 10 years, forex traders and mathematicians have paired with developers to come up with many software packages to quickly execute trades. These are called expert advisors (EAs), algorithmic trading software, or trading robots. If you have a look around the net, you´ll find thousands of people who sell these software packages and claim to have the holy grail. While some of them are successful and genuine, many others are quite useless. Since the trading robots use mainly price action and technical indicators, the trades/signals they provide do not take fundamental and some forms of market sentiment into account. These sort of signals have the advantage of removing human emotion and are not affected by fear or greed. But at the same time that is their main disadvantage. The financial markets are driven by humans and market sentiment. Market sentiment is a useful indicator if you know how to read it. All the other indicators may point to a certain market direction, but if the market sentiment is in the opposite direction, the signals may fail. The EAs don´t take into account the economic news and other events. These have a great impact on the financial markets, and it´s why I´m not a big fan of automated trading.
Manual Forex signals
The FX Leaders forex signals terminal
Last, but not the least, are websites that specialize in trading signals. FX Leaders fits into this category. Some of these websites are free, but most of them need a subscription fee which varies from 40$-50$ up to 500$ per month. The signals are published in the signals section of the websites and sent to the clients’ email inbox. Many signal providing websites use experienced and professional traders. That is their biggest advantage. Here you have a team of analysts working together and bouncing ideas off each other. This is unlike the other signal services where the signals come from one trader and you don´t know his/her experience level. In this article, we had a brief coverage of how the trading signals industry has evolved. We discussed the financial markets and instruments that are available now. It is ever-expanding to meet the increasing demand. There are several sectors of this industry which we explained shortly. We will cover more in-depth information on each sector on the upcoming articles.