Forex trading signals are a tool used to find favorable times and prices to enter the market with a buy or sell order. Forex signals are delivered in the form of email notices, SMS messages, pop-ups, tweets, private social media groups, private group chats, and so on.
Trading signals are generated manually by human traders or automatically by software. Although forex signals can be incredibly beneficial for some traders, signals still have some flaws. This article with outline all the advantages and disadvantages that come with using forex trading signals.
Trading Signal Pros
At their most basic core, trading signals simplify the trading process. After all, it can be incredibly difficult for most people to constantly keep their eyes on market activity. By receiving trading signals you’re confident in, you’re able to focus more on yourself as a trader and your trading strategy, rather than spending a majority of time looking for profitable opportunities.
Reliable forex signals limit your own risk as they provide information on market fluctuations in real-time. Forex trading signals essentially allow traders to enter into market opportunities while learning and deepening their understanding of the forex market.
Through signals, you can go back into your charts and analyze your trading history to better understand the “why” behind why this was a good or bad entry point. Signals allow traders to investigate the market factors that triggered the signal provider to enter the market.
Trading Signal Cons
The first most obvious negative that comes with using forex trading signals is the fact that there are many scams and fraudulent websites that appear authentic. Although trading signals are meant to be sent by professional traders with years and years of experience, you can never really know with 100% certainty the people behind the signals are actually who they say they are. With this in mind, using trade signals on a real account come with an element of risk.
Another downside to forex signals is the costs associated with services. Professional traders aren’t likely to give away their trade ideas for free, so a nearly all of them operate on a paid subscription model. Signal service prices can range anywhere from $25 to several thousand dollars per month. This can impact your bottom line if you use an unreliable provider.