Are Free Forex Signals Reliable?
For many new entrants to the investment market, it couldn’t be better than finding a trading strategy that doesn't require a lot of research and provides a steady stream of returns. As a newcomer to the market, you may be hanging out in networking groups or forums looking for profitable advice or trading signals. Novices may be faced with a lack of trading skills or time, so they rely more heavily on advice or trading signals.
Therefore, this article will focus on whether these trading signals and trading recommendations are reliable.
Forex signals are everywhere?
Analysts, traders, and experts always mention in their comments the direction of operation and the location of entry and exit of certain markets and trading products, which makes investors pay attention to their operation ideas on various financial websites.
Figure 1: Example of Forex signals
Because we are in an age of information explosion, such trading signals are ubiquitous, which also results in the mixed quality of forex signals. In other words, it is difficult, almost impossible, to find signs of stable and easy profits. If a trader is lucky enough to find one, it is possible to build wealth fast, but if not, it is easy to get trapped in a vicious cycle of constant losses.
Therefore, before putting any forex signals into actual trading, you should first test with a simulated position. If you can make a profit in the last three to six months, that signal is credible. Remember! It’s only credible. Because then you have to compare the risk-reward ratio, the profit ratio, and so on.
Source of Forex signals
In general, there are three sources of forex signals/ trading advice:
1 / Individual traders
Individual traders will post their trading plans on forums or places where information can be made public. They often provide a free trading signal, but because there are so many traders in the market, opinions on the same trading product are mixed. How to discern the accuracy of signals is a big problem for those who are new to the market. Similarly, it is even more difficult to find free trading signs with steady profits.
2 / Large dealers and brokers
Generally speaking, the major dealers provide brokerage services, and some traders with trading skills, after becoming brokers, start to recruit customers and usually offer free trading signals to attract customers. Again, these trading signals vary in quality. Another drawback is that most platforms earn commissions from the transactions of their clients. As a result, some brokers may want to facilitate client transactions in order to maximize their commission returns. They will also put more emphasis on recruiting new clients to further increase client turnover and therefore neglect the quality of the analysis.
Scammers are the ones you should avoid, no matter when, where, or what. Many traders are so desperate for a quick profit after a setback that they can easily fall into a trap. Most scammers will promote, for example, the so-called technical analysis course, or a unique way of trading, or automated trading, etc., or brag about their profit record to convince people. Their schemes are usually not free, even expensive, or look free at first sight but you will have to put money into trading with so-called traders, and they will guarantee a certain rate of return. It’s all scams.
Is trading signal reliable?
After reading the above, you probably know what to expect. Not all of the trading advice are scams, of course, but no matter for free or paid trading signals/advice, the chances of finding a suitable and easily profitable one are slim. Good and consistent signals are not something we can ask for.
However, these signals are not completely useless, and investors can use these signals as models to build their own forex trading strategies. It may be easy to lose money at first, but you’ll learn the lessons faster and your odds will improve over time. The profits that come with it will also make you feel more confident. Maybe one day, your trading signals will inspire a lot of beginners!
Risk Warning: The above content is for reference only and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and do the corresponding risk control.
ZFX (Zeal Capital Market) is an online forex & CFD broker providing more than 100 products for forex trading, commodity trading, index trading, and share CFDs trading. The minimum deposit for the account opening is only USD 50. Open a trading account and download our MT4 trading platform now!