Subscribing with forex signals providers is an exercise that is growing in popularity these days in the forex market. This is touted as one of the best solutions for new forex traders to learn their trade and for busy traders to make profits from the market.
Even so, this whole system hinges on one thing to be successful: the quality of the forex signals being sourced. Effectively, this brings the signals providers under the lens and makes it important for a new forex trader to know how to pick the right one. Consider the following.
Many forex signals providers have this tendency to provide too many signals in a day so as to either prove their ability to analyse the market or make more money. However, if you were to choose such providers then you would either have to waste time choosing the right signals to use or end up overtrading. This is not desirable in forex trading because it may result in severe losses.
As is natural, the popularity of the forex signals provider also matters because it shows how successful he is. Therefore, the more live users a provider has the more likely it is that his signals actually make traders a lot of profits. This is why you should look for those providers that have a healthy following in the forex market.
Many platforms would also allow you to see the success rate of the forex signals provider. Ideally, you should choose those providers whose success rates exceed 90 percent. What you should never do, however, is go for any providers whose success rates are below 80 percent.
Another thing to keep in mind while looking at various forex signals providers’ success rates is the amount of data used. If a provider has only given 10 signals and boasts of a 90 percent success rate then this would not give you a clear picture of his capabilities. At the very least, you should look for those providers that have a 90 percent success rate and 100 trades.
You should always give preference to those forex signals providers that use Stop Loss and Limit orders. Special orders are used to minimise risks in the forex market and if a trader does not use them then you can be certain that he is not as experienced as he claims to be.
Number of Trades
When it comes to using the forex signals provided by these providers, you have to keep in mind that you should not overuse them. If you have too many positions open in the market then you will be increasing the possibility of a margin call being called against you.
Ideally, you should not allow the use of more than 2 forex signals from a single provider. Also, before you actually start relying on a provider, it is advisable for you to test the signals through a forex demo account.