Forex markets are notoriously difficult to predict which is why so many people spend so much time and money trying to beat them.
It’s also why there are so many different services around that aim to do all the hard work for you. Such services offer to turn trading the markets into a breeze by providing the signals to winning trades but the reality with many of these companies can be very different.
Guest post by FXTM
Many of the services that provide forex signals offer the service over several mediums such as SMS, the web, API or email and they can go from being completely free to costing thousands of dollars. The quality of such services therefore differs greatly between different providers.
As we shall see, signal services are often no more than automated robots but without the ability to place trades. In a way this is good as it means you can only follow the signals you like the look of and won’t end up having a robot firing off a load of losing trades.
However, the downside of using a signal service usually comes down to transparency. Or, in other words, you can never be sure how the signals are generated. And since the company providing the signals is providing a service which it makes money from, it is very unlikely to ever disclose its own system. It may offer some clues, by saying that it trades volatility or that it trades trends for example, but rarely will it offer any more insight than that.
Indeed, the issue of transparency becomes a whole lot bigger when you consider what is usually needed in order to trade successfully. Namely, to make money in the markets, you, more often than not, need a valid reason for taking a trade, a strong conviction to follow it through and a precise plan as to when to close your trade.
Unfortunately, while signal services may sometimes offer good trade entries, and on occasion provide stop loss and take profit levels, they usually fail to provide a motive for making a trade and the conviction needed to carry it through.
Indeed, the only conviction provided by many of these companies is by means of an elongated sales pitch containing ‘evidence’ of historical returns. Returns that are usually far too good to be true. Upon seeing such a sales pitch, the sceptic will automatically ask, if this service is making so much money, why is this person selling it for just a couple of hundred bucks?
The answer of course is usually that the service is not profitable and probably never was.
It stands to reason, however, that in an area that garners so much interest, there is likely to be one or two gems among the chaff. The problem is that the better ones will most likely be prohibitively expensive or extremely hard to find.
A better solution therefore is to spend the time studying the markets yourself and learning to code. That way you can come up with a strategy that you can test on the market and be confident that it really works. And if it doesn’t work? Well, you can always sell it to somebody else.Get the 5 most predictable currency pairs