Whether you’ve been trading forex for a while or are just about to get started, it’s highly likely that you have come across forex signals. Offered by various professional traders and providers, these signals recommend possible trade opportunities in currency pairs, what action to take, at what level to enter the trade, and by how much the pair could move in either direction. A quick search online will throw up a long list of signals providers, some free and some paid, promising to earn you the maximum profits. But how can you trust their claims and follow them? Here’s a guide that can help you differentiate between trustworthy, reliable forex signals and the possible scammers out there.
How to check if forex signals are reliable
There are several ways to check the reliability of the claims put out by forex signals providers, but you should be willing to spend some time researching this. Fortunately, in this digital age, you can access almost all resources to verify the quality of the signals with just a few clicks online. Consider the following key things when checking how reliable the forex signals offered by a particular provider are.
Check past performance
Most of the reliable and established forex signals systems publish reports that provide details on how well their signals have performed over the past few years. Such performance reports contain a summary of how many signals they published, how many pips those signals earned, and some of the key factors that influenced the markets and drove price action which they profited from. Study these reports to see what currency pairs they offer the maximum number of signals for and how profitable the trade ideas have been. Some signals providers will also offer a breakdown of the signals on the basis of timeframes, i.e. long-term vs. short-term, and the rate of success on them.
We recommend that you examine the performance of the forex signals for at least the past five years to gain a more comprehensive idea about the reliability. This is because forex markets are extremely volatile and can be driven by unexpected events in certain years, which can cause higher wins or losses. The average performance over a longer period, say five years, compensates for the impact of such unexpected volatility. Also, if the provider has been around for at least five years, it shows that they are somewhat established in the market and their reputation can be trusted.
User reviews and testimonials
Analyzing the previous years’ performance of forex signals will only tell you how good a particular signals system is, not how good their users feel they are. Any service is only as good as its users find it to be. That being said, take a look at what the signals provider’s existing users have to say about their service. Most signals providers will publish at least some of their users’ testimonials on their website, but keep in mind that these would be the best feedback that their users have to share.
For more real feedback, take a look at some of the review websites and online communities where other forex traders have shared their personal and more honest experience with the forex signals. You can also read up on reviews of the provider by professional traders to get a better understanding of the pros and cons of each system that you are considering.
Social media activity and user feedback
In addition to user reviews posted on online communities and reviews by professional traders, social media offers an even more interesting avenue to gauge the reliability of forex signals. If you have the time, try to look up the social media presence of the signals provider, how long they have been on leading social networks, the number of followers they have, their frequency of posting and engaging with their followers, and any comments on user experience left on their accounts by their followers. This is a great way to find out just how effective other users have found their forex signals to be.
Word-of-mouth recommendations
If you know other forex traders in your network, make sure to spend some time to discuss with them and shortlist the providers that they recommend. Keep in mind, however, that every trader is different, and what works for one person may not necessarily work for you. However, it will still help to get a rough idea of some of the good, well-known signals systems available that you can consider.
Reliable vs. non-reliable forex signals
Reliable forex signals providers will focus on providing you the key information that you need for trading, i.e., trade recommendations on currency pairs with price levels to enter and exit the trade. They will not withhold information and then charge you exorbitant fees to access this when they put out forex signals. Reliable signals providers will also not make assurances for low levels of risk and high-return percentages in a short span of time—note that profits are never guaranteed in forex trading and are subject to various factors that influence market moves.
On the other hand, non-reliable forex signals providers will spam your email with multiple promotional offers that require additional payment. Some of them would even ask for your personal information in exchange for some special offers—this is something you should be especially wary about. Unlike reliable providers, potential scammers will not have any information on them on trusted review websites that verify the services they claim to offer. In addition, while reliable signals systems will use reputable payment methods for online transactions, scammers could ask for payments via wire transfers or bank account transfers instead, which offer no guarantee on the transactions made.
Differences between free and paid forex trading signals
As we mentioned above, and as you must have found through your own research as well, there are several kinds of forex signals available online. While some offer their services free of cost, paid forex signals can cost you anywhere between $40-50 and $500 a year. However, do not dismiss free signals outright thinking they may lack quality while the most expensive services need not necessarily showcase the best performance.
Nothing in life is truly free and this holds especially true in the case of free forex signals. Most providers that claim to offer free signals typically withhold the complete experience. Some may offer free signals for a limited period of time, after which you will have to pay a subscription fee. Otherwise, they may provide limited information on the trade ideas. For instance, they could share signals without an entry price listed, which could then be on offer only to paid customers. Some other forex signals providers could give you all the information in the trade idea without the analysis behind it. Such detailed analysis may only be offered on payment.
On the other hand, paid forex signals may make all this information available to you depending on their subscription plans. The advantage of free forex signals, or those offering a free trial period, is that you can check them out to see if you find them useful before spending your money on a plan and getting stuck with a provider that you are not satisfied with. Use the free trial to test out the signals, to see if they are a good fit with your trading plan, i.e., whether you receive enough trade ideas for the currency pairs you are most interested in trading, whether they offer enough signals during the session you like to trade most, and if you feel comfortable using them.
