A Forex Trading Signal is an alert for a forex trader to buy or sell a currency.
This trading signal can come from a third party forex analyst, forex brokers, forex trading firms, from forex software, or from a personal forex strategy by the use of forex charts and forex indicators.
Forex signals are generated from various means, whether that be from a forex trading system that utilizes technical analysis or from fundamental analysis, or from a combination of the two.
Monthly subscriptions to forex trading signals services can range from $50 to greater than $200. Many traders try out forex signals services in the beginning because they do not trust that they can learn forex trading themselves, they want to take short cuts and make unrealistic gains to early, and believe the just by purchasing the forex signals service that they will profit.
I will tell you the truth right now, that forex signals are not the end all and answer to forex trading. They seem and sound like they are the only think you need to make money in the forex market, but the simple truth is that the forex market moves is constantly moving, and even for the best forex signal service, unless you are available to place the trade, to manage the trade, and close the trade at the very moment that alert is issued, then you are probably going to miss out on some aspect
Let?s take for example a forex trading signals service that consistently makes 40 pips on average per trade. With a win/loss ration of 70%, if you were to receive an alert to buy or sell a currency, by the time your actual trade is issued and completed the currency pair has moved by 15 pips, and by the time you close the trade you loose 15 pips of profit due to the delay as well. Let?s look at some numbers and see how this plays out.
| Trade | SignalsW/L | Forex Signal Profit/Loss | Client’s W/L | Client’s Profit/Loss |
| 1 | W | 40 pips | W | 10 pips |
| 2 | W | 50 pips | W | 20 pips |
| 3 | L | -30 pips | L | -60 pips |
| 4 | W | 17 pips | W | 47 pips |
| 5 | W | 45 pips | W | 15 pips |
| 6 | W | 47 pips | W | 17 pips |
| 7 | L | -15 pips | L | -45 pips |
| 8 | L | -20 pips | L | -50 pips |
| 9 | W | 57 pips | W | 27 pips |
| 10 | W | 24 pips | L | -6 pips |
| Average | 70% | 40 pips profit | 60% | 18 pips profit |
| Total | 70% | 215 pips profit | 60% | -25 pips loss |
As you can see the forex signals service is providing a value added service by giving you the opportunity to make 215 pips of profit over 10 trades, which is totally realistic for a professional forex trader. However, due to the lack of knowing how to trade forex the new forex trader ends up with a loss of 25 pips of profit. A trader would be better off in this case with finding a forex signal service that provides managed forex accounts so that the clients account?s profits/losses correlates to the forex signal service success.
Personally I do not have any against forex signals services. They should be taken in context of the forex market and used ad additional information. I do not recommend students to subscribe to forex signals services as this will only confuse them. I teach and recommend people to gain the know how to trade forex, and then experience by trading in demo accounts until they are profitable. Then once they are trading profitably then they can find a forex signals service that is right for them and use that as addition information if they want to.
