Forex signal providers are everywhere these days. You only have to do a quick search on your favourite search engine to find hundreds of different providers. The thing is that they will all appear to be profitable (otherwise no-one would ever subscribe to them), but sadly this is not always the case in reality.
What you have to bear in mind is that the people providing the signals may or may not be trading their own signals. If you find that they are not trading their own signals, then this should certainly set some alarm bells ringing because you have to ask yourself why.
There may be a legitimate reason. For example they may have so many subscribers that they make more than enough money anyway. However it is more likely to be the case that they are not confident enough to trade their own signals using their own money.
You also need to look at their trading style. The best signal providers will look to build capital slowly and steadily using sound money management principles. However a lot of providers may appear to be consistently profitable, but they could easily crash and burn in the future.
For instance they may look to bank 20 points profit per trade and their trading strategy may be to find overbought or oversold markets and keep adding to positions if things go against them. Therefore when a reversal does come it is likely that all of their positions will be closed out for a small profit.
This is all well and good, but they may use excessive stop losses of say 500 points to give their positions plenty of room and increase the chances of them closing out these positions at some point. However you only need one or two of these stop losses to be triggered to wipe out all the profit that you have accumulated from previous months.
The best forex signal providers will minimize their losses and ensure that their winning trades are much greater than their losing trades. So therefore even if their overall success rate is as low as 30% or 40%, for example, they are still able to make decent profits in the long run.
So it really does pay to do your homework when choosing a signal provider. The good news is that many sites, particularly some of the large sites that host thousands of different providers, do provide detailed trading history so you can make an informed decision. As I say, you should look to pick those forex signal providers that have long and established trading records and who use sensible money management rules, ie they cut losing trades early and let their wining trades run. Article Directory : http://www.articlecube.com
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