What is a Trading Signal?

How are signals used by forex traders and those learning to trade the Forex market?

How they are used by social media traders (mostly not real traders) & Forex traders in the financial markets.

Along with the good the bad and the ugly!

trading signals lambo

Please click the below links to navigate to that section of the article.

Table of contents


does technical analysis work(Read more about me click here)

Introduction

There are four types of forex trading signals in my opinion.

But before I explain more on the four types of trading signals. Let me provide a bit more detail on the signal services that are commonly provided.

Forex signal services, daily signal services and forex signal providers do not usually offer education. If they do it will be likely invalid and unproven. That’s why the trading signal providers usually have little success in sustaining profits. Trading signals are extremely high risk. They will almost certainly have no performance tracking their trading signals. If they do, it’s often a screen shot that can be fabricated.

These signal providers rely on a high volume of new traders. To have a track record would mean they would have to be able to trade successfully and consistently. They operate by opening and closing Discord, WhatsApp or trade telegram groups. Often they will rebrand usually with no website or physical address. Social media is commonly used to hook new customers.

The usual offer is for free trading signals. As long as you sign up to there affiliated Forex broker who they will advertise as the best Forex broker.

That way they make money on every trade you take, whether you win or lose! Now you know why they don’t care if their trade signals are good or bad and don’t worry about performance. Usually seeking new inexperienced traders and provide a high volume of trading alerts. They may even offer a premium subscription plan for a client account too. A risk warning will usually be nowhere to be seen and loss of profit is inevitable from these types of services. Due diligence is not really undertaken by novice traders and risk appetite is not respected due to their inexperience.

Trading signals are very popular with novice traders!

The reason is the marketing is focused heavily on luxury lifestyle because this is easy to sell to people. This is where a trader should be extra careful. If the focus is on the dream life instead of credible trading education and trading signal performance. The signal service are looking to lure in the novice trader for easy money whilst distracting them with shiny sports car and fake Rolex.

It is common that the signals provider do not offer their proven trading systems and do not teach people to learn to trade. Instead the trader trading the signals relies blindly on the forex signal service to make returns. These signal services are considered extremely high risk of losing money. More so than an educator who will at least require to lay down some sort of effort to give their forex trading educational content credibility.

The four types of trading signal or Forex signal is as follows.

  1. An advisory Forex trading signal alert that is to intentionally recommend a trade to a client, such trading signals would come as a recommendation from an investment bank FX Desk and/or professional traders.
  2. An educational Forex trading signal alert that is for educational and demonstrational purposes only.
  3. Trading signals used to generate revenue from affiliate broker commissions and subscription services. Social media (pretend) traders
  4. Social trading such as etoro sites that allow traders to follow a traders trades by mirroring them or copy trading.

Number one is to advise and recommend to someone what to do in the FX Market and is illegal to undertake unless they hold the appropriate regulatory certificate to provide an investment advisory service.

Two, is to provide an example for educational and information purposes on what they may be doing in the markets. This does not constitute a recommendation and is for educational purposes only.

Point number three is the common trading signal provider that can’t trade but doesn’t care as then make money anyway.

And point four is following traders that share their trades through a social site. This is where you can do more research and see their trade history. It is one of the safer methods of trading signals.

What are the trading signals that can help you?

The Forex trading signal alerts I share in my free trading room are not ‘trading signals or a recommendation to trade’ but they provide that all important proof as the performance of the results have been tracked and logged over the years.

I share what my Forex trading strategy and method is capable of for educational purposes. The trading signals or alerts as I like to call them in the trading room are for an incredibly important reason and to demonstrate two things:

  1. My trading strategy and method works in a live market environment (see performance here)
  2. You are learning from a Forex trader that walks the walk not shares luxury posts on social media distracting you from what really matters. That the trading education is credible and proven.

These are an integral part of my trading education service and here’s why…

The mindset and trading psychology is often neglected in Forex trading. It’s not exactly the sexy and glamorous side of trading is it?

But… It’s absolutely essential to a trader’s success and much more important than most new traders think. It’s the foundation on which a trader’s success is built and sustained. The previous sentence should be remembered. Because this is what ALL traders that have become successful have mastered.

I ignored the importance & understanding of a successful trading mindset for years and I paid for it!

Of course I then learned the hard way through wasted precious time and money until….

I changed the way I thought about Forex trading. Trading signals is not the answer. Witnessing the trading signals consistently out perform over a long period of time on the method you are learning is. This gives you confidence. That is a huge boost in trading. Forex trading and trading the financial markets is the biggest mind game you’ll ever play.

The right mindset and as I said confidence are an incredibly huge factor in successful trading and becoming a success. With trading signals you do not get any education. Just blindly following a signal service with no proof is a sure way to losing money and your mind.

Destined to fail as a trader if this route is taken.

It’s the lowest odds of becoming successful. Not just in Forex trading itself, but also in learning to trade Forex. You cannot learn this way, there needs to be valid and proven education to back it up.

Most trading services do not provide any real credible proof they can trade or that their education and method works in a live market environment. That is of paramount importance to you if you are seeking to learn to trade.

If you learn with a trader who has the evidence they can trade and their method works through live demonstration consistently. You have already increased your odds in your favour hugely!

Now you are much closer than every trader that still follows unproven trading educators who offer recap videos and forecasts as their proof.

If you attempt to learn with a signal service who does not offer the credible evidence you deserve then save your money and your time.

Forex trading is about increasing odds and identifying a probabilistic occurrence. The same can be said about all things in life. We must make decisions all the time. Even if you don’t realise it everybody weighs up their probabilities.

With that in mind, if you ask yourself. Am I really going to make ‘consistent’ money following an FX Guru who focuses on showing off luxury social media posts and stories of making money through trading over proof their trading strategy really works? It’s really simple, if they could trade they would prove it. They don’t because they can’t. They make their money from you and your subscription or through their broker. Nothing wrong with making money, if it is in return for offering valuable education that is proven to work.

If you don’t have the proof the trading signals are performing over 12 months at least and backed up by education then that’s lowest odds of you obtaining trading success. It common sense really. If you want to learn  to fly a plane, you are trained by a pilot who can actually fly a plane. Learning to trade forex is no different. Trading signals services should be approached with caution.

Most services certainly won’t share Forex trading signal alerts in real time because that would mean they have to prove they can really trade.

TRADING SIGNALS what proof does your signal provider prove

Anyone can do a periodic video, cherry picking trades. Also anyone can do a forecast and recap video. Funded members, great! As long as it comes with the proof! The list above is very clear that one is marketing based and one is proof based. The proof that is often pushed is periodic or short term. What anyone trading signals or learning to trade Forex needs as proof is 12 months plus minimum of consistent results.

By providing a consistent example of proof through live trade alerts in real time with entry stop and target it every day/week and month over the years soon tells you who can trade and if their method works.

Good trading signals are knowing that you are learning from a proven trader and is key to your success!

I believe anyone wanting to learn to trade should witness this so they can relax and focus on learning instead of worrying if what they are learning really works. At least they know they are with the right forex trading educator.

However let me tell you from over 15 years experience. Once conditions have been learnt and analysis is buttoned down, which is a relatively simple process. Only then the true battle starts, with oneself.

Successful Forex trading is a mind game with yourself. I know that now… But when I first started to learn how to trade Forex my focus was woefully misplaced.

I was so focused on ‘conditions’ of a strategy making me a success that I didn’t understand the mindset part.

Oh how that changed through those early countless years of being battered by the Forex markets.

Humbled over and over again by poor risk management and a poor understanding of what forex trading really is.

Conclusion & Summary

Trading signals provided by a person with no credible evidence of their performance is high risk. It’s likely the highest probability of losing all your money trading Forex.

You will want credible evidence of performance over a prolonged period of time (minimum 12 months) or you are virtually guaranteeing you will lose your money and line the pockets of someone else to help you do it.

Remember the signal providers will have an agenda. If they have no evidence of performance and offer free signals you are likely the product. You will sign up to their broker of choice and they make money on every trade whether they trading signals win or lose. So they really couldn’t care about performance of the trading signals. All they care about is volume of forex signals.

However, trading signals can be helpful by way of demonstration and an example to prove a trading strategy and method works. Especially over a prolonged period of time (12 months plus). This shows you that the trading strategy has an edge over an extended duration of live market trading. This will show how robust the trading strategy and method is and what metrics to expect. Win rate, drawdown and monthly return.

When trading signals are accompanied by credible and proven education this is the fastest way to understand how that strategy works. Naturally this accelerates the learning process. This is a way to quit your 9-5 like others already have learning to trade Forex at Able Trading.

Thanks for reading.

If you want the highest odds of success and want to learn a proven method then click the button below to become one of the ‘Able!’

Get Started!

What to read next! Top 5 Books On Forex Trading