Do you want a Forex signal provider that gives accurate calls regularly?
Imagine:
You can rely on their best forex signals and generate consistent profits every month.
And it won’t be long before you can quit your job and have your FREEDOM — no boss, no politics, and no stress.
And best of all…
No money worries because your Forex signal is doing all the “work” for you.
Now, how great would that be?
Awesome!
But…
There’s always a BUT, right?
It’s only a fantasy (I’ll explain why later).
For now, you might be wondering…
“What’s a Forex signals provider and how does it work?”
A Forex signals provider gives buy & sell “calls” so the user can generate profits from the market.
And you’re charged a monthly fee for this service (whether you make money or not).
Still, you might consider it when you see profits like this…
You’re thinking:
“This makes sense as I’m getting signals from a professional trader. So all I need to do is follow his best forex signals and I’ll be successful like him.”
Wrong!
Let me explain why…
You won’t have the confidence to trade the Forex signals
Here’s the deal:
You’ve no idea how your Forex signals are generated.
It can be a “professional” trader giving out discretionary buy/sell calls, or a “black box” programmed to spit out buy/sell signals.
And this is a problem because…
When the drawdown comes (and it definitely will), you’ll lose the confidence to stick to the trading strategy.
You’ll have thoughts like…
“What’s going on?”
“Did the trading strategy stopped working?”
“Do I still follow the strategy after the last 5 losses?”
Know what I mean?
So here’s my point…
If you don’t know how a trading strategy works, or WHY it works — you’ll never have the confidence to trade it even if your signal provider gives out the best forex signals in the world.
You won’t make money even if the Forex signals are “working”, here’s why…
Let’s get real.
Most Forex signals provider charge about $100/month (or more) for their service.
So imagine:
- You have a $3000 Forex trading account
- You pay $100/month for Forex signals
This means at the end of the year, you need a return of 40% to break even.
And it gets worse.
Because with a $2000 account, you need a return of 60% to break even.
And with a $1000 account, you need a return of 120% to break even.
Ouch.
You’re better off gambling at the casinos instead of following the “best forex signals” out there; at least you have free booze.
Free Forex signals is a LIE
You’ve probably come across “traders” giving free Forex signals.
But is it really free?
And do forex signals work?
Nope. It’s a lie and here’s why…
Yes, you don’t have to pay a monthly subscription fee but…
You’ll have to sign up at a brokerage of their choice.
Do you wonder why?
It’s because they’ll earn a “commission” every time you place a trade with them.
This means:
- The more you trade
- The higher your transactions costs
- The more they profit from you
Clearly, there’s a conflict of interest here, that even if the provider is spitting out the best forex signals, it’ll still eat away from your profits.
So be aware of this marketing gimmick because there’s no such thing as free Forex signals.
The markets are always changing
Here’s a fact…
The markets are always changing. It moves from trend to range, low volatility to high volatility, downtrend to uptrend, etc.
This means your Forex signals might work for now.
But what if the markets change?
Will the signal still work?
Or will it go bust?
You’ll never know.
And that’s why I said…
If you don’t know how or why a trading strategy works, you’ll have no confidence to trade it — especially in ever-changing market conditions.
Right now:
You’ve realized that most signal service is junk.
But, if you still want to subscribe to one, then here’s what you must do…
Put the odds in your favor, here’s how…
Recall:
I said with a $3000 account, you need 40% a year to break even.
However, if you increase your account size, you reduce the returns needed to be break-even.
For example:
- You have a $30,000 trading account
- You pay $100/month for Forex signals
This means you need a return of 4% per year to break even.
And if you have a $100,000 account, you need only 1% per year to break even.
See the difference?
However, you might not have a large trading capital.
So, what now?
Well, what you can do is opt for a profit-sharing scheme.
Here’s an example:
If you have a 30–70 profit-sharing scheme, you’ll pay 30% of your profits to your signal provider and keep the remaining 70%.
If there’s no profit, you pay nothing.
Do you want to grow your trading account steadily? Then you must have this one thing…
Here’s the deal:
You can find a profitable Forex signal provider.
You can have the appropriate account size.
But without proper risk management, you’ll still lose.
And this is something your Forex signal provider can’t help you with.
Let me share an example…
There are two traders, John and Sally.
John is an aggressive trader, and he risks 25% of his account on each trade.
Sally is a conservative trader, and she risks 1% of her account on each trade.
Both receive profitable Forex signals that win 50% of the time with an average of 1:2 risk to reward.
Over the next 8 trades, the outcomes are Lose Lose Lose Lose Win Win Win Win.
Here’s the outcome for John:
-25% -25% -25% – 25% = BLOW UP
Here’s the outcome for Sally:
-1% -1% -1% -1% +2% +2% +2% +2% = +4%
Do you see my point?
So as a guideline, you don’t want to lose over 1% of your trading capital on each trade.
This means if you have a $10,000 trading account, your maximum loss per trade shouldn’t be more than $100 (1% of 10,000).
If you want to how to do it, go read The Complete Guide to Risk Management and Position Sizing.
Why you must know the trading strategy inside out
Let’s take Trend Following for an example…
How does it work?
- You trade breakouts across many markets
- Those breakouts that fail, you cut your losses
- Those breakouts that trend, you ride your winners
And WHY does it work?
Because of fear and greed in the markets.
In times of greed, traders keep buying and it pushes the price higher.
In times of fear (or Recession), traders keep selling to stop “the pain”.
So, as a Trend Follower, you can take advantage of this phenomenon as you buy high and sell higher (and vice versa).
Does this work all the time?
Of course not!
Which brings me to my next point…
A simple test to tell whether your Forex signal provider is legit (hint: 99% of them will fail this test)
One year of trading results isn’t enough to prove that your trading strategy works.
Because market conditions change.
For example:
In 2017, Bitcoin traders were “killing” it as the market was in a strong uptrend.
You could buy and close two eyes and still make money at the end of the month.
But in 2018, things changed drastically.
The price of Bitcoin collapsed 60%, and many traders blew up their account.
Now here’s the thing…
These traders were using the same trading strategy.
In 2017 they made huge profits, but in 2018 they lost everything.
Why?
Because market conditions change.
So…
If you want to know whether a trading strategy will work, you must verify the results over the last 5 years and take into account one major recession.
For example:
A backtest period of 2007 to 2011 is good because it has 5 years of results that includes the 2008 financial crisis.
So, before you sign up for a Forex signal service, make sure they can pass this test.
Frequently asked questions
#1: Do you consider offering Forex signal service which I can follow?
No, I don’t offer Forex signal service. I’d rather teach you how to fish (and you’ll be able to fish for a lifetime) than to simply give you the fish.
#2: Which Forex broker do you use?
I don’t wish to publicise and disclose which brokers to use over here, but if you want more information, you can just reach out to support(at)tradingwithrayner(dot)com and I’ll be glad to give you some recommendations.
#3: If the Forex signal services are provided by professionals, wouldn’t they adapt to the change in market condition?
Yes, that’s possible. If a signal service is given by a professional trader, then the signal could possibly adapt to changing market conditions. But so far, I haven’t come across any who survives in the long run.
Conclusion
Here’s what you’ve learned today:
- If you don’t know how a Forex signal is generated, you won’t have the confidence to trade it when the drawdown comes
- It doesn’t make sense to use a Forex signal service if your account size is small
- Forex signal usually stops working when market conditions change
And if you want to subscribe to a Forex signal provider:
- Have a decent account size
- Adopt proper risk management
- Understand the trading strategy used
- Know how the strategy performs over the last 10 years
Now here’s a question for you…
Do you use a Forex signal service and did it work for you?
Leave a comment below and share your thoughts with me.