Are Forex Trading Signals a Good Investment?
By Tom WellsForex trading signals can be a great way to profit from the forex industry, but it's important to understand what you are getting and why it may be beneficial to explore other avenues before considering such a service.
The Forex market is one of the most liquid in the world, with literally trillions of dollars flowing around it on a daily basis. If you know what you are doing, have a patient and exact personality and the ability to create a solid trading plan and stick to it, you can profit immensely from the markets. Because of this, forex attracts many new traders on a daily basis. Most will lose all of their money, and give up on forex never to return. This will happen for some, or all of the above reasons.
Because of this, many new traders turn to forex trading signals. This is basically where someone else sends you a signal whenever a potential trade is coming up on a certain pair. For example, a provider may notice that the GBP/JPY is showing all the signs of a bullish reversal, and would instruct his or her clients to make a trade when price reaches a certain point. They will normally do this at a price, in other words you pay for the signals regardless of whether they are profitable or not.
If the trade goes in your favour, you make money. If the trade goes against you, you lost money. It's easy therefore to see why forex trading signals providers can actually be a very sound investment. In theory, all you need to do is pick a provider who makes predominantly winning recommendations. Couple this with some good money management and you should have absolutely no problems making a profit.
The drawbacks come from the fact that what you are doing is essentially copying someone else's actions as opposed to learning anything for yourself. You could compare it to the act of copying someone more intelligent than you in an exam. For as long as that person is sat next to you, and you can see their paper, you'll be able to ride off of their success. But if that person moves seat, and you can't see what they're doing anymore, you're in trouble. You have nothing to copy, and you're none the wiser yourself as you haven't built up your own knowledge.
Forex trading signals providers are the same. It's not difficult to make money when you find a profitable provider, but you have no guarantee that they will be around forever. If you lose that provider, you lose your source of revenue. You need to consider learning how to trade for yourself, so that you're armed with the knowledge, skills and experience to make your own calls. Once you've reached this point, there is absolutely nothing wrong with taking some money and investing it on the side in to a forex trading signals provider. While they are making good calls, you're making money, and should they suddenly disappear, you're in the same position of power you have always been in, able to walk away and pick things up yourself.
A great source for Forex Information is this blog, you can find it at http://forex-education-online.blogspot.com/ -- There's lessons, useful info and some cool hints and tips. But if you're serious about trading, you need to visit it today!
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