Despites of what many beginners believe or wish to believe, trading forex is extremely risky business. A huge percentage of the beginner forex traders lose all the money in less than few months. Another big percentage of traders manage to start well just to suddenly lose everything in volatile market times.
If you want to trade forex successfully, you need to read a lot of books, study tutorials and play with demo money for years. Uh!
Any other options, please?
Yes, there are.
Get signals from experienced forex traders
This is a simple concept. If someone has already read all these books and practiced trading for years, why not following him or her trading instead of following the entire education process?
Sounds great, but … Most forex traders will not share their trades with anyone. Without this is part of their business – this is what the forex signal providers are doing.
What exactly is a forex signal?
Typically it's an email or some kind of instant alert telling you when to buy or sell a currency pair. Sometimes signals are distributed with desktop software which notifies you instantly. Others are organized as private chat rooms where members can not only get trading signals but also communicate with the main trader and the other users of the signals.
Some signal providers will propose you a stop loss and will send you exit alerts. Others will suggest you only the entry point and let you decide when to exit the position yourself.
That's why trading forex by signals requires at least basic understanding of how forex works, what is a stop loss, limit and lot size.
The costs of forex signals vary, but generally they will be in the range of $ 50 – $ 300 monthly. Some companies will give you good discounts if you subscribe for 3, 6 or 12 months.
There are also free signals offered, but usually you get what you pay for.
Trading by good signals drastically increases your chances to make profits long term. But forex trading is a very risky investment and you can still lose a lot of the money.
One thing that you should consider is that your expected trading profits should be large enough to cover the signals provider fee and bring some revenue to yourself. You will need to decide on a proper size of your investment in order to achieve that.
Another problem is that many signals companies publish fake results of their trading in order to get more subscribers. You should carefully investigate the signals company before paying for their service.