Free Forex signals is a popular tool of many aspiring currency traders. According to our surveys, three quarters of our website’s visitors use some signals, and almost all of them prefer free signals over paid ones for their Forex trading. But are free signal services effective? Are they really free? Or do they serve some other purpose? In this guide you will learn how the majority of such “free Forex signal schemes” work.
First of all, it must be said that we didn’t perform a constant real-time monitoring of hundreds of free online signal services that are available out there. It would be technically impossible and unnecessary. This guide examines the signals posted on various Forex forums (including EarnForex forum) and provided by some sites. In nearly all cases, the scenario was quite the same.
Such a free signal service usually starts as a forum topic where the author shares their signals in a rather clear form but without any explanations. Daily or weekly results (positive, of course) are reported in pips. The forum topic then draws attention from not-so-experienced traders and they become interested in receiving these signals. The author continues posting free signals until they see enough followers and then switches to private signal posting. It usually includes some email subscription (via their website) or simple mailing of the signals. After some short time, these signals become paid and the author posts them via subscription for a fee.
The problem is that until you start receiving these signals via some convenient mean (such as email or push-notifications) regularly and timely follow all the signals, you cannot measure their effectiveness. And this effectiveness may turn out to be far from good. There are certain problems with the quality of these signals and their delivery:
- Signals aren’t accurate. They often fail to trigger and often trigger only to soon hit a stop-loss. We have followed several signal services ex post facto and their total result was negative.
- The author changes positions and acts against signals without warning. For example, if a signal was for EUR/USD to buy at 1.4000 and sell at 1.4500, they can write in the next post that the trade was closed at breakeven (1.4000), while the majority of the followers would have waited for a target and then would lose at a stop-loss.
- Total pip count is manipulated to present an over-successful result. Authors vary the number of lots to increase the pip count of the profitable trades (for example +40 pips with 2 lots become +80 pips) and to decrease the number of lost pips. Signal followers usually get to know that only from the after-trade post of the signal provider.
So, what is bad in such signals? After all, they are free and you have a choice whether to follow them or not. But such free Forex signals are not only a waste of time, which alone is a reason good enough to stay away from them, they also keep you from learning Forex, as no analysis is presented to back the signals. You also have a very high probability of losing your funds if you feel risky enough to use those signals in a live account. And then again, you would have to start buying those signals after a certain period, which would be a waste of money.
Professional Forex traders recommend ignoring free signals, especially if you are new to trading. It is much better and more effective to follow the free analysis posts or videos, which are aplenty online. At the very least, you will be learning to analyze charts or fundamental indicators and keep yourself up-to-date with the market. Signals is a bad thing to depend on in Forex.
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