Foreign exchange market trading averages about $5.1 trillion a day. There’s a lot of money to be made there!
When there is a lot of money at stake though, there are many people who will be looking to scam gullible victims. An easy way to do this is through forex signals. While these signals can be helpful, it’s important to know what’s legitimate and what’s a scam.
This article will walk you through forex signals and help you decide if you’re wondering is forex worth it.
Forex signals are tips for trading in the stock market. They are short bits of information, letting people know when to buy or sell their stock.
These short snippets are made to be sent via emails or text messages.
Here is one example of forex signals:
BUY EUR/USD @ 1.1240
SL @ 1.1220, TP @ 1.1270
The opening couple of letters tells you whether it is a buying (long) or selling (short) tip. The next information is the type of currency, like Euros/US Dollars in this example. A currency nickname may also be used like Aussie for the Australian dollar or Loonie for Canadian money.
The next 4 or 5 digits you see is the price of the stock quotation.
You may also see these letters in a free forex signal: MO (market order), PO (pending order), LO (limit order). There are other types of orders that can be included, but it depends on the broker’s platform and the source of the signals.
The next line, SL @ 1.1220, TP @ 1.1270, shows you when you should stop before you start losing money. SL stands for stop-loss, and TP means take profit. Sometimes you will see TS too, which means trailing-stop.
That means that when the ticker reaches the SL amounts, you must sell. When it reaches the TP, you’re going to start making money.
Free Forex Signal Sources
The goal of stock-trading is to make money. It’s tempting then to want to find free tips instead of paying a fee for the same information.
But is it the same information? Let’s take a look at trusted and untrusted sources.
In order to know if you can trust free forex signals, you need to know where they’re coming from. The most common sources are traders, affiliates, and scammers.
If you come across free signals from a trader, they are pretty reliable. Traders give forex signals they are using in their own trades. Their motivation is often to pay it forward to others since someone helped them when they were learning too.
You can also get free forex signals from an affiliate. Usually, you have to sign up for a broker’s affiliate link to get these signals. The broker gets a commission of your purchases, but you don’t pay anything to them.
You’re getting your signals from someone who knows the market, but affiliates are not as trustworthy as traders. They can be distracted by their own business and start to let their free forex signals slide because they’re not as profitable.
Make sure you test affiliate signals before you sink a lot of money into following them. This is a great reason to sign up for demo accounts before you decide to fully trust an affiliate site.
Scammers obviously don’t have your best interest in mind, and their forex signals are not trustworthy. Sometimes, they just want to earn an affiliate commission off you. Sometimes, they may give you a few signals for free and then ask you to sign up for paid signals or a premium service.
When you sign up for an account with a scammer, you will get forex signals, but they will be useless. Half of their customers receive buy orders, the other half receive sell orders. If you’re lucky, you’ll be in the half that ends up making money, but there’s no way to tell which order you’ll receive.
Be careful to vet any website or service you sign-up for. The last thing you want is bad information causing you to lose money.
Red Flags for Scams
One way to make sure you’re using a legitimate service or broker is to check them out on Forex Peace Army. This free service will give you the background and probability of your potential broker’s trustworthiness.
If the website or broker can’t be found on this site, you’d better avoid them.
If you see a chart or graph listing a stocks history, but it doesn’t have any losing periods, drawdowns, or open trades, you should be suspicious. This is data that you need to be check on Forex Peace Army or Myfxbook.
If you can’t verify the information, move on to a new source of forex signals.
Again, beware of missing information or data like open positions, equity, balance, or withdrawals. You need to verify this from other trustworthy sites, or you could be scammed.
If you are looking at signing up for forex signals, there should be a free-trial or short-term money back guarantee. Any sites without these kinds of incentives shouldn’t be trusted. It’s your right to get to know a service before you commit to it 100%.
You may also come across some good-looking results that you can verify on Forex Peace Army and Myfxbook. You try them yourself, but your results aren’t coming out as well.
This could be because the website you are using has borrowed their results from another webpage and is giving you their strategy, not the strategy that actually got those results. This is one reason you want to be careful with free forex signals.
Be cautious with anything that looks really great, but can’t verify the method they used to get their results.
So, Is Forex Worth It?
Since you’ve read this article, you have a pretty good idea of what can go wrong with free forex signals. You may still be wondering if forex is worth it.
The answer is yes, forex signals are great and helpful, but you have to be careful where you get them.
The old saying, “You get what you pay for” is accurate in this case. If you’re relying on free forex signals, you just can’t trust them as much as verified signals from a trusted company.
If you’re ready to find a company you can trust and stop the game of dodging dishonest scammers, start your search here.