Free Forex signals is a popular tool of many currency traders. According to my October 2009 poll, 79% of this blog’s readers use some signals, and almost 76% of them prefer free signals for their Forex trading. But are free signal services effective? Are they really free? Or do they serve some other purpose? In this article I’ll try to explain how the majority of such “free Forex signal schemes” work.
First of all, I must say that I didn’t do a constant
Such free signal service usually starts as forum topic where the author shares his signals in a rather clear form but without any explanations. Daily or weekly results (positive, of course) are reported in pips. Such forum topic draws attention from
The problem is that until you start receiving this signals via some convenient mean (like
- Signals aren’t accurate. They often fail to trigger and often trigger only to hit
stop-losssoon. I’ve followed several signal services post factum 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. He can write in his next post that he closed the trade at breakeven (1.4000), while the majority of the followers would have waited for a target and then would lose at
- Total pip count is manipulated to present an
over-successfulresult. Authors vary the amount 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 amount of lost pips. The signal followers usually know that only from the after-tradepost of the signal provider.
So, what’s bad in such signals? They are free after all 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 chance of losing your funds if you feel risky enough to use those signals on real account. And then again, you’d have to start buying those signals after a certain period, which would be a waste of money.
I’d recommend ignoring free Forex signals, especially if you are new to trading. It’s much better and effective to follow the free analysis posts or videos, which are plenty
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