Forex Signals have changed the way normal traders operate in the forex market these days. They give traders an opportunity to perform successive profitable trades if implemented correctly. In layman’s terms, a forex signal refers to a set of analyses, used by a trader to decide whether to purchase or sell a currency pair at any given moment. They are typically available either for free or as part of a paid service.
However, just like several other industries, the success of forex signalling services has prompted several fraudulent developers and organizations to enter the market. Signal Sellers can be retail firms, managed account companies or even individual traders who offer a system for some sort of fee. They usually tend to tout their experience and trading abilities to entice unsuspecting traders. Testimonials from third parties give the impression that the signal service is worth the investment.
There are several tricks that a forex signals service can use to appear legitimate in front of prospective customers. This article aims to highlight certain signs that would help traders distinguish fraudulent forex signals from the others and avoid them.
- No information about open positions: Many forex signal services tend not to include any data about their current open positions. These service providers typically have accounts where stats such as balance, equity, history, open trades, and profits are hidden. These forex signals should be avoided at all costs, even if they have accounts on authoritative sites.
- Unusual Payment Options: Signals services that ask for payments using methods such as wire transfer to bank accounts should be considered doubtful and should be avoided. Reputed or reliable forex signal services always use reliable payment methods such as PayPal or Swift which are supported in almost all countries.
- No Money-Back guarantee or Trial Period Offering: Signal services that do not offer a free trial period or money-back guarantee should be avoided. Any reputed signal service would provide customers with a free trial period or money-back guarantee scheme. This is done to allow customers to test their signal services before making a final commitment. Many Signal providers, who avoid this, turn out to be fraudulent in the end.
- Signals which do not match trading history: Signalling service providers tend to provide customers with verifiable results on authoritative sites to prove their point. However, it may so happen that the results they are showing are from a different applied strategy. If the trader receives trading signals that do not match with those provided on authoritative sites, chances are that the provider is sending out random signals. These should be avoided at all costs.
- No Third party verified Results: One of the main signs that a signal service might be a scam is the absence of any verified results on authoritative sites such as myfxbook or fxblue. Providing customers with MT4 statements, backtests and monthly stats in PIPS do not count if they come from independent, outside sources which can easily be fabricated.
Distinguishing Legitimate Signalling Services from Fraudulent Ones
The above points highlight some of the tell-tale signs that can be used to identify a fraudulent signalling service. That being said, the majority of forex signal services out there tend to be legitimate, offering varying degrees of success to traders who use them. Some additional factors can be used to identify signals which are worth the investment.
These are mentioned in brief below:
- The performance and subscription fees for the forex signalling service should be affordable to allow room for guaranteed profits at the end of the month. The profit calculated should never be less than the subscription fees one pays for the signals.
- The service should provide complete information on all current open positions. This is to ensure that they are not holding positions in loss for a long period of time, such as a floating loss.
- The Signal strategy should have a drawdown that the trader is comfortable with. This depends from trader to trader. To many, a 30% drawdown rate is satisfactory, but to others a 10% drawdown may appear to be too much.
- Good trading signals with good strategies in place should be able to provide a complete trading record for the prior six months or the last 100 trades. Without this information, there aren’t enough statistical data to make a judgement.
- Above everything else, the signal service should have a trading record of authoritative sites such as mxfxbook, fxblue, or forexpeacearmy.
Forex signals have played their part in helping many traders amass huge profits on a consistent level. However, the presence of fraudulent and illegitimate signal services comes as a hindrance for traders searching for the right service provider. The above points will help traders avoid such fraudulent forex signal service providers and prevent them from spoiling their trading experience.