Many people who decide to trade Forex usually do one of two things. They lose all of their money or simply do not have the time to learn how to trade Forex. With this being the case for 95% of Forex traders, it becomes a breeding ground for Forex signal providers. Now this doesn’t go to say that Forex signal providers do not work, because a lot of them do, it just takes a little sifting and sorting the good from the bad.
I started trading Forex back in October of 2005 and blew out my first two live accounts. The main reason I blew out my first two accounts was due to lack of education in the Forex arena. After putting in over 1,000 hours of researching, training and studying I did manage to learn how to properly trade and found a few very good signal service providers.
What many people do not know about Forex is that the brokers do not want you to make money. Their objective is to advertise their services and get as many people as possible to trade through them so that when you lose they can take your money. On top of that, FXCM’s (brokers) can manipulate the bank feed knocking you out of trades you may have won. To put the icing on the cake, by law a Forex broker doesn’t have to pay you if they cannot cover your positions. These are the main reasons 95% of trades lose, however there are ways to beat them at their own game.
I don’t know how many signal service providers a typical trader may or may not have tested in the past, but I do know that a few excellent ones exist. Many Forex signal service providers claim to make 4,000 and 5,000 pips per month and that is a bit ridiculous and unrealistic in the Forex realm. Look for modest providers that display their results in real-time. Everyone will back test their data or show you a running log of what would have happened if they used their system in the past. The misconception is that they didn’t actually test their system in real-time, rather their history of trades will display what might have happened had they followed the signals. For some this is enough, but proven systems will show live data and have their systems back tested in real-time.
Through my experience it’s important to learn as much as possible about Forex before you begin trading live. Educating oneself coupled with a good Forex signal service will increase winning trades. Knowing the daily support and resistance zones coupled with daily trends will help you weed out the bad signals.