There are many individuals who want to take advantage of the foreign exchange market but simply don’t have the time to devote to studying the market to develop a profitable trading strategy. This why many traders often choose to take advantage of forex signals instead. A Forex Signal Service is the first of three methods of hands-off trading that the forex trader may consider, the others being Automated Forex Trading Software and Forex Managed Accounts. Although signals are meant to help the trader make informed trading decisions, they still have some flaws.
A Signal Service provides alerts on trading opportunities. For example, a professional trader sits at his desk, trading his account (or his company or hedge fund account). Whenever the trader enters the market, he also sends an alert to his subscribers, giving them the opportunity to enter the same trades as him. Some service also provides an automated robot, sometimes called a Trade Copier or a Trade Cloner. This robot will execute the same trade on the client’s account, so clients don’t need to actually go to their computer and execute the signals manually.
While there are plenty of arguments for using a signal service you also have to consider the reasons that you may want to think seriously about whether it is for you and to ensure you choose the right service. While there are many good signal service providers out there, there are also many who are just looking to make a quick buck. If you are new to trading and don't know what you are doing then you could make poor trading decisions by using the signals incorrectly. Signals are there to alert you to changes in the market. If you don't act quickly then there is no point in having the signal service.
Perhaps the first major drawback of trading signals is that there are many scams that look like authentic signals. Despite the fact that trading signals are supposed to be sent by the professional trader or analyst, you do not really know what people are behind the name “signal provider”. Therefore, accepting the trade signal is always a risk. The only way around to prove whether the signal works is by reading the transaction record and viewing the detailed stats of the signal provider.
As long as you will just follow the signals provider you will never become forex expert you will always need someone who helps you to make money or trade in forex, otherwise you can’t trade in forex also sometimes signal provider’s prediction can be wrong you will argument with the signal provider as you got the loss. This is a very risky business and direct effect on your investment, you need to be very careful and must learn forex trading which will help you to predict the market to check the signal is correct or not and it might help you before you take decision to follow the signal or to wait for the best time to take position.