What exactly does a Forex signal service do? A Forex signal provider does the research and development of a particular Forex trading system or systems. This service then sends the necessary information to its subscribers so that they can place the trades. Some even offer what is called copier service that makes the whole process even simpler.
Having someone else do all the hard work for you sounds like a dream come true doesn't it? Well, it can be if and only if you have a good Foreign Exchnage signal service. This is because all Forex signal services are not created equal.
The level of expertise of those creating the Forex trading signals varies widely, the cold, hard truth of the matter is that there are many more Forex signal providers that don't know what they are doing than there are those that know what they are doing. Unfortunately there are a lot of scammers out there trying to take advantage of newcomers to the game.
Since the level of competence of Foreign exchange signal providers varies so greatly it is crucial that you do homework prior to using this sort of service. You will certainly want to take your time and thoroughly investigate the service you are considering.
Here are just a few of the things that are vital for you to know:
Does the Forex signal provider have his own money in the system? While this is not always a deal-breaker, it can indicate the level if the signal provider's faith in their own system.
How much capital is needed to start? Subscribing to a service that requires $100,000 simply doesn't make sense if you are planning on opening an account with $10,000.
What is the system's maximum historical drawdown?
How much ROI does the system deliver?
It's a newbie mistake to focus only on the Pips made. Info: ROI = [Profit (pips) / (MaxOpenTrades x 100) + (MaxDD in pips)] x 100. The result is a percentage (%).
These are only a few questions you need to ask in order to get a feel for whether or not the signal service is right for you. Remember that the time you spend doing your homework will be paid back many times over in the quality of the signals you receive and the ROI they will award you!