Updated: Jan 25, 2022
Forex signals are way too popular these days. Everyone is giving away “free forex signals” or “VIP forex signals”. It’s getting absolutely ridiculous. The only people who make money from forex signals, are the people giving the signals, and maybe a few lucky people. In the long run, there is a 99% chance you are going to lose money with following forex signals. In this article you are going to read exactly why you shouldn’t take forex signals and should instead, focus on building your own forex trading edge.
Why do people give signals?
There are a lot of reasons why people give forex signals. Below you will find a list with the most common reasons:
To sell signals and make a steady income
To make an income via commissions
To stroke their ego
To promote services
If you look at these reasons, it becomes plain obvious why you shouldn’t take forex signals. The reason people give signals is not to help you, but to make profits for their own good.
Usually, you will find people promoting free signals. If you join the free signals, you will quickly see that they offer “VIP signals”. Really, VIP? Does that sound professional? Obviously not. The goal from giving free signals is to show they give reliable signals (which they don’t) in order to sell you VIP signals.
Now, you might be wondering: why do people buy VIP signals if the free signals are not working? It’s because of luck. Let’s say you give forex signals and you give 100 trade signals. Over the 100 signals you lose money, but maybe there are 5 signals in a row that win. People will only focus on the short term, see these signals and think the signal provider is profitable, while it was most likely plain luck.
This way people fall into buying signals. Then, the losing streak hits and they lose money. However, the signal provider already has made money from selling the losing signals. This is usually how it works. Another common thing is that once people make money from signals, because of luck, they tend to tell people about it because they are so happy. This way the signal provider makes more money. Once again, the losing streak hits, people lose money but the signal provider sold another subscription.
Another reason why people give free signals, is to make an income via commissions. They usually give you free signals if you join a broker. They get money if you join & trade via that broker. This way, they make money, even if the signals are losing. You will find that they post a lot of signals, just to get you to trade and they earn more commissions.
The other reason why people give forex signals, is to stroke their ego. They know they suck at trading but they don’t want to admit it and feel bad about it. So, what do they do? They share free signals in groups and if the trade makes money, they say to everyone: wow, look at me, this trade just made a lot of money. In reality they lose in the long run, but everyone will be saying good job and their ego gets a stroke. Recipe for disaster.
People also give free signals to promote other services. Again, they might experience a temporary winning streak, highly promote that winning streak and then promote the services they sell, so you can learn to make profitable signals for yourself.
Why shouldn’t you take forex signals?
The signal provider always makes money, even if the signals are all losing. He gets money from the people paying him and from the services he promotes. A signal provider doesn’t care if his clients make money in the long run, because he is making a steady income from selling the signals.
Now, let’s say you found someone with a profitable track record, that is actually giving profitable signals. First of all, you won’t find someone like this, because if someone is making a lot of money trading, he won’t bother giving away signals, he will be taking on investors’ money or firm money, because this way he can make way more money and build an actual career.
So once again, the chances of you finding a genuine and profitable forex signal provider, are virtually zero.
Let's say in this rare occasion you find someone that gives profitable forex signals. The thing then is, you will have to follow all the signals, 100% accurate, in order to get the same results. The problem with this is that nobody can do that. Most likely the person lives in a different time zone, so the trades will be posted during the night, and you won’t be able to follow those. Now, you might think: why do I need to take all the signals? Because cherry picking the signals doesn’t work. Let’s say during the night, the signals win. But, you are sleeping, so you take the signals during your daytime. However, unfortunately these signals lose. The signal provider made wins on his other trades and is now at breakeven. You are at a drawdown because you missed the winning trades.
This can also happen during the day. Maybe you are at work, or doing something else. Life happens and things need your attention, so you can’t just sit there all day and wait for a signal. The thing is, you will miss signals and because you will miss signals, you won’t get the same results as the signal provider and you will most likely lose money.
The impact of emotions
Another reason to not take forex signals are your emotions. You don’t know if the forex signals work in the long run as you don’t do the analysis yourself. The signal provider is confident, because they are his signals. He knows why they work, he knows his edge. This allows him to trade through the drawdowns that will happen. You, on the other hand, will most likely second guess trades once you lose a few trades in a row. You then start skipping signals or making mistakes. This is yet another reason why you shouldn’t take forex signals.
The next thing is the fact that you are completely relying on someone else. What if he stops giving signals? Then you can’t trade. What if he starts losing his edge or making emotional mistakes? You are not independent and need someone, which is not a position you want to be in.
A lot of people start with following signals, because they think it will make them some money in the short term. This never happens. The only way to make forex trading work, is to develop your own trading edge and learn to trade for yourself. Signals won’t work, so stop searching for them and start making your own signals.
How to actually approach forex trading?
Now, if you are still reading after this rant, you know why you shouldn’t take forex signals. But then, how to actually make money trading? By approaching it as a business. Trading is a real career and it takes years to master this and make money. You should only get into forex trading if you are interested in the markets. Also, know it takes years to make money. Only start with forex trading if you are willing to put in the work, day in and day out, without making money for years. If this is not you, please don’t get into forex trading. You will waste your time, health and money.
Start by learning the free basics out there. Learn different concepts. Start testing things. Develop your own forex trading edge. Once you have mastered the basics, search for a coach or a mentor. Work with someone that has way more experience than you do. Together you can build a real forex trading edge, so you can finally start to make some real money with forex trading.
If you are interested in trading and genuinely want to make this your career, you might be interested in our 1-on-1 coaching services. We focus on coaching our traders to build their own mechanical trading strategy. The mechanical trading edge our students develop fits with their lifestyle and personality. They learn to make a profitable forex trading system, so they make their own signals and are not dependent on someone else.
Forex signals work for only one person, the signal provider. There is a huge conflict of interest with forex signals ( for brokers as well). People that give forex signals always make money, while the people that follow the signals have to rely on luck. You now know why you shouldn’t follow forex signals and that the only way to make money is to actually learn how to trade. If you have any questions about forex trading and want more information, please contact us. We love to help you with your forex trading journey!
If you found this interesting and want to warn other people about forex signals, feel free to share the blog!