If everyone was consistently profitable trading the forex market, everyone would be traders. There’s plenty of truth in the old adage that over 90% of forex traders lose money. The sad reality is that not everyone is fit to be a forex trader.
But, even if you’re not cut out to turn a profit in the forex market, there’s still a way to make money trading. With a little extra cash, you could hire a specialized signal service. Signal services aim to make consistently accurate and profitable trading decisions on your behalf.
Here we’ll outline the different types of forex signal services out there, and how to best use them to gain an edge in the highly competitive forex market.
The 3 Different Types of Forex Signal Services
Long gone are the days of traditional money managers reserved for investors with deep pockets. Today, things have changed and traders have a wide variety of signal choices to consider. Forex signal services can be classified within one of the three following categories.
• Investor Services
• Signal Provider
• Copy Trading
‘Investor services’ is a term used to describe the higher end, pricier FX signal services out there [for example Elite Signal]. Investor service companies tend to operate similar to hedge funds, creating a portfolio of long-term trades for wealthy investors. Typically, investor service companies require a minimum deposit each month or quarter, depending on their requirements.
This type of signal service is best suited to serious investors who have at least $50,000 in funds to trade and are looking for a hands-off approach to trading. If an investor service is what you’re looking for, pay attention to their fees, average returns, check for guarantees, and take inflation into account.
Signal providers lie in the middle of the spectrum of signals for retail traders. Signal providers will charge a monthly, quarterly, or yearly fee. Elite providers may even use a performance-based fee structure. Signal providers give you access to a dashboard where you can see the signals they publish. Signals will contain the buy or sell price, stop loss and take profit levels.
Unless the signal provider is automated, you will need to execute and manage any trades you make in a timely manner. Signal providers are definitely more affordable than investor service companies, where you can expect monthly prices to be anywhere from $20 to $200 per month.
Copy trading, often referred to as mirror trading or social trading, is the latest craze to come out of the forex signal service market. The concept of copy trading is simple: You pay a fee or make a deposit to gain access to a network of active traders who publish their trade ideas for everyone to see. While some platforms charge a monthly fee, others make you pay a fee to the trader you’re following.
If you find a consistently profitable trader on one of these networks, you can easily copy the trade they make onto your own platform. Some copy trading services can be automated with your platform, while others are completely manual. Expect prices similar to that of signal providers.