By James Woolley
There are many different ways you can trade the forex markets, and one of the most popular ways right now is to use automated forex trading signals. By using these third party services, you obviously do not have to come up with trades yourself. However there are a few dangers that you need to be aware of.
Whilst you can make some excellent profits letting someone else trade for you, you can still lose money very easily if you are not careful. That’s why you need to spend many hours doing your research to find which signal providers are the most reliable and the most trustworthy.
If you go to a website that offers these automated signals, you will often find hundreds, if not thousands of different providers. Some will be really profitable, whilst others will obviously be less profitable.
However it is not just a case of picking the most profitable providers and then sitting back and watching the profits roll in. If that was the case then we would all be millionaires, and none of us would actually be trading ourselves because we wouldn’t need to.
What you need to look at is the detailed trading history of each provider going back several months. Each signal provider has different ways of generating profits, and some will look to make lots of small profits whilst using really large stop losses. These are the ones you need to be aware of because they may make excellent profits for months at a time, but every so often they may make a huge loss, which could potentially wipe you out.
Similarly you will find lots of signal providers that use excessive stop losses, which they do not believe will ever get hit. Unfortunately the markets are unpredictable and these big stop loss can get triggered.
You need to remember that a lot of the signal providers on these sites may not actually trade their own money. They probably make more than enough money from the people who subscribe to their signals. So whilst they are seemingly making steady profits, they are probably doing so via a demo account, whilst you are putting your hard-earned money on the line.
So as I say, you do need to bear these things in mind when using automated forex signals to trade the markets. It is possible to make a nice reliable income from these signals, but you ideally need to find providers that use sensible money management principles and trade their own real money accounts as well.
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