What is a Trading Signal ?
A trading signal is an activity shared by a trader who declares taking a position on a certain asset, at a certain price, and in a specified direction.
Trading signals can be seen as recommendations, but they are primarily a voluntary share by a trader.
These signals can serve multiple purposes. Groups of experienced traders may share their signals among themselves to exchange market opportunities they’ve found.
Some brokers or companies also share signals with their community to inform them of positions that could potentially be interesting. A signal should not be considered advice, as investment advice can only be provided by licensed advisors.
However, it is very common to see various entities sharing positions, not for advice, but for spontaneous sharing.
To trade signals, investors can choose the trading platform of their choice. The most well-known and widely used by traders is Metatrader (MT4 and MT5), which allows opening and closing trades, using main indicators, and even engaging in copy trading.
What is the purpose of trading signals ?
Trading signals can serve several purposes :
- Sharing opportunities that others might not have noticed
- Benefiting from the knowledge of experienced traders
- Assisting beginners in sharpening their learning
Indeed, trading signals can be a boon for beginners in the midst of learning trading. They can learn while practicing in the markets. Signals can be a way to awaken their awareness, to understand choices, and to conduct a retrospective analysis.
It starts with a shared opportunity and traces back the thought process to understand the trader’s choice. This, of course, depends on the quality and depth of the shared signals.
Indeed, some signals are shared without additional information, which doesn’t really allow for understanding the trader’s choice.
What are the different types of trading signals ?
Several types of trading signals can be distinguished :
- Free vs Paid Signals : Some groups or companies share their positions through a paid access, while others offer free sharing of trading plans.
- Forex, Crypto, Indices Signals : Trading signals can also cover numerous assets and financial markets. The most popular market for signals is arguably forex, which represents the world’s largest stock market.
- Copy Trading Signals : Copy trading is very trendy in the trading world. It involves using appropriate platforms to access trades from traders who choose to share them publicly. Anyone can choose to copy these trades. Some investors simply select investors with good returns to copy all their trades without analysis.
- Automated Trading : There are many ways to automate trading today. There are numerous bots that scrape (extract) information and trades from certain platforms to place them automatically on another. Some trading robots, like most Binance bots, allow extracting trades from traders on the LeaderBoard to receive a notification and decide whether or not to open the position.
How to determine the reliability of trading signals ?
The world of trading signals should be approached with caution. Although they are not concrete trading advice, many people follow signals without thinking about the reasons why the trader decided to open their position.
We advise against following trading signals without understanding the analysis behind them.
However, there are indicators that can help you assess the legitimacy of shared trading signals. Whether free or paid, trading signals should be shared in accordance with certain criteria.
To find the best trading signals, consider the following elements :
- Trader’s History : Is the trader transparent about their results? Can you see a verified and verifiable history? Traders on platforms like eToro or Binance have a history that they cannot falsify. If traders share free trading signals on social networks, always ensure you have access to their verified track record.
- Explanations and Analysis : The best trading signals are shared with detailed explanations and analyses. On the Telegram group InvestX, you can regularly find explanatory videos of all the positions we share, complete with in-depth analysis.
- Precision : Whether it’s forex signals, crypto signals, or others, it’s important that the signal is comprehensive and includes an asset, an entry price, a stop loss, and a take profit (sometimes, traders also propose 2 take profits).
- Availability of the Trader : Prefer crypto or forex signals from traders who are available and can be contacted personally for information or explanations. The more transparent and available the trader is, the better.
- About the Trader/Company : Do they share promises of gains? This is a red flag. If you come across a company (such as an MLM) that promises a certain profitability, it’s a bad sign. Real traders know that it’s impossible to predict any profitability and do not risk it.
- Success Rate : Based on the shared results of the trader, analyze the success rate of the shared trades. They will give you an indicator of the relevance of the signals.
These various elements help to identify signals that are more reliable than others and also to distinguish the best trading signals in the market.
The track record is a fundamental element in trading when you are following traders. This tool is a dashboard of a trader’s historical performance.
Where to find the best free trading signals in 2023 ?
Today, there are many ways to find forex, crypto, and other trading signals. On social media platforms like Telegram or Twitter, there are numerous sharing groups. However, be cautious about the relevance of these groups, based on the elements mentioned in the previous paragraph.
If you are looking for the best trading signals for forex, crypto, indices, commodities, you can download the InvestX app.
We have developed a completely free app, accessible to everyone (beginners and advanced users), where you can find numerous resources, including free trading signals.
Our operating system is also designed for beginners and novices. Indeed, our model is not just about blindly sharing trading plans. Our app aims to support your learning through continuous trading education.
A team of experts is available for any questions and can be reached Monday through Friday.
The trading signals we share are comprehensive and relevant :
- Asset or currency pair
- Entry price
- Stop loss
- Take profit (often 2 TPs shared)
- Explanations of open positions
You can also join our Telegram channel where we share daily trading news. There, you will find market analyses and explanations of the positions we share.
Our traders create explanatory and comprehensive videos on the choices they make, and their real-time market opinions.
Advantages and disadvantages of trading signals
Following traders and their positions can be very relevant depending on your level in trading and what you are looking for. However, caution is essential in the world of trading, and it’s important to always be aware of the risks involved, especially when following the decisions of a third-party trader.
Here is a summary of the advantages and disadvantages of following trading signals.
- Learn faster by having a practical aspect to apply learned theory
- Benefit from the knowledge of renowned traders with proven results
- Gain from in-depth analyses by experienced traders
- Take advantage of a trader’s success rate
- Copy trades from experienced traders without knowing trading yourself (not advised)
- Numerous fake traders on social media
- Promises of profit from certain traders/companies that suggest zero risk
- Past results do not guarantee future outcomes
- Traders sharing false track records or historical results
Our overall review of trading signals
Our general review of trading signals is that they can be a valuable source of information when used correctly.
We advise treating trading signals as data to be utilized, not as definitive instructions. Signals offer an external perspective that should be analyzed and understood.
Forex trading signals, ideally, should be part of a comprehensive learning process.
It’s crucial to be wary of the information source for these signals. Take into account the factors mentioned in this article, such as the explanations of signals, the results, and the trader’s track record, etc.
If you’re seeking the market’s best trading signals while also expanding your knowledge, our app can assist. Each signal is explained in detail to provide insights into trading strategies. It’s not just about following instructions; it’s about learning to analyze and make clear decisions. Our signals are carefully considered, not randomly chosen or copied from others. If this interests you, our app is available for free on the App Store or Google Play Store.