Becoming a successful FOREX trader can be a tough journey and it can take years of dedication to achieve even a modest profit. So why not leverage the skills of others who have a proven track record by trading off their forex signals with the MetaTrader 4 platform?
With hundreds of different signals to choose from it can be a tough job in itself to find a signal provider that is suitable for your needs and expectations, so here are a few tips on what to look for and what you should be aware of when choosing a forex signal.
Choosing a Signal
There are several things that need to be considered when selecting a forex signal to use. Performance metrics can vary greatly between different signal providers, but none really stand out more than growth. On the MT4 platform, a signal’s growth is shown as a percentage alongside the time the signal has been live for. To get an idea of weekly performance, simply divide the growth percentage by the number of weeks the signal has been live for.
Next, you’ll want to have a look at the drawdown figure. This is the maximum equity loss that the signal has experienced. Now everyone has a different tolerance for risk, but anything above 30% can be quite hard to stomach. It’s also important to remember that a forex signal can experience future drawdowns that are larger than historical drawdowns.
Now, you’ll want to dive into the win/loss ratio. This can be somewhat confusing when choosing a forex signal because often people are uncomfortable accepting that losses are just part of the forex game. Whilst a high win rate looks good, it often means that the wins are of a small size. Conversely, a profitable forex signal with a low win rate often has winners of a much more significant size compared to the size of losses. You need to select a forex signal with a risk/reward ratio that you’re comfortable with.
Ok, so you’ve found the forex trading signal that has the growth, win rate and drawdown that suits your expectations and you’re ready to start using it to trade. Now, before you jump the gun and whack it on your live account you may want to run it on a demo account first so you can see how it works in real time.
Why’s that, you ask? Well there are a couple of reasons why. Many forex signals are profitable because they’re dependent on things like super low spreads, or different margin requirements to the broker that you use.
Use a VPS
Because trade setups can occur around the clock, it’s important that your platform is up and running so you’re able to trade the forex signal when it occurs. Of course you can leave your computer on all day and need throughout the week with MT4 running, but what happens if your platform shuts down, or even worse, your computer crashes?
This is why many people who use forex signals run them on a dedicated VPS. This is an affordable way to ensure that you’re able to trade signals 24 hours a day.
We hope you enjoyed reading about forex trading signals. As you can see, there are a few things to consider, it can be very rewarding and a lot less stress than manually trading yourself. Again, it’s always important to remember to test signals on a demo account before going live. Best of luck in your search for a consistent signal provider.
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