Forex signals are a great way of making money in the forex market without putting years and years into your education. In order to make money though, you’re going to need to select a profitable forex signal provider. You might assume that anyone setting up a forex signal service is a profitable trader, but there are actually a lot of pretenders around who are happy to take subscription fees, but can’t deliver profitable results.

Look for a forex signal provider with a proven track record

A forex signal provider who claims to be profitable should be able to readily produce trading results validating this claim. A signal provider could have an incredibly professional looking and expensive website, but take a deeper look and you will be unable to find a shred of evidence regarding profitability. If a provider can’t provide any evidence that they can trade profitably, then you should assume they can’t.

Another thing to consider is the type of evidence presented. 3rd party verified live accounts are the be all and all of trading evidence. MT4 history statements can be easily modified or fabricated entirely as these statements are simple HTML files. A profitable forex signal provider will have nothing to hide and should be able to link you to a system page at Myfxbook or similar.

When analyzing a signal provider’s track record, you should look at key performance metrics to see just how good the signal is. Return is only one side of the coin, you should also look at return in relation to max drawdown, the win rate and relationship between average wins and average losses. Some signals look really good because they risk hundreds of pips to only make 5 or 10 in profit. This approach works well over the short term, but signals like this nearly always blow up eventually.

Look for a forex signal provider with an automated option

Even if a signal provider is profitable, your results can be very different to the providers if you don’t take every trade they do, or trade with a different risk profile. If you are taking your signal providers trades selectively, you can very easily only pick the losers. If you are trading with a different risk profile and varying your risk per trade on a whim, your results could suffer from massive divergence. It would be possible to turn a winning strategy into a losing one simply by risking too much on the wrong trades.

Trade copying software removes all of these issues. Your MT4 account will take every trade the signal provider takes and the risk profile can be replicated exactly or minimized or increased as per your tolerance. Trade copying software if very easy to set up and will ensure minimum performance divergence between you and the signal provider. By setting up your trade copying software on a VPS, you won’t need to leave your computer running all day and you will never miss a single trade.

Trading conditions and choice of broker matter

When you trade with a profitable forex signal provider, it is important you are trading with a top tier broker who offers the best spreads and conditions. If your signal provider is trading with a professional ECN and you are trading with retail bucket-shop, you will be missing out on 1-2 pips on every entry and exit. Depending on how often your signal provider trades, that those pips can add up very quickly. If your broker’s spreads are extremely wide, you could even find your provider’s winning trades are actually losers once copied over to your account.

Another thing to consider is that lots of everyday brokers actually don’t like profitable traders and don’t allow automated trading. Most brokers operate on the market maker model where they profit of client losses and lose money to winning clients. These brokers tend to disallow automated trading in their terms, but won’t actually act on the term unless you are profitable. At that point, you will receive a notice saying your account has been closed, and if you are really unlucky, your broker may even refuse to pay out your profits. As their terms clearly disallow automated trading, you actually won’t have a leg to stand on in this situation.

Selecting a well regulated ECN forex broker like Vantage FX will ensure you get the most out of every trade and your performance closely mirrors that of your profitable signal provider.

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