Last Updated on 3 November, 2022 by Samuelsson
It is true that trading signals allow you to participate in financial trading without investing too much time and effort in first learning how the market works and doing the analysis yourself, and it is perfectly fine to make use of trading signals. But can you make money from trading signals?
So, can you make money from trading signals?
The answer is mixed. Surely, you can make money from trading signals if the signal has been proven to work with a verifiable track record of success, but it’s not always that simple. If the signal is manually executed, it must match your trading personality and style and be delivered in a way that allows you to implement it at the right time to gain the expected trading edge.
In this post, you will learn the following:
- What trading signals are
- How trading signals work
- Where you can get reliable manual trading signals
- The pros and cons of manual signals
- Why you may still fail with a profitable trading signal
- How to make the most of manual trading signals
- Why you should not fall for free trading signals
- How to know a worthy trading signal provider
What are trading signals?
Trading signals are notifications sent by a signal provider of trading opportunities in any financial market. The signals are provided by an experienced trader or a trading company, and they are often sent via SMS, email, Skype, Telegram, WhatsApp, or delivered within a trading platform where the trades can be automatically executed.
A trading signal is usually manually traded but can also be automated, in which case it is referred to as copy trading or mirror trading because the receiver’s trading account is simply copying the trades taken by the signal provider. For manually executed trading signals, the provider sends information about the trade entry, stop loss, and profit target, while in copy trading, the signal supplier’s trades, with the stop loss and profit targets, are copied to the receiver’s accounts.
Some providers of manually executed signals also attach charts and explanations of their analysis in the signal package they deliver to their subscribers. This enables them to understand the reason behind the trading signal, which may also help them to trust the signals, as well as enhance their trading knowledge.
Whether you’re a beginner or an experienced trader, trading signals can help you become the profitable trader you’ve always wanted to be. Be careful with the type of signal provider you choose though — not all trading signals are useful. But if you can find quality trading signals, they can make you money when properly executed.
How do trading signals work?
Trading signals take away the hard part of trading, which is analyzing the markets to find tradable opportunities. So, whether the trading signal is manually executed or it is copied automatically into your trading accounts, you don’t get to do much work again as the major part of the work is done for you.
As we stated earlier, there two forms of trading signals. There are manually executed trading signals where the provider has to send the trading information via an email, Telegram, SMS, or WhatsApp. On the other hand, there is copy trading which is done directly on a trading platform with the provider’s trades automatically replicated in the subscriber’s trading account. Let’s take a look at the differences.
Manual trading signals vs. automated copy trading
|Manually executed trading signals||Automated copy trading|
|Trading signals are manually sent to the subscribers for them to execute on their trading accounts.||Trades automatically copied into the subscriber’s account|
|The trading signals are delivered via a messaging app, such as email, Telegram, or WhatsApp. The trader can decide whether to implement the recommended trade on his trading account or not.||Works within a trading platform. It is an automatic execution.|
|There may be a delay in execution||No delay in execution|
|Can be affected by incompatible time zones in intraday trading||No time zone issues|
|Best for swing trading||Best for intraday trading|
Where you can get reliable manual trading signals
If you intend to trade real stocks, especially the U.S. stocks, the best trading signal service you can get is the Robust Trader Swing Trading Signal Service. Launched in 2013, the Robust Trader Swing Trading Service is a manually executed signal service with a solid track record better than what you can get anywhere else, and the service is very transparent, with proven results displayed on the website.
Once you sign up, you will receive swing trading signals for U.S. stocks daily before the market opens! The signals have a high win rate and profit factor. Interestingly, the fee is very pocket-friendly.
Why the Robust Trader Swing Trading Signal Service is the best
When it comes to swing trading the stock market, you can’t get it better anywhere, and here is why:
- A proven track record with more than 6 years of history of profitable trading signals
- The results are pretty good, with more than 74% winning trades and a profit factor of 2.2.
- The service is operated by a team of expert traders headed by a former Merrill Lynch trader with more than 20 years of trading experience
The pros and cons of manual trading signals
Manually executed trading signals come with some advantages, and these are some of them:
- The signals are usually based on an in-depth fundamental analysis along with technical analysis done by trading experts.
- The signals are created by people with real experience and understanding of the market after back-testing and front-testing the strategy to be sure that it has an edge in the market.
- You have the opportunity to decide whether to execute the trading signals you receive or not, and you can determine how you want to execute it, including modifying the profit target if the market condition calls for that.
- You can learn from the explanations that accompany the trading signal, including the chart analysis if there is one.
- Executing the signals yourself offers you that feeling of being a trader, unlike in copy trading where you don’t participate in trade execution.
- You have more control over your trading account and can decide when to trade and when to stay away from the market.
Despite the benefits, there are some drawbacks to using manually executed trading signals, and these are some of them:
- There is room for your trading emotions to influence your ability to effectively execute the signals you receive.
- Delay in execution can affect the performance of the signal, especially for intraday trading that requires fast execution. This is not the case for swing trading.
- For intraday trading, if your time zone does not match the signal provider’s time zone, the signal notifications may come when you are sleeping at night.
- You may be tempted to micromanage the trades since you have complete control.
How to make the most of manual trading signals to increase your chances of making money
You have to effectively implement the trading signals you receive to have the chance of making money with it. To achieve that, here are the things you need to do:
- Consider your trading personality: Your personality should determine the style of trading to adopt, which, in turn, determines the type of manually executed trading signal — intraday or swing trading — you subscribe to. If you opt for copy trading, your personality may not matter because the trades are executed automatically.
- Ensure you’re in the same time zone with the signal provider: Be sure you are in the same time zone with the signal provider, especially if you intend to do intraday trading. It will make it easier for you to be ready to execute the trade signals.
- Be ready to execute the trades at all times: Execute your trades promptly. Any delay might reduce the effectiveness of the trade signal.
- Execute the signals as recommended by the signal provider: It is best to execute the trade signal as recommended by the signal provider. There is no need to increase or reduce the stop loss or profit target, as that could affect the performance of the trading signal. It is only when you execute the trades as recommended by the signal provider that you can assess the performance.
- Don’t risk more than 1% of your trading account per trade: No matter how well the trading signal performs, you must not risk more than 1% of your trading account balance in a trade. It is better to grow your account gradually than blow it up.
Why you may still not make money with a profitable trading signal
You can have profitable trading signals and not make money trading them. Trading is more than just getting a quality trading signal. The psychological skills necessary for the proper execution of trades is as important as having quality trading signals. Without those skills, you may not be able to properly execute the signals you receive.
You may either start modifying the stop loss or profit target or start to micromanage your trades. Another one is the issue of fear, which can creep in if you have a series of losses not knowing that losses are part of trading. Fear can make you stop taking new trades, but the thing about trading is that there is no way of knowing winning trades beforehand. So, you need to take all trades because that one you do not take make be the winner.
There is also the issue of greed, which can manifest in different ways. One common way is the use of excessive leverage — trading more volume than your account can comfortably carry — because you want to grow your trading account at a faster rate. While leverage increases your profit potential, it also increases the size of your losses, making it possible for your account to deplete faster.
How to know a worthy trading signal provider
Here are some of the things to look out for when judging the capacity of a signal provider to supply you with quality signals:
- The track record: You have to check the track record of the signal provider. Track record here implies so many things, including how long they have been offering the service, the performance of their signals over the years, and how consistent they have been with delivering quality signals.
- The person behind the service: It is good to know the person or persons behind the trading signal. Does he or she have the adequate trading experience to offer such services? You need to find out.
- The cost: While this may not be a major factor to consider, it is important you think about the cost vis-à-vis your trading capital. If your trading capital is $1,000, for example, subscribing to a trading signal that costs $40 per month would mean that you have to make at least 48% profit to stay at breakeven. But it is not a question of cost!
Don’t fall for free trading signals
You may have seen many trading signal vendors who claim to offer free trading signals. Don’t fall for it because there is no free lunch anywhere, even in Freetown. Those so-called free trading signals are not free in any way, since the signal providers still get their money, and here is how:
While the vendors of free trading signals may not directly charge you monthly subscription fees, they usually mandate you to open a trading account with their specified broker. Now, this broker increases the spread and commission for all your trades, and the signal vendor earns an affiliate commission on every trade you make.
Apart from the higher spread and/or commission you pay per trade, the so-called free signals are often designed to generate trade setups more frequently, thereby making you trade more often. The more you trade, the more your free signal vendor earns.
You can definitely make money with trading signals if the signal has been proven to work with a verifiable track record of success, but if the signal is manually executed, you must have the necessary skills to properly execute it.
Here you can find our archive with all our swing trading articles.