Last Updated on 13 July, 2021 by Samuelsson
The advent of the internet and the proliferation of online retail and discount brokers made financial trading very popular. Many people have taken to forex, commodity, or stock trading as a part-time business to complement their income. In fact, some even quit their 9-5 jobs and took to full-time trading.
While the influx of retail traders has boosted liquidity in the market, a lot of retail traders don’t make money from trading, and the main reason is that they rush to trading thinking it’s just about clicking the buy and sell button without first learning how to analyze the market to find good trading opportunities. Trading might look easy, but it is very difficult if you embark on the journey on your own.
It takes a lot of money, time, and patience to truly learn how the market works and acquire the right trading skills. But you can still trade successfully and gain all the benefits from trading — extra money and more comfort — without having to go through the tough process of learning how to analyze the markets yourself. This is possible with the help of trading signals.
In this post, we will discuss the following:
- What a trading signal is
- Where to get trading signals
- Types of trading signals
- The things to consider when picking the best trading signals
- Our picks for the best trading signals
- How to use trading signals
What is a trading signal?
A trading signal is a service that notifies you of a trading opportunity in a specified financial market. This service is usually provided by an experienced trader or a company that specializes in market analysis. The signals are often sent via SMS, email, Skype, Telegram, WhatsApp, or within a trading platform.
The signals help new and inexperienced traders to know when to buy or sell a particular financial instrument to stand a chance of making a profitable trade. The signal also has information about where the trader should set his or her stop loss and profit target. Some signal providers also go try to explain the reasons behind the trade signals and may even attach charts with their analysis, which can help the traders to understand how the market works and the factors that move the market.
It doesn’t matter whether you’re a beginner or an advanced and experienced trader, trading signals are one the most important tools you should have in your trading arsenals if you intend to be a profitable trader. There are a lot of people parading themselves as trading signal providers, but many of them are not worth a cent. You should be careful with the type of signal provider you choose. What should matter to you should be the quality of the trading signals and not the cost.
High-quality trading signals don’t just tell you when to hop into the market and the direction to trade, but also include detailed information about the levels to set your Stop Losses and Take Profits. Just giving you the trade entry is not enough. Some good signal providers, not all, may give you a free trial period; if you see such an opportunity, don’t hesitate to use it to assess how suitable the signals are to your trading personality and schedule.
Where to get the best trading signals
There are many different signal providers out there, serving traders in different markets. Some provide forex trading signals, while some focus on the stock market. The kind of signal provider you go for depends on the market you want to trade.
A signal provider can be an experienced trader on any of the popular trading platforms who decides to sell his/her trading setups to other traders on the platform. For these kinds of signal providers, the trading signals are sent as an online notification on the platform. Online trading brokers also provide trading signals to their clients via this method. In some trading platforms, the signals can be automatically executed.
Some signal providers are trading companies that send their signals via emails, SMS text messages, Telegram messenger, WhatsApp messaging, or their websites where you can log in to access the signals. Whatever the case, what matters is getting reliable and profitable signals that suit your trading personality and style.
Your trading style determines the kind of trader you are and the timeframe you trade on. The trading signal you choose should be in line with your preferred trading timeframe. One more thing, if you are to go for intraday trading signals, you will need to choose a signal provider in your time zone. But how are trading signals generated and what are the types?
Our picks for where to find the best trading signals
There are many trading signal providers out there, but only a few of them are worth your money. It is not easy to find reliable trading signal providers with a proven track record of success, but we have searched the web and came up with a shortlist of places where you can quality trading signals that you can try out.
This swing trading signal service focuses on the U.S. stock market. The Robust Trader swing trading signal service, along with the swing trading course, is operated by a team of expert traders headed by a former Merrill Lynch trader with more than 20 years of trading experience.
Launched in 2013, the Robust Trader Swing Trading Service has 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. Amazingly, the results are pretty good, with more than 74% winning trades and a profit factor of 2.2.
Interestingly, the signals are easy to follow! Once you sign up, you will receive swing trading signals for U.S. stocks daily before the market opens! The fee is very pocket-friendly.
Learn 2 Trade is a UK-based forex and cryptocurrency signal service provider that caters to intraday traders, and their signal service is based exclusively on technical analysis. They send about 3-5 signals each day, on cryptos, forex, indices, and commodities, to their subscribers via Telegram, and the signals often come with chart analysis and market trends.
They claim to have an 82 % win rate, with an average monthly gain of 30-40 %. Their fee is fair at $35 per month, and the monthly cost goes down if you choose a 3-monthly or 6-monthly plan.
This provider is a UK-based forex & analysis hub that offers free daily market analysis to everyone but also provides signal services to their VIP clients. Their signals are based on price action, which the provider is famously known for. The school has a price action trading course.
The forex signal service is said to have about an 81% win rate, with an average monthly gain of 29-38%. The monthly cost is fair and goes down if you choose to upgrade to yearly billing. Alternatively, if you open an account with their recommended broker, you can get free lifetime access to the VIP group and trading signals.
Launched in 2012, ForexSignals.com offers a beginner-friendly interface with the opportunity to also make use of advanced trading features, such as copy trading, which allows you to automatically copy the trades of highly successful traders.
This forex signal provider claims that it belongs to the top 1% category of successfully forex traders. They strive to ensure great transparency and provide professional customer service. Also, they give their clients access to live trading forum where traders share their ideas. They have different categories: The Professional ($47.25 per month billed yearly at $567 per year), The Apprentice ($97 per month), and The Committed ($49.5 per month billed every 6 months at $297).
This trading signal service focuses on the forex market. It was established by a team of successful traders with over 98 years of combined experience in the forex market. One thing about Pips Alert is that they think that charts and further analysis are not necessary for their trading services, and their signals are mainly for day trading, mostly sent during the London and New York market sessions.
You can access the trade signals on the online dashboard platform. However, the trading results they provide are not always up to date, which can be a turnoff. Hence, the signal provider needs to do a better job by providing prompt trading results and trading strategy information.
8alert doesn’t just provide signals but also opens and closes trades for you because they offer a combination of trading signal service and trading robots. Hence they. They have many trading strategies and follow different trading styles, such as swing trading, intraday, and long-term, and they cover a wide range of instruments and analytics.
They also have some risk protection features, such as an automatic stop loss function, lot size restriction that is defined by the user, and money management features. You can access all the services with a mobile app, which you can use to check the charts of the preferred instruments and also monitor active trades.
MQL Signal Marketplace
There is a community of experienced traders on the MQL5 marketplace offering their trading signals. You can analyze the trading history of those traders to know the ones to subscribe to their signal services. The interesting thing is that the signals are sent within the trading platform.
Many signal providers are available in the MQL5 community, and you can easily gain access to their signals on your MT4/MT5 account. Simply click on the ‘Signals’ tab after you have signed up on the MQL5 community account. You can sign up directly from your MT4 or MT5 trading platform.
In choosing an MQL signal supplier, you should focus more on parameters like maximum drawdown and profit factor than on win rate and returns. The profit factor is the best measure of the profitability of a signal system, while the maximum drawdown shows what the downside is like. If you can’t stomach that level of drawdown, avoid that signal supplier.
Forex GDP is a popular trading signal provider. They focus on the forex market, and they offer their customers a free subscription plan with up to four signals a month, which has the potential to generate between 90 and 150 pips in profit. Their free signals are delivered via WhatsApp, providing only basic entry and exit levels.
You will need to subscribe to the paid plans if you want to get additional features and higher profit potential. The paid plan gives you 8-12 trading signals with a target profit of 300 to 700 pips. It provides you specific entry and exit levels while offering email support for as many as 6 more trade ideas in addition to the trading signals.
You can subscribe for the premium plan at $84 per month, but the price goes down to $69 per month for a 3-month subscription, $59 per month for a 6- month subscription, and $49 per month for a 1-year subscription. There is also the Supreme plan that gives with 16-25 signals, including signals for commodities, with a target of 700-1500 pips. The subscription fee is $147 a month, the price declines to $126 per month for 3 months, $111 per month for 6 months, and $99 per month for a whole year.
JKonFX is a trading signal service operated by the veteran trader Joel Kruger. The signal service caters to novice and seasoned traders alike and is based on six market analysis disciplines that include technical analysis, fundamental analysis, dashboard analysis, a trade journal, trader psychology, and bank reports. He refers to each one of those six factors as the fundamentals and discusses them daily via a video presentation or information published on the website.
There are two plans in this signal provider’s service:
The $30 per month plan includes 5 weekly technical and fundamental analysis reports, at least 1 weekly Market Movers Report, and at least 10 Daily Bank Reports.
The $45 per month plan offers you all of the previous offerings plus 3 trade finder dashboards, priority customer service, an export trade journal history, and instant trade alerts.
eToro is a popular copy trading platform that provides experienced traders with the opportunity to sell their trading signals while offering new traders the capacity to copy the trades of those experienced traders. There are different parameters traders can use to assess the performance of the traders they’re considering to copy.
Things to consider when picking the best trading signals
There are many things you should consider when choosing the right trading signal service for you. These are some of them:
- Nature of signal: You have to consider the nature of the trade signal you want to subscribe to. Will you have to manually execute the signal or is the execution automated? Automated execution (copy trading) can only be possible within a trading platform.
- Your trading personality and style: If you prefer to have control over your trade executions and choose manual type, you need to be sure that the signal you want to subscribe to suits your preferred trading style. If you love swing trading, it makes no sense to be receiving intraday signals.
- Time zone compatibility: If you prefer intraday trading, you must consider whether your time zone is compatible with that of the signal provider. You don’t want to be receiving signals in the middle of the night. Swing trading doesn’t have that issue.
- The signal provider’s track record: Of course, you need to be sure that the signal provider has a track record of success and that you can trust their signals.
Types of trading signals
Trading strategies can be broadly grouped into fundamental and technical analysis methods. Different signal providers use different approaches for analyzing the markets to find trading opportunities. Some base their analysis mainly on fundamental factors, while some concentrate on technical analysis. Many also use a combination of both fundamental and technical analysis.
Fundamental analysis focuses on those economic and business factors that can affect the value of an asset. For a stock, the fundamental factors include such things as the company’s management, earnings report, debt profile, and products under development. In the case of the forex market, fundamental factors include the country’s GDP, interest rate, inflation reports, employment data, wages increase, and others.
Technical analysis, on the other hand, Implies studying the history of price movement to predict where the price might go next. With technical analysis, all the analyses are done on the price and volume charts. You simply study what the price has done in the past and what it is doing at the moment to know what is likely to happen next.
Whatever the method of analysis, a trading signal can be manual or automated. What we mean by a manual signal here is a trading signal that you have to manually execute the recommended trade. In this case, you receive the trade signals as SMS, email, Telegram, or WhatsApp message. You can then decide to open a trade as recommended in the signal or not.
For automated signal services, also known as copy trading or mirror trading, your trading account is linked to the signal supplier’s account such that any trade he enters is automatically replicated in your account in a manager that corresponds with your money management preferences. You will have to set your money management parameters yourself before copying the trade signal.
How to use effectively trading signals
While trading signal makes trading a lot easier by taking away the difficult process of market analysis and looking for tradable opportunities in the markets, you need to know how best to use the trading signals to get the best result you expect. Before we go into the factors to consider when implementing a trading signal, let’s examine how a typical trading signal comes.
Most trading signals tend to show the following:
- The particular instrument — stock, commodity, or currency pair — you will be trading
- The direction you should trade — buy or sell
- The entry price
- The stop loss level
- The potential profit target
- Some comments, which may include charts and explanations of the trade setup.
Now, let’s say you have all the information that you need to basically make a good trade. But there are other peculiar factors you need to consider if you are to make the best out of your trading journey. The two main factors are money management and account growth plan.
Here, you are concerned about how much of your account you are willing to risk in each trade. The signal provider doesn’t know how much you have as your trading capital and how much of it you can comfortably risk per trade. You, alone, can determine that, but the rule is that it’s best to risk only 1-3% of your account capital per trade.
Whatever risk percentage you choose, you convert it to the dollar amount, which will determine your trading volume and use of leverage. In the case of forex or CFD trading, trading volume refers to the lot size, while in the case of stocks, it refers to the number of shares you can trade.
In fact, your trading capital would even determine if you can buy the recommended stock or not. For instance, if you have a $1,000 capital and there is a trading signal for a stock that is trading at $3,500 with a 10% stop loss level, you will need to risk $350 for that one trade, which is more than 3% of your $1,000 trading capital.
In this kind of scenario, it is either you don’t trade the stock or you trade with a platform that allows fractional stock trading. So, you should be sure you have the necessary capital and platform for your trading.
Account growth plan
Another factor to consider is your account growth plan. Will you reinvest every profit or withdraw some or all of it every month? You need to have a plan for your trading profits.
There are many signal providers out there, but when it comes to stock trading, the Robust Trader is your best bet.
Here you can find our archive with all our swing trading articles.