The Trading Bible Questions Are Forex Signals Worth it?

Are Forex Signals Worth it?

By Stefano Treviso, Updated on: Sep 25 2023.

Forex signals are not worth it due to the fact that if anyone did develop a successful Forex Signal generator they should be using it instead of trying to monetise it by charging to provide signals.

In the financial trading business, there are a lot of sharks always coming up with new ways to make money and remember, for them, making money is not about actually trading but rather how to get money from the people that want to trade. Our industry is plagued by:

Fake trading gurus that show a fake lifestyle
Fake signal providers trying to get money
Brokers that are actively looking for ways to make you lose more money as this is the way they earn profits

Within an industry of this kind, the most expected outcomes are:

Smart individuals or companies will try to create signals and either sell them by themselves or sell them to brokers
Brokers will acquire signals in order to boost their client's trading activity thus increasing their client's losses which in turn results in more profits for them

To justify everything we said above, let's try to really understand the Forex Signals business.

Lets imagine that a Forex Signal Seller develops a successful trading strategy and an automatic way of transforming it into actionable signals. Now he's weighing the decision of either selling them as a service against using them himself.

Selling Forex Signals as a service	Using his own signals
If each signal subscription is sold at $50 per month, once he reaches his first 10,000 customers he'll be netting $500,000 monthly. His risk is 0 as he doesn't care much how profitable are his customers and terms and conditions prevent him from being liable.	Assuming his signals are successful as most of them claim. He decides to raise capital with investors and now he has $50,000,000 available to trade with the beloved signals. Assuming his signals are so great and he can generate a 20% monthly return, he'll be making $10,000,000 monthly. The trader won't be dealing with small business, customer support, small monthly subscriptions and his only concern will be the risk management in the trades.

Selling Forex Signals as a service

Using his own signals

If each signal subscription is sold at $50 per month, once he reaches his first 10,000 customers he'll be netting $500,000 monthly.
His risk is 0 as he doesn't care much how profitable are his customers and terms and conditions prevent him from being liable.

Assuming his signals are successful as most of them claim. He decides to raise capital with investors and now he has $50,000,000 available to trade with the beloved signals.
Assuming his signals are so great and he can generate a 20% monthly return, he'll be making $10,000,000 monthly.
The trader won't be dealing with small business, customer support, small monthly subscriptions and his only concern will be the risk management in the trades.

After reading the above table, tell me, who in their right mind would say that they'd rather open an online shop and provide customer support instead of just trading their "successful signals" and making millions while enjoying life and talking to as few people as possible?

No one would choose that!

But the thing is, no one is actually providing successful signals to start with as if they did, their signals would be more profitable being used by them rather than being sold as a subscription service.

The real truth is that if you want to be successful at trading, you need to learn how to trade, how to build your own strategy and you need to keep quiet when you find a successful one, want to know why?

The nature of the markets doesn't allow for many participants to execute a strategy successfully.

In any market, there are buyers, sellers and order books full of limit orders providing liquidity. Every time a trade is executed, it changes the current market situation. For example: if there were only 10 Apple shares available at $2 and you bought them, the price will move to the next available price which could be anything (eg: $2.1).

This means that even in highly liquid markets like Forex, a mass strategy won't work as if enough people execute it at the same time, they will move the market thus rendering the strategy useless.

Bottom Line

Forex Signals are not worth it for 2 reasons:

If a person or company did have profitable forex signals, they should be using them instead of selling them at a discount as a service. If they do choose to sell it as a service, it shows you by fact that they are not useful at all, otherwise they would be using them.
Signals in any market regardless of it being Forex or not, do not work by the nature of the market itself. Any action will generate a movement and the more people take the same action, the bigger the market movement. If 10,000 people buy or sell a penny stock, they will move the market thus rendering the strategy useless.

Remember, don't let anyone fool you. Logic will always provide the answers no matter which fancy explanations anyone wants to give you. Learn to develop your own strategies and make sure that your money's fate is in your own hands.