Forex Signals Industry Introduction

Many traders nowadays use forex signal services, especially new traders. Forex signals are a type of social trading, and social trading is not a new thing at all. Before trading went online, many people followed successful traders they knew or via media. They would pay professionals for trading tips on hot stocks and currencies. With the progress in technology, more inexperienced people are joining the trading community.

Many inexperienced individuals benefit from using forex signals.

This led to an increasing demand for trade tips from professional traders and analysts. The former professional traders turned trading tips into an industry, and now trading is more social than ever. There are many signal providers who operate in different forms and compete with each other to provide the best service and results. We have divided them into five main groups. The social media and forums group, the MetaTrader community (MQL 4/5), social trading platforms and brokers, automated forex signals, and the signal providing sites.

Social media forums 

The MetaQuotes Software Corporation developed the MetaTrader 4 and MetaTrader 5 trading platforms. It also produced their mobile versions and offered the option of following other traders. This was on top of trading based on your own analysis. In 2011 they implemented the trade signals to their platforms. If you look at the bottom of your MetaTrader platform, you´ll see a “Signals” section. After clicking on it, you´ll see many signal providers and their performance charts. When you click on one of them you go to the MQL4/5 community where the performance history and trades are displayed in real time. Most of these signals are available for a subscription fee, but there are a few free ones. This is a good option for some extra income for the successful traders who do not have big accounts.

Social trading platforms/brokers

Brokers have seen the increasing demand for trading signals on financial instruments. Many have started to catch up with the signals industry. They build social trading platforms where traders can see other traders’ history and statistics. They can follow the most successful ones, known as leading traders. You can build a portfolio of traders and follow them either through manual or automatic signals. One of the most famous brokers in this category is eToro, but there are many others like TradeCrowd, Tradeo, etc. This kind of service is like the MQL4/5 signals. The difference is that you can follow traders for free while on the MQL4/5 network you have to pay a registration fee to the signal providers.

Automated Forex signals

During the last 10 years, forex traders and mathematicians have paired with developers to come up with many software packages to quickly execute trades. These are called expert advisors (EAs), algorithmic trading software, or trading robots. If you have a look around the net, you´ll find thousands of people who sell these software packages and claim to have the holy grail. While some of them are successful and genuine, many others are quite useless. Since the trading robots use mainly price action and technical indicators, the trades/signals they provide do not take fundamental and some forms of market sentiment into account. These sort of signals have the advantage of removing human emotion and are not affected by fear or greed. But at the same time that is their main disadvantage. The financial markets are driven by humans and market sentiment. Market sentiment is a useful indicator if you know how to read it. All the other indicators may point to a certain market direction, but if the market sentiment is in the opposite direction, the signals may fail. The EAs don´t take into account the economic news and other events. These have a great impact on the financial markets, and it´s why I´m not a big fan of automated trading.

Manual Forex signals 

The FX Leaders forex signals terminal

Last, but not the least, are websites that specialize in trading signals. FX Leaders fits into this category. Some of these websites are free, but most of them need a subscription fee which varies from 40$-50$ up to 500$ per month. The signals are published in the signals section of the websites and sent to the clients’ email inbox. Many signal providing websites use experienced and professional traders. That is their biggest advantage. Here you have a team of analysts working together and bouncing ideas off each other. This is unlike the other signal services where the signals come from one trader and you don´t know his/her experience level.  In this article, we had a brief coverage of how the trading signals industry has evolved. We discussed the financial markets and instruments that are available now. It is ever-expanding to meet the increasing demand. There are several sectors of this industry which we explained shortly. We will cover more in-depth information on each sector on the upcoming articles.

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