There are many reasons one could start looking for these, even though you are also learning or are already an experienced forex trader. You might want other income options, diversify your trades with some other trading type, have signals when you are not in your trading time, and so on. This option is more appealing to people looking for a quick fix. They have tried, they have burnt in forex trading. Now they can just skip the learning process and jump in the boat somebody else is driving. Sounds great, nothing to object with a reasonable plan for bonus income.
Unfortunately, this is a very good base for dishonest people, or scammers, to take advantage of that enthusiasm. Again, it seems that there is no easy path to get rich quick. This article will deal with possible scams you can get into if you are not informed and also give you a hint of what to expect when you find a legit service. There are many ways of how a signal service might be an actual scam, we have categorized red flags and scam patterns so you can filter those scammers out in your search.
The task of finding a legit forex signal service is difficult, especially now when the internet is flooded with dishonest ones. Approach this task with a healthy dose of skepticism, it will help you to find inconsistencies. The notion of an income generated just by copying someone else makes a very low barrier to entry, attracting all the people looking for a quick fix, people who are easer to scam. If you question everything the service is promoting, you will have an inherent edge.
Let’s start with the first warning sign. The “service” is available on channels only. Social media channels like WhatsApp, Viber, Telegram, or Instagram. If you find out they require you to pay some fees to enter the channel without any other page or reference, you can with almost complete certainty say they are a scam. This is also a warning for anyone who honestly wants to start this business, find a better way to establish a platform got your signals, smart people will not find or trust you this way. Scammers like these channels. Why not use better and probably the best places to make yourself known like YouTube, Facebook, Tweeter, and many other platforms?
Just have a small group of people following you and by the word of mouth you should snowball followers exponentially. Well, scammers will not last long here, it will be a matter of days before they are exposed and could even become an easy target for criminal prosecution. So even a dishonest business has a risk to it that needs management. Honest signal service providers will still have a reputation to preserve, even if their signals are of high quality there will be bad reviews from people that fail to follow simple instructions (there are so many you would be surprised). Well, we guess this is just the nature of this business with no barriers to entry for consumers, everyone is interested.
Scammers will not be completely anonymous of Telegram or IG, but they have enough obscurity so they can scam a substantial group of people without prying eyes of justice. Whatsmore, these groups are easy to make and the whole cycle can start over. This should not inspire you, it is also a way to make money, you will just belong to the dark side to ruin what good is left about forex trading. Search out for the website or testimonial if they exist about the group, with good results you can check.
We have noticed a lot of these “scam chat groups” are younger, rarely passed the fourth decade. Interestingly, both the victims or customers and the scammers have a similar mentality. They both seek the easy way to gather substantial income in a short time. Although scammers have a plan on how to do it and they have better success than their customers. Another interesting pattern here can be noticed, when we use common sense, would you invest or trust the quality of a signal service run by mature traders in their 40s, or 50s, or rather a young group that rarely passes 35? Common sense says to go with the more experienced ones. We are sure there are talented and devoted trading killers in their 20s, this is just an observation we made. Forex trading, at least on the professional level, requires a long hard work on testing and forging the mindset for this market.
Only repetition, learning by mistakes, and swallowing most of the “unexpected” out of forex can make you experienced enough to become a signal provider. The signal whose many accounts depend on. Responsibility only experienced mind can take with confidence. All this, of course, needs time, unlikely to be a part of someone’s life when they are just out of high school. Whatsmore, even young great forex traders are simply better when they get older, their systems are improved, they have more irreplaceable experience and of course more consistent performance. A good and different perspective for young traders comes from the positive traits of a young mind. They are really great with new technologies, they can soak new concepts which in turn make interesting automated trading software solutions. EAs will take control of their early trading psychological challenges and now we have another type of signal provider and “traders”. We can go even further and say experience plays part in the making of EAs too, let’s say a combination of an experienced trader and a youngster who is great at making EAs from expert concepts produces rare masterpieces.
With experience, you will notice marketing tricks which are common flags of a service or product without substance. Have you noticed the marketing elements for signals and other parts of the forex business? Unfortunately, these marketing elements are common. They usually involve promoting an expensive, extravagant lifestyle, featuring supercars, champagne, private jets, girls, and suits. These target men, as they are more interested in forex (more on this topic in Women in Forex). Additionally, they target men who are still affected by this marketing. Be smart to them and they will filter you out, you are more likely to be a problem than a “customer”. Aside from the internet, TVs and mass media channels are full of it. You will see a sharp increase in specialized marketeer numbers for every segment of internet published product or service platforms nowadays. The question is, do you belong to this group of people affected by this type of marketing? If you are now you know better, if not your chances of finding a legit signal provider are very good. So let’s go deeper into other warning signs.
A legit signal provider will promote their results. Common sense says you want to invest into a money-making business, or at least the business with high and probable reward compared to the risk involved. Now you will want to measure the rewards to risks ratio by looking at their past performance. Do you still have that suspicious eyebrow? Good, you will need to check this performance sheet (more on this later). If they do not have one, but they have good reviews, check that too. Is the rating sample large enough to confirm the positive outlook of reviewers? Are the reviews informative and not too short?
If yes, then maybe you have something worth your while, still, your work is not over, most of the websites without the performance track record are a well-obscured scam. These scams are even reputable, a massive amount of marketing campaigns are funded to keep the bad covered and the “good” pushed to your face. The accessibility of the internet makes this easy, making your work to find the truth harder. Summing the elements, the websites would contain a very well and flashy presentation. Optimistic, inexperienced visitors will feel like these “pros” know what they are doing, just look at these charts, animations, pretty customer support girls, and percentages! “With this percentage gains, I could buy…soon!”. This should not be your thinking.
The group has extensive experience within financial institutions and financial investing ventures. Well, does this mean they are great trading forex? The short answer is no. The long answer will tell you why it is probably a “legit scam”. This experienced group has left corporate life so they can maintain their signals service, it is a better business option to them isn’t it? Okay, what about the fact financial institutions can generate mediocre results at best for you. They are not something a professional trader would aim for. To uncover it all in a funny way take a look at the book by Fred Schwed “Where Are the Customers’ Yachts?: or A Good Hard Look at Wall Street”. Put simply, they have experience making money from you more than for you.
Financial flashy words are making them educated, geeky, impressive, dedicated performers. Most websites may choose to go with this language or a simple approach in line with your age. Complex technical expressions will make you believe they know what they are doing for sure, a good place to invest. Well, it is another method of how to make you trust them. If you go a bit deeper, you will find no arguments their AI or algorithms are as good as they are promoted. Pay attention if the phrases tell you anything you can check, refer to, or measure. If not, this is a red flag sign to move on.
Back to the results sheet you need to check. Now, you may see some gain numbers on the page. How easy is to put some number in there? Takes you a second, is it backed up? Go on and inquire about how they attained this number by showing you their trades journal. Is this table legit and matches the data in your MT4 or other platforms? More often than not the table will be completely made up if you are even given one. After reading this it is not likely to be fooled, but know that even true results may not be completely what you want. Here is an example, the signal group could tell you they made an exaggerated figure gain, like 3000 pips per month. This could be true, or better said half true. The 3000 pip gain part is true but the other part about the 3500 pips lost is not mentioned. This is a nice example of wordplay and statistics multi presentation or interpretation.
Nobody told you a lie, you just did not ask, you have assumed the losing in the equation. On top, you do not have arguments to accuse them of lying. Stating the more than 80% win rate is also a sign of this, some of the losing trades are omitted even when every trade matches. Similar is when we look at some EAs for sale, you will see extreme win ratios above 90% but you realize they are made on a very high number of short trades, and those 10% losing trades negated all the gains or worse. Inquire about the net results.
Speaking of net results, there is another interesting way to show great, truthful but deceiving performance. You may see a very high pip gain, for example, 3000 pips per month, including the losses. This is impressive, right? If you have assumed all is made on spot forex, you are deceived. Making 2000 pips on index trading is not great and an average trader can do it consistently. Some assets like Indexes, crypto, or precious metals move at extreme ranges when compared to spot forex. Therefore, pip gains from these assets carry different weights. If the result is all made from forex, know there is even more reason to be skeptical. An additional step to check is the period covered for this performance. Is it just a result of one month while all others do not even come close? Are the trades positions extremely big or only on exotic currencies?
One of the hardest to crack schemes is the dual lines approach and averaging packages. The Dual Lines method applies to many scam services, but let’s focus on results presentation. Scammers open two demo accounts or more. On one they pick a very volatile pair, probably an exotic and go long. The other account has a short position. Now all they have to do is wait, after some time they will have one loser and one winner. If they have more accounts, half will probably be very nice performers. Losing accounts are closed, winning ones are promoted to you or anyone willing to go with their signal service.
The Dual Line can even go trade by trade with their customers. They will tell you to go short and tell some other guy to go long. At the end of a few cycles, they will have one who is absolutely trusting their “service”. If they are using the channels mentioned above, they are still under the radar. Whatsmore, they can close the channel and start a new with a winning account they made in the previous venture. Nothing shady with the results right? Sports betting applies the science of averaging, bringing you various packages that perform but in reality, they are a “truthful half”. Everything is legit here, no lies. Is it ethical? Another debate.
The results are outdated. Many will miss this red flag, even it is obvious. You may see EAs performance spooling gains until 2019, for example. No strong trends in the forex market and the account is shut down after a few losing streaks, but the overall performance is legit and good looking. Well, the website promoting this EA or signal service is still online, surprisingly. Guess what, they will still sell you the signal, like usual. Many do not pay attention to this and it is spreading the scam industry to the point forex becomes regarded as a scam at first thought.
After all of these flags, you may still think a signal service is worth the trouble. Here is what you need to consider, besides looking for the mentioned signs. Every signal service you have paid needs to be tried on a demo account. Assumed that the price of signing up for a service is more than coverable by the gains you will potentially have, you need to be sure the results from this forward testing matches. Since you are going to follow them for a long time, 2 months of demo testing will save you the trouble of risking real money. Note that you will need to have an optimal account size for this service to be profitable in the long run. Besides, you should consider investing only money you can afford to spend and not care about it, like the account is already gone.
Legit signal providers are rare, but it is even more rare to find the service in line with your lifestyle. The signals you are about to get could be at times you are sleeping, at work, or simply not convenient for you. Another reason to demo trade, but know that you are not a master of your account (time) and bound to signals pace.