Welcome traders!
Trading is one thing not for sure: making money quickly and without efforts. One thing human being seems to be addicted, is searching for success without considerable expenditure. Nothing is wrong with this.
Despite I don’t use automated trading and signal services myself so far, I think this is a topic qualified to discuss. There are some reasons:
[B]First[/B] - successful trading is a dream job. Who else is able to work from anywhere at desired times and really independent from employers and other restrictions? But successful trading also is a result of learning as well as in other professions needed. How to do this? You may read books, talk to friends with the same ambition, visit forums like Forex Trading Online: Foreign Exchange (FX) Trading | Currency Trading.
I’ll shorten this, not going here ‘how to learn to trade’. The point is that trading seems an easy thing, but it isn’t at all. Like in other businesses you’ll find al lot of helpful tools and persons – trading platforms, e-books, trainers, coaches and demo-trading with play-money. And best: all for free!
Mostly before learning to trade you’ll learn, that there is an excellent working marketing industry, competing for customers and their money. You’ll possibly recognize that trading currencies still is an unregulated market – you don’t have a central exchange anywhere, you have the wholesale money market managed by large banks.
[B]Second[/B] - you will look for support and tools, which are helping to setup a strategy hopefully to make money. Searching the forums long enough you will come to the question – is there anything which wasn’t tried already? But it is not necessary to have an exclusive system, the often so-called ‘holy grail’. It would be very satisfying to trade with persistent success even others are doing the same. How to participate with other’s success? – No problem, you always find helpful guys trying to sell you the ‘ultimate trading robot’ or other things, promising you to be a wealthy trader in very short time. After thinking about, why a trader/company should sell this ‘ultimate’ for USD 99 or some more, you hopefully decide not going this way.
[B]Third[/B] - after getting a feeling about the difference between something really helpful and ‘the other side’ you are on the way being able to evaluate the benefit of provided support. There are trading rooms, forums with public offered trading strategies, signal services and automated trading-strategies. Because I’m familiar with the MetaTrader (MT4) and this also is a well-known and numerous used platform, I’ll use it to explain the tool ‘robot’. With MT they are called ‘expert advisor’ (EA) and probably can do all, what you want.
I think, a probably bad robot is a closed black-box, because you won’t know, what it really is doing. A possibly good robot is the implementation of a good strategy to simplify executions and trade-management. The same benchmark should be valid for trading-strategies, the more clear and open they are the better. Most successful traders remark, that the right strategy is part of success, the right mind the other part, may be more than 50 percent!
[B]Fourth[/B] - you will be frequently confronted with your lack of time. Not being already wealthy, there is a daily job and you are only able to learn and trade occasionally. Robots are one possibility to get around this, because they are doing their job without you. External traders are another possibility. Since computer technology is grown-up, no phone-calls or paper newsletters are necessary to follow some advice. Signals, meaning recommendations to buy or sell, are received by e-mail and you may even connect your trading-platform to the external provider. If you want!
[B]Fifth[/B] - as mentioned above this industry seems to exist without revenue, because all is free. Of course that’s not the case. If you read ‘no commission’, it’s true. But doing your studies, you know, the spread is a bit larger and includes the commission. Traders and service-providers want (and must) earn money too. That’s as legal as legitimate. But the costs and risks for the subscribers have to be fair and clear.
Now – let us compare the nature of robots and external trading signals, trying to get a decision, if robots or signal providers are the better solution.
[U]Pro and con Robots[/U]
Robots may be open to read (no closed black-box), so you see, what they are doing.
They may be very expensive (mostly those are the black-boxes), you also can get them for free. For example look at Steve Hopwood’s Forex Trading Forum, there are a lot of people, who produce a new one nearly each week.
You have to check their reliability by yourself or being part of a forum of development and evaluation. This needs a lot of time and you’ll experience, that most developments are as fast ‘out’ as they were ‘in’ because of failure.
Testing robots is not an easy work, because the best test is a forward one, needing time. Reliability of back testing still is discussed very controversial.
You are able to run robots with demo accounts to avoid risking your money.
[U]Pro and con signal providers[/U]
Signal providers work with a specific strategy, often using automated systems (robots!).
There are many traders offering their strategy over a specialized provider, showing results and statistics.
You have the choice to select a strategy which also fits your personal trading.
You may -similar to robots- test a service with a demo account to avoid risking your money.
With a set of rules the risk is manageable, so you’ll be able to cancel a service before a remarkable amount of your account is lost.
I don’t want to list sellers of ‘professional robots’ here, because probably you know some of them, you are able to discard them by reading their selling arguments and because most of them pretend large profits, but delivering the above mentioned black-boxes, which are very difficult to test.
Looking at some signal providers:
Alternative Investments | Diversify Your Portfolio - Currensee, Inc.
Forex Signals | Best Forex Signal Providers | Forex Trading Signal | Instant Forex Signal
MetaTrader 4 and MetaTrader 5 Trading Signals - Social Trading
www.myfxbook.com
ZuluTrade
A lot more you’ll find searching at Google. Comparing the services and their trading-partners is not very difficult. Rule of thumb: the more participants, the better the repertory, the more clear and professional the terms.
Comparing and choosing a good trader is quite more difficult. You have to look not only at the results, but below the numbers – if this is possible!
Let’s take 2 examples:
On MQL5 (this is the MetaTrader Company) you have 2 parts: Traders with Demo or Real Account. I chose platform MT4 (MT5 is available too) and not trader #1 with 1,231% profit, but trader #2 with ‘only’ 158% profit per month, because his system is running 78 weeks, more than one year and comparable to the next one of Zulutrade.
Trader #2 Arshin Trader has 106 subscribers and made 2,430 trades, 1,702 profitable and 728 with loss. Despite the statistics are not comparable in all details, Arshin Trader has a relative drawdown of 6.91%. This is a small one and the numbers are showing a balanced relation.
MQL5 provides Arshin Trader ‘more from author’ with system ‘Take Profit’. This account is running 60 weeks and has a less balanced relation in statistics, but nonetheless 384% profit overall.
On Zulutrade trader #1 is hihoforex. He has 2,543 followers, made 1,639 trades, 1,354 profitable and 285 with loss. He has a ROI (return on investment) of 249%. The system is running 63 weeks, more than one year, too. The average number of pips per trade is 9. Looking at the history you often see a drawdown of several hundred pips to get a few after an average trade time of 19 hours, the max. drawdown is 12%. This looks a bit risky to me.
Zulutrade provides hihoforex ‘also known as’ trader with different name ‘dotoforex’. This account is running 59 weeks and has higher drawdown than profit. Not so impressive.
[B]Question[/B]: would the MQL5 or Zulutrade system fit your personal trading too? – If yes, go ahead to next step, if not, I think, you won’t be lucky.
Next, I’ll try to compare the business concepts of the service providers. What are they doing to protect their clients and themselves against trader ‘hooligans’. What are the cost of being subscriber, are there hidden ones and what is the income for an author of trading-signals?
So far my intro (much longer as I expected). I’d be interested in some contributors ref. their experience, already subscribed anywhere (with positive or negative results) and so on. Goal of this thread should be, to figure out the best possibilities for a trader, who doesn’t want to start ‘lonely’.
[I]Good luck trading
josch[/I]