Why 'Free' Telegram groups are not actually free

With the number of people spruiking ‘Free’ Telegram groups these days and personally knowing a number of people that have churned and burned through them I thought I would take a couple minutes to hopefully educate some newbies to the Forex industry and hopefully save them a couple of $$$ in the long run…

Free Telegram groups/signals… To someone who is new to forex trading these seem like a great way to get entry and exit signals from an ‘expert’ - for FREE!

BUT like most things in life, especially with the forex industry, you need to ask yourself what is the benefit to the counterparty?

To understand how the person providing free signals is making money you need to understand that the majority of forex traders fail, yes the majority of retail traders that come into the forex world end up blowing their account and quitting or running out of money. Now this alone is a big issue for all the brokerage companies out there as if they don’t get new sign ups, depositing money into their brokerage and making trades, they would quickly go out of business!

To combat this, nearly every brokerage will offer either upfront payments or ongoing commissions to anyone that brings in new business in the form of signups.

But just signing up to a brokerage isn’t enough. As the brokerage makes the bulk of it’s money on the spread every time a client takes a trade. So what the brokerage really needs is new clients signing up AND processing a large volume of trades. The more clients placing large trades = more revenue for the brokerage firm.

This is where marketers and enterprising individuals come in with their free signal groups… As these appeal to most who are new in the industry, chances are you will follow the signal groups recommendation of which broker to sign up to, with some not even giving you a choice! This is all then linked through the broker to the signal provider who not only will get paid just for you signing up and depositing money, but will also receive ongoing payment for every trade you place.

This dynamic means that it is not in the signal providers interest for you to learn how to trade, manage risk or even make money, their motives lie purely with getting you to trade as big as you can, as often as you can, while they get paid handsomely from the broker.

Now I am not saying all signal groups are bad, and hey if they are free then they have to get paid for their time somehow. This is more just about educating those new to the industry who may not be aware that their are some signal groups out there with hidden financial motives. So always approach them with a level of cautious skepticism.

Hopefully this helps a couple of you.
Happy Trading,
Nathan

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Nice summary, Nathan. The couple I have tried, for free or for a “trial” subscription, I’ve just paper-traded.
NONE of them would have made me any money.

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Unfortunately that is more common than not!
But you definitely went about it the right way doing a trial and just paper trading to test them out.

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I would LOVE for anyone/everyone to post a link on one/any that have actually worked.
I fear the sound of crickets…

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I had not realized this alterior motive. I have just (politely) asked a new member who posted a link to a free signals telegraph group to explain exactly what the benefit is to BabyPips members, though I had not thought through the implications of broker affiliate links and the like. And I agree. I think most members want to learn enough to be able to think for themselves and not rely on others for signals, tips, copy trades. It’s interesting that it is rare (if ever) that anyone does an independent review of such “services” on BabyPips. :grimacing:

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How long have you been following the signals or results of a given trader and found that it is not profitable a month? two? Investment is a long-term action, after a month or two you are unlikely to determine if and how much the signals are profitable.

It is in the interest of newbies to learn about trading and risk management. As the name implies, the trading signal provider provides trading signals.
Now everyone has access to educational content, free and paid. If someone is using trading signals without basic forex knowledge, they are counting on luck.

You can add link for proven groups that offer good signals?

My answer was to explain who is and how work a signal provider is, besides, for everyone a “good signal provider” may have a different meaning. Regards Greg

I understand long term investments and personally I have not followed signal groups at all as I was never interested in relying on someone else to make me money, from day one I wanted to invest the time and understand the markets myself to make my own calls.
So my understanding and reason for my post was not due to me being on the receiving end but rather from personally knowing several people that run these free telegram groups and I have personally spoken with Introducing Broker managers/partnership managers from a few leading brokerages who advised this is a recommended way to scale up brokerage commissions.

I’m not saying anything is good or bad - everyone has to make money somehow. My intent was just to advise those that may not have an idea on the inner workings of brokerage commissions and why free telegrams are so popular.

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Ok, understood, thanks for explanation.

Haven’t actually joined any telegram groups yet. Just started trading forex about a month ago. I’ve heard about getting entry and exit signals that help a lot in trading.

If you do want to join a signal group make sure you prove a bit of a track record with a demo account first. As I mentioned here… Majority of them are just making money from your trading volume and don’t care that you will loose money.

There is nothing like a free lunch in the financial markets. I learnt this lesson when I traded with a zero commission broker that had plenty of hidden costs that cost more than trading commissions that you would have paid to some other broker.

These so called free groups dragged me inside this industry and took all of my free time :smiley:
There was sponsored post on my IG regarding Telegram group… Lured me into their web, today I have 10+ groups, started learning technical analysis exploring brokers etc…