The Truth About Buying Trading Signals Learn About Trading Signals and How they Can and Cannot Help You By Mo2

What are Trading Signals?
Trading Signals are all over the place with apparent professionals that try to sell you on-the-spot advice about where to buy and sell. Not limited to stocks, signals are sold for currencies, commodities, bonds, and pretty much for anything that is tradable.

What does it cost?
That would depend on whom you are buying the signals from. There are signal sellers that have monthly fees and those that have fees based on different sorts of services. Rarely do you find a signal seller that bases their commission on their winnings, there might be a few but I guess the reason is quite obvious, they can't guarantee anything.

Accuracy
Many signal sellers claim that they have 65-100% returns sometimes monthly! Wow, if I could have a 100% (which means doubling your money on a monthly basis) return on a monthly basis I could turn $1,000 into over a $1,000,000 in a year. So I guess the $999.99 monthly fee is really cheap eh? Obviously, things don't work out that way. First, we're all human when we're dealing with a $1,000 it isn't too big of a deal but once we start moving out of our comfort zone say the 6 digit ($100,000) range then we might feel uncomfortable and not listen to what the signals are telling us.

Risk Control & Position Sizes
Once our trade sizes begin to grow we might lose sight of risk and position sizes. I've had a couple of margin calls in my trading career and it's been devastating but I'm glad I've had them because in my young trading career I am able to have a cautious yet clearer view of what to do with my money.

You need to stay on top your risk. The golden rule is to only risk 1% of your account size per trade and no more. I have greater risk tolerance than most and therefore my risk percentage is higher but that's also because I don't have a seven-digit account that I have to worry about blowing up. I guess, that statement itself shows that I'm a bit of dangerous trader.

Anyhow, be sure to control your risk. This is what makes or breaks your fortune, regardless of what system of trading you take on. Be sure to only risk so much even with these 100% monthly return signals.

 

Mo2 Thinks
Ok, what do I think about signal sellers? I'm sure there some legitimate signal sellers that actually know what they're doing and actually care about others making money off of their ideas. However, for the most part signal sellers use indicators and moving averages to sell their signals. I'm not saying that's all they do since there are so many different types of people selling signals that every one of them could have a different way of producing their signals. Nevertheless, you need to understand this. If these signal sellers could really produce the returns that they claim, what exactly are they doing selling signals? If I could produce even a 35% monthly return on a regular basis then I don't think I would be wasting time selling my signals and rather keep quiet and concentrate on making my trading/investing portfolio grow.

In reality, there is no "free lunch" in trading. You really need to know what you're doing in order to succeed in the trading world. Most people think it's an easy profession. Hey, what is there to complain about when you could be at home all day and just look at the computer and rack in thousands of dollars a day?

It isn't that easy and it probably never will be. Trading is probably one of the toughest professions to succeed in because not only are you trading against other amateur traders you've going head on against hedge funds, financial institutions and other large players that you cannot see from your computer screen.

If you're hoping to make a fortune from trading signals, all I can say is good luck because you're going to need it. You must learn to trade yourself. Here's one example why. If you were given a great trading signal to go long gold at a certain price and the it goes up $5 but then all of a sudden for some fundamental reason, say a huge gold company out in Brazil actually finds a way to produce gold from other minerals, then the price of gold would plummet. (Obviously, this is fiction)

I'm pretty sure just like you, the people selling signals would be panicking and before they tell you when to get out they would get out first (if they're even trading in the first place) and you would be screwed before you know it. But if you were a seasoned trader you would know your exit point often before your entry. Of course, you should always have a stop-loss to prevent such tragedies.

Conclusion
Just like when you watch an infomercial and the product sounds unbelievable until you get it, the same applies with trading signals. If you're willing to "risk" the monthly fee to see how these things work then by all means try it. But overall I would try and spend the time and money on trading itself.

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If you would like to comment on this article or anything on this website, please feel free to e-mail Mo2. He can be reached at Mo2@Mo2Thinks.com. Thank you for visiting!