Online trading continues to grow at a strong pace. In recent years online investors approaching the financial markets start trading directly with brokerage firms offering forex and cfd products.
There is also an increasing number of traders who move from classic trading on regulated markets via banks and other brokerage firms regulated by the Australian Securities and Investment Commssion, to online trading with brokers like AvaTrade. Trading financial markets with the CFDs offered by AvaTrade straight from one platform and easily online, allows all traders to access indices, stocks, commodities, forex, bonds and cryptos.
With the growing popularity of online forex and cfd trading, the range of supporting services has skyrocketed. An increasing number of services to support trading have born, including forex signals, especially forex signals in real time.
Forex signals can be provided to Australian traders in various forms inclusing free of charge signals, in real time, for a fee, directly from the broker or from third parties.
Below is our analysis to be able to choose reliable forex signals in the present jungle by typing in Google keywords such as “forex signals, free real-time forex signals, free forex signals, reliable forex signals or free forex signals”
It should be emphasized that a broker is financial intermediary regulated by ASIC and as such should not provide trading signals unless authorized otherwise.
Other brokers or unregulated entities acting maliciously may offer free forex signals that are often provided to entice traders to make more volumes for their own profit.
It is therefore necessary to carefully assess the origin of the free forex signals: reliable forex signals hardly come directly from the broker itself
Forex signals offered can be free or come at a fee: obviously free signals most of the time come on a temporary basis to show the product and drive the sale of such product or connected services. Other times there are commercial arrangements between brokerage firms and service providers that allow the signal provider to offer its services free of charge when the customer opens an account with a broker. These are perfectly legitimate arrangements which, however, bring forward something called counterparty risk.
In fact, when opening an account with any broker the customer needs to pay attention to the referred broker that must be authrized in Australia by ASIC and therefore offer all guarantees to customer protection.
Reliable signals require quite a lot of work and are not always free. Indeed you need to ask yourself a question: if you had reliable signals would you give them free or for a few tens / hundreds of dollars?
A reliable signal would benefit your account and therefore it needs to come to a cost which is the licensing fee or other fee the provider may ask.
Let’s get to the most important point:
How to evaluate the quality and reliability of a signal?
What are reliable signals?
First of all it is advisable to evaluate the historicity of the signal, if a signal is automatic, therefore built with a trading system (EA Expert Advisor in Metatrader language), it is much easier to have historical performance calculated by the back tests of the strategy on the single markets and instruments. Obviously it would be even better that the historical data was not merely a backtest but a so-called live test where trades are actually executed following the signal strategy. The greater degree of accuracy of the signal is then obtained having results with the same broker one trades with, as on non-regulated markets such as forex, prices may vary even if a few pips depending on the intermediary, same as the execution of orders on the received signal could different between broker and broker.
To evaluate the track record of a signal, the ideal approach would be to have tracked the trades entered into by the signal on a real account through sites such as myfxbook or fxstat that show a large array of statistics of an account, in this way it is also possible to follow forex signals in real time.
When evaluating a signal, it is of pivotal importance to have information on the possible drowdown, on the risk return ratio, on the profit factor and other technical terms that must be declared by the provider of either a free or paid forex signal.
When selecting a forex signal one must take into account mainly risk and money management; there may be signals that are good for a 1000 dollar accounts and not for a 200 dollar account. In addition to the input signal it also gives an exit signal, or rather two, one for a winning trade (take profit) and one to limit the loss (stop loss). It is necessary to understand if the signal is valid only for forex or also for other cfds in order to understand whether it is valid for all currencies or only for some exchange rates.
Free forex signals in real time or in a broader sense free signals should be parameterized to the above.
But how are reliable forex signals built?
Normally forex signals arise from studies of technical analysis and evaluation of economony’s fundamentals. They can also exploit strategies on intermarket analysis between multiple currencies and therefore between multiple currency pairs.
Very often forex signals in real time come in the form of trading systems or expert advisors for MT4 or MT5 that read the signal when all the conditions programmed by the person creating the signal occur and then execute the trade.
As such it is therefore possible to have the signal automatically trading your account or accessing a copy of the orders through mirror trading or copy trading solutions.
These slutions can be useful for those who do not have time to follow the market in real time and so they can understand with their broker the feasibility of these solutions or evaluate a specific trading system they seek to purchase.
Not necessarily real-time forex signals are better than signals that foresee an advanced planning of trades. For example, the signal provider could plan its trades with pending orders at certain market levels, given by technical and graphic analysis; in this way it would be possible to receive a package of signals a day or a week in advance. In such way the customer would be able to set all pending orders from the signal in his trading platform.
In this way even with the platform off, the broker will execute pending orders should market prices be met.
Reliable forex signals must therefore be evaluated for their historical track record byt also evaluating the strategy they are built on. On this matter it is important to understand whether the customer would be able to follow them both technically but above all in relation to their own risk profile.
The suggestion, once the signal has been chosen, is to try it first on a demo account with AvaTrade and only then gradually switch to the real account, whether they are real-time forex signals or planned in advance ones.