Monday, September 14, 2009

Forex signals services

There are a number of automatic signals services out there which present a smorgasboard of systems to chose from. For a while I was using FXDD Auto until I drove an account into the ground. This is no reflection on them, because their platform is quite good, but on my poor selection of systems, and I must take the time to check out their latest offerings.

FXDD Auto has a very elegant method of charging for their services - they simply add an extra pip onto every trade. This means that you can create a balanced portfolio of systems which can be easily adjusted at any time. You can start at 0.1 lot trades and, if you're lucky enough to watch your equity increase, there is automatic money management available to gradually increase trade (and fee) size. But, vouching from experience, you can also create an absolutely amazing equity curve from historical system results, only to watch it grow … then crash. You have to really question whether the builders of some of the systems have any genuine belief that they are profitable in the long term.

Another signals service that I am actively using right now is Global Forex Signals, with the PipsRain system. This system reassuringly doesn't boast massive pips per week, or a ridiculously high profitable trade ratio, but even so I am only trading it at 0.1 lot at the moment. The system costs $150 per month, so I'm hardly grossing any profit right now. Here's a forward test at 1 lot per trade (ahh, the peaceful luxury of demo accounts). The link updates only once a day to make it pointless to copy, so I hope I'm not violating any agreements. Come to think of it, they should be pleased that I'm promoting them.

GF Signals provides a free EA which reads their signal emails to automatically drive MT4. I've never tried it because I wrote a similar EA coupled with a gmail reader dll a long time ago before they released their own version. It worked fine, but I was quickly frustrated by the slippage from slow delivery of emails - it's quite normal to see at least 5 pips of entry and exit slippage simply because of the time delay. So I wrote a web page scraper instead which polls their signals web page and is far more reliable. The email reader approach would be fine as long as the average profit per trade is reasonably high.

So here's my approach to selecting a signals system:-
  • At least 6 months of history, preferably 12 months
  • Good profit/drawdown ratio
  • Trading only 0.1 or 0.2 lots. This allows money management to be implemented earlier
  • Maximum profitable trade ratio about 80% to avoid the luck factor
  • Active use of stops in the 50 to 200 pip range
  • Absolute minimum average profit per trade of 20 pips
  • Use very low leverage
 I should emphasise that I am just a paying customer of FXDD Auto and Global Forex Signals, nothing more.

2 comments:

  1. I agree with the majority of the points in this article and it’s great without any doubt, but in my views it’s not weighing with a site that I have ever seen in my life (http://fxchronicles.com/), Just have a look!!!
    Anyone else have anything better?

    ReplyDelete
  2. Hey Ya'll,

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    ReplyDelete