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Hello to all. I'm just writing this small tips to help you to choose a Signal. Any suggestion or addition will be great. Just told me and I will edit this posts with suggested addition.
If you decided to buy a signal to help with your trading there are some tips you can follow to avoid problems and or as potential loses.
Remember we're talking about trading and winners only is not the rule.
Know your seller: learn as much as possible about your seller’s objectives, business practices and working culture.
The devil is in the detail: make sure that you know what you want to buy is for you.
Check contracts size and processes are all tight.
Check if your capital is enough.
Check past trading because it will give you an overall idea so future disagreements and uncertainties do not arise.
Add value over and above your job role: where possible, always be looking to give more than is simply required – the extra effort is genuinely appreciated.
Empathise with your seller and other partners using same signal client and their situation – be supportive.
Share knowledge with other and they will help you if you need
Educate before star trading and encourage learn as much as possible about Forex, Trading, Metatrader, Expert Advisors, Internet, Indicators en everything relative. It will avoid to keep you ignorant and dependent.
Avoid to feel you uncomfortable with the technology. Never try to blind with science. If overpass your knowledge be sure the account manager is prepared to answer technicals
Don't be embarrassed to ask.
Give you time to be available. Set it and forget is often managed by Murphy's laws.
Look after the budget – make sure that you never get in the situation where you have to ask for more money.
Some general tips any successful trader should follow
Make your Trading Plan and stay with it.
Understand the risks of Internet Trading
Read again our policy about Trading Risk and Terms and Conditions.
"Get rich so fast" or "double your account" are another marketing strategy to attract customers.
Take a carefully look to ROI or Return over Investment. Too big often equal to too dangerous.
Trade on demos during some time before go real. If your plan is to trade during years maybe one testing is not enough.
Trading less than a standard lot means getting in for less - and having less to lose.
Always remember currency trading offers far more flexibility than other markets, but long-term success requires discipline in money management.
Discover first what type of Forex Trader are you? and choose a signal according to your type
Don't forget to check clones before buy
Be honest, proactive, responsive, resilient, interested and understanding.
Calculate your expectancy. This is:
Expectancy is the formula you use to determine how reliable that signal you want buy is.
You should go back in time and measure all trades that were winners versus all your trades that were losers.
Then determine how profitable winning trades were versus how much losing trades lost.
Take a look at last 10 trades. Determine if you would have made a profit or a loss. Write these results down.
Total all your winning trades and divide the answer by the number of winning trades you made. Here is the formula:
E= [1+ (W/L)] x P – 1
where:
W = Average Winning Trade
L = Average Losing Trade
P = Percentage Win Ratio
Example:
If you have 50 trades and 30 of them were winning trades and 20 were
losing trades, your percentage win ratio would be 30/50 or 60%. If your
30 trades made $4000, then your average win would be $4000/6 = $666. If
your losses were $2500, then your average loss would be $2500/4 = $625.
Apply these results to the formula and you get; E= [1+ (666/625)] x 0.6
- 1 = 0.23 or 23%.
A positive 23% expectancy means that your system will return you 23 cents per dollar over the long term.
There another ways to calculate trading system averages over long term.
Rent a Signal also provides some statistics and calculation where you
search for any signal.
At this point We assume you decided to test some signal.
Here are some more mixed tips you can follow to avoid problems and or as potential loses.
Understand Risk warning (read it again). This is about Investment Objective, Experience, Risk of Loss, leverage, creditworthiness,
limited regulatory protection, market volatility that may substantially affect the price, or liquidity of a currency or currency pair, communication failure, etc.
Understand Risk warning and disclosures with your Broker too. Read above.
Understand Forex trading can involve the risk of loss beyond your initial deposit. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Understand the relationship between you, your seller and Rent a Signal. Read our disclosures again
Understand Past Performance is not necessarily indicative of future results
Understand increasing leverage increases risk
Understand trading is not for anybody and you need to discover if it's for you. Read point 3 above.
I want to add something more practical.
About how to select the signal to subscribe.
It is on this post: http://www.forex-tsd.com/311673-post1071.html
It is just my experiance about how I am selecting the signals for myself.
At this point We assume you decided to test some signal.
Here are some more mixed tips you can follow to avoid problems and or as potential loses.
Understand Risk warning (read it again). This is about Investment Objective, Experience, Risk of Loss, leverage, creditworthiness,
limited regulatory protection, market volatility that may substantially affect the price, or liquidity of a currency or currency pair, communication failure, etc.
Understand Risk warning and disclosures with your Broker too. Read above.
Understand Forex trading can involve the risk of loss beyond your initial deposit. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
Understand the relationship between you, your seller and Rent a Signal. Read our disclosures again
Understand Past Performance is not necessarily indicative of future results
Understand increasing leverage increases risk
Understand trading is not for anybody and you need to discover if it's for you. Read point 3 above.
Understand points 1 to 7 and previous posts
Linuxser,
I have been reading this section for a few days now,It was outside my radar but now it attracts my attention because it is obvious that many subscribers do not select the right signals....So,I would like to add my comments here.
What is a Right signal?...The right signal for YOU..you subscriber...ask yourself what you want out of the signals first...then look for it.
Ok?...Now the usual reply would be "the signal that makes me a millionnaire" ...Well,I am gonna disappoint you ...That is not a valid reply,you need to be very specific and ask yourself the following questions :
1-RISK:How much Risk can I suffer before I stop?..if having a 10% open drawdown wakes you up in the middle of the night...Look at the risk statitiscs and the trading position sizes relative to account size,and avoid choosing a system whith open drawdowns of 35% and high leverage,no matter how many millions you feel you are missing....Unless you are a Masochist
2-REWARD:What do I want to get out of the system?...If you want to get a reasonable return on your money...aka...15-40% annual ROI,you are on the good track...if you want to get higher returns,well 40%-300% annualized ROI is feasible,usually not for an entire year...AND with a very high degree of RISK...so.."I want to have annualized ROI of 350% with max open drawdown of 7%"...is not a valid reply either....AND,if you want to grow your small 5k$ account into 250k$ in one year(5000% ROI)...you are going to lose your 5k$ instead of that.
So,once you have defined your profile in terms of Risk and Reward you are either:
1-High Risk/High Reward:You accept higher than 20-35% Drawdowns in order to TRY TO get 40%-300 ROI
2-Middle Risk/Middle Reward:You accept 10- 20% Drawdown in order to POSSIBLY get 20-40% ROI
3-Low Risk/Low Reward : You accept a max drawdown of 5-10% in order to PROBABLY get 15-20%
4-Low Risk/High Reward:Invalid Profile ...Stop dreaming,you can improve your reward and deduce your risk,within limits,by selecting among the systems that meet your criteria ...the ones with higher reward for the same % of risk,so you can choose System1 with 35% ROI and 12% max DD vs System 2 with 25% ROI and 13% Max DD...But you are not going to find System3 with 450% ROI and 10% Max DD,and,if you find it,take care these performances do not last for very long.
SUGGESTIONefine your risk tolerance range,Define your realistic expected Reward range,preselect among those systems that meet BOTH criteria,then study in deep the systems that passed both filters...Next post I will explain how I would select a system with specific examples,or,if somebody can post some systems he is comparing,I will give my opinion on them.
I think that nothing can be taken for granted, and that before commiting to any system or signals they have to be tested in real time.
You think...therefore you exist
Nice words,You are way ahead of 95% of traders...everything should be tested,specially when subscribing to a signal for the first time,allocate at least the first 2/5 weeks to test it ...On Demo
Oh,you are paying 2 weeks of a signal and then test on demo?...Yes,the alternative is to trade it on real and blow the account(in 2 weeks ?) because you didn`t check if the reality correlated to the vendor supplied information...Easy decision,isn`t it?...
Now that you had defined your RR profile as a purchaser of signals,let`s see how I would compare among different signal providers with the statistics that RAS provides...
1-I look for consistency of returns
ROI:Return On Investment...it is usually reported in annualized format,basically,I like to check the ROI for 90 days,60 days,30 days and 1 week,and see if there is consistency or not...For example,a system(SystemA) with ROI
90 days=134%
60 days =85%
30 days = 30%
1week = -20%
Is clearly a system that has lost its edge,so,I wouldn`t be interested in buying it....It gave very good results the past 2 months but has lost its streak.
If the system is too young,I just compare 30 days vs 1 week or 60 days,30 days,1 week...But I always compare for consistency.
2-I look for good REWARD to RISK ratio
Then I like to take the SystemB and do a quick math,I divide the lowest of the annualized ROIs(90%) by the maximum drawdown in % of account...so,if SystemB has had a 50% Drawdown during its life,the ratio would be 90/50=1.8...not a very good ratio..let`s suppose I have SystemC which has the same ROI as SystemB ,but the maximum dd for it is 20%...clearly this SystemC is a much better system with a ROI/MAXDD=90/20=4.5...It gives you the same return with much lower risk.
3-I check for hidden risks,using the following available tools or statistics
SPF:If SPF is below zero the system is inmediately discarded...if its above zero,I then check 2 things...1-Profit Factor..I want systems with Profit Factor higher than 2,the higher the better...2-RATIO:I divide the average weekly profit,in $,by the maximum drawdown in $...If the average weekly profit has been,for example 1.5K USD and the MAX DD has been 15K USD...the system is probably HOLD &HOPE ...It Holds big open lossses Hoping to get back into profits,one day it won`t and it will destroy the account...so,I avoid any system with a ratio below 0.35,I can accept that systems with a very high win rate may have a bad week or 2 ,but any ratio below 0.35 is suspicious of being just Hold&Hope.
4-Lastly,I check for system seller data,who he is,what style of trading uses,what frequency of trades,IF HE REPLIES TO QUESTIONS POSTED ABOUT HIS SYSTEM OR NOT etc...to see if there is a personal fit with my own view of the trading world or not...I would never buy a signal sold by somebody who doesn`t reply the questions he is legitimately asked about his system,or that replies with vague or "out of context" statements.
Next Post I will use actual signals sold at RAS to show you a practical example.
...Well,I am gonna disappoint you ...That is not a valid reply,you need to be very specific and ask yourself the following questions :
efine your risk tolerance range,Define your realistic expected Reward range,preselect among those systems that meet BOTH criteria,then study in deep the systems that passed both filters...Next post I will explain how I would select a system with specific examples,or,if somebody can post some systems he is comparing,I will give my opinion on them.
Linear Mode
