How to Choose the Best Trading Signal Provider

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Choosing a trading signal provider is an important decision.   Are You Day Trading Forex Currency Review   A profitable provider can skyrocket your trading profits, and a losing one can harm your account badly. In this article we will give you several tips to help you estimate the REAL performance of a trading signal provider.

Look At Risk:Reward
Risk:Reward is the ratio between the average win and the average loss of the trading signal provider. It can also be calculated by dividing the Take Profit by Stop Loss. This ratio gives you an estimate on the trading proficiency of the provider. A high number (above 1.5) indicates that the trader is highly experienced and is able to enter at precise points, risking very little compared to its winnings. On the contrary, a low number indicates some flaw in one's trading: either inability to ride winners, cutting losers too late or simply a mediocre trading entry.

Many fraudelent trading signal providers enter trades with very low Risk:Reward, and enjoy a 80-90% hit rate. What their clients don't know, is that one loss can and will kill profits of many profitable trades, so in the long-term performance will decrease sharply.

Trend-Following or Reversal Picker
A trading signal provider is either Trend-Following or a Reversal Trader. While trend-following is easy and simple trading strategy, its short-term results can mislead clients and seem more positive then they actually are. A trend-following provider can have periods of great profits, and in the long-term - fail miserable. On the other hand, providers that are Reversal traders pick market bottoms or tops (almost).

This method is harder to trade and profit from, and indicate that the trader is very experienced and technically proficient. Check historic trades of your provider to assess its trading style.

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