How to choose a good signal provider and keep a long-term collaboration
Signal followers wanting to have trades automatically copied in their trading accounts are in general inexperienced traders who want to obtain positive results without a great deal of time and energy investment. Although signal providers are professional traders with real accounts investing real money and a successful trading history, it is not always enough just to pick any provider from a list. A signal provider’s trading style has to match your own strategy and communication is always a required to maintain a sustainable collaboration. Here is a basic list of criteria you should take into consideration when choosing your signal provider:
- Research and analyse well before making your choice
- Don’t let comments on forums and message boards significantly influence your choice. Of course, suggestions and opinions are always welcome and can help you form an image abut a signal provider’s trading style, but it is never enough. Exact data about trades and performance will always reflect better if the signal provider is suitable, although popularity and feedback from other followers is important.
- Check for how long he/she has been trading and providing signals. A long history will always offer a more detailed picture of his/her trading. But that doesn’t mean that you should ignore new signal providers. The new signal providers might even have a longer history as traders than more experienced ones.
- Check how many signals the trader provides and how many positions he opens at a time. Is he investing in many different currency pairs? No one can be the best in everything, so make sure your signal provider is focused on not so many currency pairs.
- Weigh all the data available about a trader. Don’t check only the profit, winning trades (they can close positions shortly after a few pips profit) or average pips. Do analyse drawdown, as it is an important indicator of a trader’s performance and risk profile. That’s why you have interactive graphics – take into account every detail possible.
- Use the parameters available to you to keep control over your investment. Set the stop-loss, limit or maximum floating loss and choose the maximum open trades and orders. Try to maximise your return and minimize your risk by controlling the trades made in your account.
- Communicate with your signal provider. Ask questions, clarify any doubt that you might have and ask explanations if needed.
- Give time to your signal provider. Trading has its ups and downs and it is not always that a trader manages to make high profits. It is normal and a sign of sustainability for a trader to lose money once in a while. Don’t despair if the first month didn’t bring the highest profits possible, but continue checking his performance.