Most beginner traders believe that paying for forex signals is the quickest route to profitability in the financial markets, but this is not completely accurate.
Traders who are new to the markets do not have an in-depth understanding of trading and the markets, which acts as a major hindrance to their success in trading. Therefore, many beginner traders turn to the providers of trading signals to make a quick profit in the markets. This route may work for some traders, but most traders make losses even when trading with accurate signals for several reasons.
Lack of a proper understanding of trading
The main issue that derails most beginner traders is that most of them do not understand how the markets work. Therefore, such traders are likely to make losses in the markets despite being given accurate trade signals that could have resulted in profitable trades.
One of the pitfalls that plagues newbie traders is a distinct lack of patience in the markets, which leads them to close trades with losses when the price starts moving against them. Many newer traders may not understand the trading strategy used by the trading signals provider, which leaves them expecting quick profits, yet the market may trade sideways for an entire day.
Not all trading signals are created equal
Most mentors who provide trading signals do not provide the reasons they took the trade, which leaves most traders wondering what to expect when they take the trade. Most signal providers will provide a trade entry position, a stop-loss order, and a take profit level. This leaves the beginner trader to watch as the trade goes into profit or moves against them without understanding the reason the signal provider took the trade.
However, there are a few signal providers who are interested in teaching their subscribers how to trade, which means that they always provide their reasons for taking a trade. You should only consider subscribing to signal services managed by traders who provide the analysis that led them to trade a specific setup.
Traders not being interested in learning about the markets
Some beginner traders who subscribe to trading signals may not be interested in learning how to trade the markets as their main focus is making quick profits from the markets. Traders who take this approach drastically reduce the chances of becoming successful in future as they are only interested in receiving trading signals.
Remember the old saying that if you teach a man how to fish, he will feed himself for a lifetime, whereas giving him fish will only feed him for a day? This statement is very applicable to trading in the sense that trading signals will only make you profitable as long as the provider remains profitable. You could be left struggling if the signal service is discontinued or the traders behind the service encounter a losing streak.
Lack of proper risk management
Many beginner traders book major losses from signals that result in losing trades by failing to apply proper risk management strategies while trading. Beginners usually want certainty in the markets, which is what drives them to subscribe to signal services in the hope that they will avoid losses.
However, profitable traders also have losing trades, which is why all traders are advised to limit their risk exposure in the markets due to the inevitable losses that are part of trading. Many beginner traders end up blowing their account on a few trades despite being provided with other winning trades.
Chasing trade setups
Beginner traders who miss trading signals for various reasons may chase the trade higher or lower despite the signal provider instructing them to avoid the trade beyond a certain point. Most professional signal providers will warn their subscribers not to take a trade past a specific buy-up-to price, but many beginner traders tend to ignore such instructions and chase the trade anyway.
The bottom line
There are some excellent signal providers out there who provide profitable trade setups to their subscribers. However, the journey to being a profitable trader requires you to learn about the markets so that you have a solid understanding of the trading signals provided. Furthermore, you should focus on learning how to trade the markets and only subscribe to signals that are provided by profitable traders who can teach you how to trade.