Spread Trading Solutions

How to choose a good forex siginal service and automated system is very important for people who cannot or don't have the experience to trade themselves. Although there are tons of automated forex trading systems which claim to be succesful, chances are most of them are scams. I have tried several times for these so-called winners, and I have to say "thank God, I demoed it, instead of making it live." However, even if you find a real good system, it does not mean it is suitable for your trading strategy. You could still blow up your account because of that. Let's first look at the two main types of auto-systems: third party signal proviers and EAs on Metatrader 4.

Third-Party Signal Providers

Welcome to the world of monkeys. I cannot say most of them are scams, but definitely 90% of them are not as profitable as they claim. Just check the feedback on forexpeacearmy.com. So what they do is they build a website and post some stats and tell you how profitable they are. Don't fall over their traps. I heard one trader said that the forex signals he got were losing trades, but the website either changed the entry prices afterwards to make it a winning trade, or simply don't post them on web. I am not surprised if such things happen. It is totally not transparent. And some websites promise they win over 200 pips per month. Please, what is max drawdown? And honestly speaking 200 pips/month is defintely not a good performance for an experienced forex trader. You are overpaying them. You can make 200 pips per week yourself if you know how to do news trading. Enough said about the scams, let's look at something better.

1. Zulutrade.com

It is a website that people can sign up as forex signal providers freely and send signals to the subscribers. The transactions are transparent, and they give a lot of stats like maximum drawdown, win ratio etc. And it is completely free. It is your broker who pays for the service. And of course your broker gets money from you in the beginning from spread and commissions. So if you are looking for a signal provider, I suggest you check this website and demo the signals that are suitable for you. However, there are some numerical traps you should be aware of:

-More winning pips do not mean it is profitable. What Zulutrade did is to multiply the pips by the position size. So for example, the provider finished a winning trade with 2 pips, but he traded 10 lots, so his winning pips was 20pips. But this is not a fair calculation. Because suppose some provider won 15 pips on 1 lot, then his winning pips was only 15 pips. The latter is definitely more profitable. So you really need to see the transaction history and check out the position size the signal provider is using. I see many followers for signals that trade big, but actully not so profitable. So be careful with this.

-"Many followers" do not really mean exactly the same number of people are running them live. Most of them are just testing them. Find the real number of people running them live on the "live followers" tab beside the graph.

-Maximum Drawdown of course is important. But big drawdown does not mean it is bad. For example swing trades usually have big drawdowns, but they can sometimes be more profitable than scalping. Scalping have smaller drawdown, but there is always a delay between you and the provider, the signal goes through a long process to you, even if is less than half a second, the price changes quickly. You will get a losing trade even if the signal provider gets a winning one. Again, demo it first!!

-Diversification: Some traders like to diversify and try to follow 3-5 signals at the same time. But the problem is his account is too small. So he limit the number of trade signals from each provider. However, this may seem a good strategy for scalping followers, because many scalpers like to open 10 positions on the same trade and close them at different times. But for swing trades, this is a bad idea. Swing traders keep losing trades because they know price will reverse. In the meantime they will open other trades that may be profitable. But if you limit the number of signals from the swing trader, you will not receive a winning signal afterwards, and instead end up with a losing trade. This is also why sometimes there is a huge difference between the performances of signal providers and the followers. Don't be greedy, 3 is the max for a small account under 10,000 dollars.

-Manual Trading or Automated Trading? Some signal providers are real traders who do manual trading and send signals to you, some are people who possess a trading program like an EA. Both could be profitable or unprofitable. So I suggest you choose one for each type.

-Important: Get a broker that allows two-way hedging!! Now many US brokers under NFA regulations do not allow sell and buy the same pair at the same time anymore. So if you receive contradictory signals from two providers, one will cancel out the other.

-One last advice about Zulutrade: check out where the money flows, if a system has a lot of followers, there's gotta be a reason for that.

2. Tradency Trading systems such as FXCM FSS and FXDD Auto-trade

You should check out their websites if you don't know what they are. There are many brokers offer scuh service. You can check it out at