⇒ Warning. Any strategy does not guarantee profit on every trade. Strategy is an algorithm of actions. Any algorithm is a systematic work. Success in trading is to adhere to systematic work.
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Trading signals—at first glance—seem like a win-win form of collaboration. A signal provider, be it a trader, analyst, or algorithmic system, offers advice on how to earn profits. The subscriber follows the signal and typically shares a portion of the earnings with the provider.
In reality, trading based on signals has several nuances and risks. Trading signals are an extremely popular niche, especially among crypto enthusiasts. To help beginners understand signal trading, we have compiled brief overviews of various providers in this article.
What Are Trading Signals?
Trading signals are specific instructions to execute a trade on the exchange. Typically, a trading signal includes:
Market name
Trade direction—buy or sell
Entry and/or exit price
Additional information (optional)
How Do Trading Signals Work?
The basic scheme is simple:
The signal provider—whether a robot or human—monitors the markets.
Upon spotting a setup, the provider sends a signal.
The subscriber receives the signal and acts on it, either manually or automatically.
Example
A trading signal in Binance Killers—one of the popular groups on Telegram for crypto trading, which we will discuss in more detail later:
The signal in the image is based on a triangle breakout, and the author expects an upward impulse with a new high.
The signal briefly contains all the necessary information:
Name of the crypto market (ticker)
Direction (buy)
Acceptable price range for entering a long position
Several take-profit targets (seemingly too many)
Emergency stop-loss level
Simply put, a qualified person continuously monitors the markets, and the subscriber saves time and gains the potential to enter a position at the start of a trend, even without having the expertise of a market analyst. It sounds convenient.
As evidenced by Google Trends, trading signals are becoming increasingly popular. Not only are they popular, but they are also diverse. Next, we will examine the types of trading signals.
ВИДЫ ТОРГОВЫХ СИГНАЛОВ
BY MARKET TYPE
BY RETENTION PERIOD
BY PROVIDER TYPE
BY DISTRIBUTION TYPE:
forex;crypto;actions;
futures;
combined.
short-term; medium-term.
manual
(trading signals are generated by people – professional traders or analysts)automatic
(signals are generated by algorithms and trading bots based on data analysis and preset strategies without human intervention)
in social networks, messengers (Telegram, WhatsApp); through signal platforms and trading terminals;
through brokers.
BY THE METHOD OF ANALYSIS
BY COST
FOR MORE INFORMATION
BY REPUTATION
Fundamental: based on the analysis of economic indicators, news and other external factors. Technical: based on price charts, patterns, indicators and other technical tools.
Social: take into account the actions of other traders. For example, large market liquidations that can influence market movements.
paid: subscription costs can range from $30 to $100 per month, which is justified if the signals are actually profitable; free: often used to attract an audience or demonstrate capabilities.
educational: signals accompanied by educational materials explaining trading strategies and methods; news: includes important market events that may affect the price of an asset;
memes: when information in trading signal channels is presented in an entertaining manner, sometimes using humor to attract the attention of traders.
with a high reputation: such signals are provided by real public people whose competence is confirmed. In addition, the provider may have a legal entity, licenses, broker statements and other supporting documents. with a low reputation: unfortunately, such providers are the majority. Subscribers do not have access to information about the identity of the trader, the effectiveness of his strategy during testing, there is no evidence of the absence of dishonest motives on the part of the provider, etc.
Who Is Signal Trading Suitable For?
Beginner Traders: Trading signals help novices understand how the market works and learn from experienced traders, developing discipline. Signal trading potentially reduces risk by providing ready-made entry and exit recommendations.
Those Seeking Passive Income: People who do not want to actively engage in market research and analysis can use signals to generate passive income. Signals allow trading without deep knowledge of technical and fundamental analysis and profit without constant market monitoring.
Traders Looking to Diversify Their Strategy: Signals can complement existing approaches, offering opportunities to balance a portfolio of strategies.
Traders Seeking New Ideas: Signals provide information for trades that traders might miss on their own. This helps cover more active markets.
Experienced Traders: Experienced traders can generate signals themselves, becoming providers, and thus scale their income.
Regardless of the level and goals in trading, it is important to remember that trading signals should be used with caution and in combination with personal analysis and risk management.
Crypto Trading Signals on Telegram
A Google search for “best crypto trading signal on Telegram” yields numerous results. Randomly picked from the top, the Binance Killers group claims a 92% success rate for its signals.
An extremely high percentage raises suspicions of manipulation in calculation methodology, but it might be simpler… If you trade on the crossover of moving averages with a 50% chance of profit, with a stop size exceeding the take size tenfold… Hypothetically, the take will trigger ten times more often, and you will have all the grounds to claim that only 1 in 10 trades results in a loss. Voila, a 90% success rate!
Binance Killers works with its trading signals using the following common scheme:
Two channels are created—paid closed and free open.
Profitable signals from the paid group are forwarded in the free channel. This motivates the audience to subscribe to the paid channel for $100 a month.
Signals that did not lead to profits were not found in the free group. For some reason.
Whether to pay a hundred dollars for signals on simple graphical patterns’ breakouts is a decision each person makes for themselves.
Copy Trading on Binance
Copy trading is a private manifestation of signal trading where users can automatically copy successful traders’ trades.
This allows beginners or less experienced investors to follow professionals’ strategies, minimizing risks and saving time on market analysis. Usually, providers charge about 10% of the earned profit for their services.
To start crypto trading using Binance Copy Trading signals, you need to:
Fund your Spot account and go to the Binance Copy Trading page.
Choose signal providers based on performance curve, maximum drawdown, profitability, and other criteria.
Subscribe to the trader’s signals, specifying: a) the amount for signal trading; b) the acceptable drawdown level (stop-losses); and c) other parameters.
Confirm your decision.
Below is the cumulative negative result of following signals from 36 providers:
When the market was steadily rising, trading on signals was profitable—likely based on trend-following strategies. Once the market moved against the trend, trading based on some signals stopped at stop-losses: they were set at 15-20% of the invested amount in the signal. Over the long term, not a single provider survived—possibly due to too close stop-losses? In the professional capital management community, a 20% drawdown is considered unacceptable.
It is possible that the result would have been better if the quality of the providers’ signals had been higher. However, on the Binance Copy Trading platform, high-reputation providers usually set minimum requirements for those who want to copy their signals, such as $3000-5000. Almost every top cryptocurrency exchange offers deal copying services as a form of signal trading. This attracts clients.
Automatic Trading Signals by Chart Patterns
Another alternative for signal trading is the Autochartist service, positioned as an additional tool for clients of various brokers.
The service automatically monitors markets, finds patterns, and offers sorting by probability and market type (crypto, forex, other assets).
The advantage is that traders are given specific target levels and can decide whether to follow the indication. A drawback is that signals do not come as often as one would like.
Selection of Signal Trading Resources
Signal trading is also called social trading because it includes elements of interaction and cooperation between traders. Here is a selection of resources directly related to signal copying by traders:
Zulutrade.com: A platform allowing automatic copying of professional traders’ trades and real-time signal reception.
eToro.com: A broker providing a social trading platform where users can copy experienced investors’ trades and communicate with them.
3Commas.io: A platform for automating cryptocurrency trading, offering signals and trading bots.
Darwinex.com: A functional platform where investors can create portfolios from professional traders’ strategies.
Signalstart.com: A service offering trading signals for automatic copying on your accounts.
Myfxbook.com: Reviews of trading signal providers.
Covesting.io: A social trading platform allowing you to copy successful crypto traders’ trades.
Collective2.com: A social trading platform where you can follow experienced traders’ strategies and copy their trades.
Wunderbit.io: A platform for cryptocurrency trading, offering trading bots and signals for automatic copying.
NAGA.com: A social trading platform providing the opportunity to copy successful traders’ trades and receive trading signals.
Zignaly.com: A platform for cryptocurrency trading, offering signals and trading bots for automatic deal copying.
Advantages of Using Trading Signals
Large selection: You can find thousands of signals on various resources, which can be copied to your account manually or automatically.
Statistics: Signal providers usually provide trading history, though not always, as in the case of Telegram signals.
Availability: Setting up signal trading is usually straightforward. If the process goes through a broker, support can be contacted.
Potential high profit: By sorting available trading signals by profitability, you will find the highest percentages among top providers.
Control: You can set up trading to have constant access to funds in your account and manually decide whether to execute a trade based on the signal.
Legality: Signal trading is generally legal, though some platforms, like eToro, may require verifying your account and filling out a questionnaire.
Community: Signal trading typically involves interaction and exchange of experiences with other traders.
Ease of use: You don’t need to analyze markets yourself; signals provide specific recommendations.
Availability of various strategies: Signals can cover different strategies, including scalping, swing trading, and long-term investment.
Risks of Using Trading Signals
Unreliable signals: Providers’ competence and honesty can vary significantly, leading to the use of incorrect or unverified signals.
Limited transparency: Some providers may not provide sufficient information about their strategy or results, making it difficult to evaluate their reliability.
High costs: Paid signals and platform subscriptions can be costly, reducing profitability.
Market risks: Regardless of signals, markets remain unpredictable and influenced by various factors.
Dependence on the provider: Using signals can lead to dependency on a particular provider, limiting independence in making trading decisions.
Technical risks: Using automatic trading systems and platforms can involve technical risks, such as software errors or communication interruptions.
Losses: Even reliable signals cannot guarantee profit; losses are always possible.
Conclusion
Trading signals can be a useful tool for traders, helping them make informed decisions and increase profitability. However, it is important to be cautious when choosing signal providers and consider risks. The use of trading signals should be part of a comprehensive trading strategy, incorporating personal analysis and risk management. Ultimately, the success of signal trading depends on the trader’s ability to use information effectively and adapt to changing market conditions.
