EA's / Signals - Do they have a place in trading?

99% of the time when signals services mentioned on forums they are being slated but are all of them really that bad? Some of them i have looked in to seem to be getting good results, one of the Forex ones has had 6 winning months out of the last 7.. hey that can't be bad. So what about you expert traders, do you bother with them?

If so which ones do you find to be genuinely consistent?

And if you steer clear, whats your reasons?

DB

a) Some are (significantly) worse than bad

b) How do you know they are getting good results ? are you following them trade by trade or relying on 3rd party verification (which by the way is extremely easy to falsify... in most cases its specifically designed so it can be falsified)

c) 6 winning months out of 7. Even T2W's latest pet vendor managed that (it was the losses in the 7th month that wiped out the previous 6 months gains that are the problem). Throwing around these sorts of metrics is pointless really.

d) What exactly do you mean by consistant ? In most cases if you look at the day to day performance of a signals service you are looking at the varience in the returns, not the returns. To be blunt, watching varience isnt really a very smart thing to do. My trading is "absolutely 100% consistant" but the returns made over a given sample period certainly are not.

e) If someone fully exposed an edge in order that I could verify the method worked, and then was kind enough to give me signals, I'd quite happily follow em providing they met with my objectives. The problem is that the tiny minority who are prepared to do that dont actually meet my personal objectives. Either they earn to little, or take too much risk, or trade to frequently, or trade too infrequently etc etc.

Imagine what would happen when the goose stops laying its golden eggs, and you have no idea why.

My experience has been that they publish results that are impossible to get in real life. Either they are simply fraudulent or other factors come into play such as late notification or the market moving too fast and so on.

The latest is trade copier software which replicates the 'experts' actual trades but any trader prepared to give up his freedom to do this day in and day out can't be making enough money to provide the lifestyle he wanted.

Also, market conditions change and what may provide profitable signals one month will, sooner or later, crash and burn. I'm afraid there just isn't any certain, long-term way to make money trading by following instructions - i.e. not putting in the work yourself.

Remember also that if anyone had guaranteed signals (and I mean guaranteed) they would trade a huge number of contracts and be so rich they wouldn't need to sell the signals.

The bottom line is that most (99%?) of anything sold to do with trading is a rip-off. People are always willing to buy 'the dream' but it's just a day dream...

Yeah i see what you mean about most of it being rubbish, but a few do stand out from the crowd... one that springs to mind is FMT (forex morning trade) you only have to look in the journal to see consistent wins, hammy is getting 100 pips practically most days from this service and its software that decides if you trade or not... it would be impossible to fake these results as many members on here are using

Yes, I have this myself but it is not a signals service. It's an indicator system you use on your own computer and MetaTrader. Also, if you live in the UK, you have to be up and trading by 6:30am. I'm not that desperate...

I think the consensus is that signals/indicators are only crap if they're being sold. I'm sure there are plenty of mechanical systems that generate money no problem. Consider this: if you had a program that made you on average 50 pips a day, would you sell it for £50?

shadowninja said:

if you had a program that made you on average 50 pips a day, would you sell it for £50?

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I have one that averages 7 pips a day. I once considered selling it for about 3 microseconds, then I came to my senses

The majority of systems from signal sellers blow up at some point, but there are some decent ones out there. Make sure results are verified by an independent 3rd party. There is more transparency recently with some of the 3rd party sites that sell the signals, whereby its possible to see live brokerage trades. This eliminates any systems that, for example, look good on paper but are untradeable due to slippage.

shadowninja said:

I think the consensus is that signals/indicators are only crap if they're being sold. I'm sure there are plenty of mechanical systems that generate money no problem. Consider this: if you had a program that made you on average 50 pips a day, would you sell it for £50?

Click to expand...

I would agree with your comments. if someone is selling signals claiming they can earn average 50 pips a day i would run a mile. However I know plenty of developers who sell signals due to lack of trading capital to trade it at full capacity (ie to max out contract size up to the point where slippage starts to impact returns) and this offers additional income.

Yeah im gonna keep my eyes and ears open, as not every single signal firm will be crooks, and it wouldn't take long to figure out which are good and which are crap, and i suppose if you don't start getting greedy putting big money on each trade it can't go as pair shaped, does anyone know of anything to take a look at?