I am running a signal service for almost 2 years.
In this article, I am going to share my experience of being a signalyst and I will try to explain why most of the signal services that are available are scam.
First, let me tell you why I started a signal service, because I frequently hear a question: why to sell signals if you make money from trading?
I post free signals, forecasts and ideas on TradingView for more than 8 years. (that info is publicly available on my TV page)
I also run a free telegram channel and a trading academy, and a coaching program for 5 years.
Each and every day, I received dozens of requests from my followers to start selling signals, but I had no passion, and I was always trying to position myself as an educator.
However, less than 2 years ago, a black swan occurred in my life.
A conflict in Ukraine started.
I was a happy owner of a Russian passport at that time (and I still am).
Because of the sanctions, all the withdrawals from my broker were frozen. Not only I could not withdraw my profits, I could not even take my trading deposit.
In a glimpse of an eye, the main source of my funds was closed.
I got a Finnish residence at that time, and my first action was to update my trading profile with the broker and switch to a Finnish residence.
Could you imagine how shocked I was when my Finnish bank account was suspended the next day?
The only way to restore my trading account and make withdrawals was
to get a residence in a Russian-friendly country. Not an easy task, man...
So I made a decision to get the residence permit in Dubai and open a bank account there.
I was warned by the consultancy agencies that it will take AT LEAST half a year.
Relocation to Dubai, the bureaucracy and stuff were extremely expensive, and I needed money.
At that moment, I decided to start a signal service so that I could stay afloat.
And here is how my signal service looks like:
Forex majors and minors:
Gold, Silver Oil Entry, stop and target
4-5 weekly signals
I also keep a spreadsheet with all the results of the trades that I shared
If you ask me, is it worth it to run a signals group, from the financial perspective it definitely is. Moreover, it is even possible to not trade at all and the signals' revenue can easily cover the trading profits.
But here there is also an important NUANCE.
The nuance is in people.
My clients, the members of the signals group, are my TradingView/Telegram or YouTube followers, I even know some of them in person, so I believe that most of them are decent individuals.
The problem is, however, in people's expectations.
Here is what people want:
high win rate, preferably 70% plus,
high reward to risk ratio, at least 1,5,
regular/daily signals,
a lot of signals, preferably, 3+ daily,
no losing streaks.
Let's now discuss these points.
About a win rate.
My overall winning rate this year was 67%.
What does it mean?
It means that among 100 trades 33 trades will be losing ones.
The distribution of these losing trades will be completely random.
It means that a losing streak of 5 trades in a row can easily occur.
For some reason, however, a lot of people leave my group after we face a couple of losing trades. Most of the time, it is enough for a person to leave after 2-3 losing trades in a row.
People do believe that "real" signal service should provide stable and profitable signals with rare and tiny losses.
Is it possible to provide a stable amount of signals on a daily basis?
The markets are always different: one day they are very volatile, another day they are barely moving.
When you trade a particular trading strategy, you focus on very specific events.
With a constantly changing nature of the markets, it is IMPOSSIBLE to guarantee a stable number of signals daily without affecting their quality.
Imagine that you are a swing trader, your goal is to catch strong long-term impulsive movements. If the markets are calm because of the absence of the news for a week, you will not trade simply because there are no opportunities for your strategy.
In the example about, USDJPY is not moving for 8 trading days. How can you catch a move on the market when there are no moves?
What I do when there are no trades matching my trading rules: I simply skip such a trading day and wait for a new one.
This year, occasionally I was not trading for 3 consequent days because of not appropriate market conditions.
But, when I don't send the signals for more than one day, I receive a lot of complaints from the members. They demand the signals. And no, I am not charging my members for the days when there are no signals.
I even made an experiment, in summer I started to on purpose send daily signals, even if the setups were not that good.
You can see the results of the month of August on the left.
Could you imagine how surprised I was when the performance of the signals dropped significantly, but signals were coming every day, people sent me much fewer complaints?
How could it be?!
Here is the equity curve of my signal service this year.
To me, it looks absolutely amazing. Steady and nice growth over the entire year with limited drawdowns.
But, in fact, around 25% of the members believe that the service is a scam and around 25% think that the service is barely making money.
The problem is that people think that trading is like a cash machine. If you are a professional trader, you make millions, and you never lose.
Good signals are what is needed to become rich quick.
Just imagine how great the life could be if for 80$ subscription you could leave your job and just trade the signals.
Just copy the trades and become a millionaire.
How appealing that idea is.
Now, back to the question, why most of the signal services are scam?
From what I see, professional traders noted that people are looking for something that does not exist. No matter how hard you are trying, people will keep believing that somewhere there is a better service with easy money.
In such a situation, the best way to maximize your signals revenue is to present that you are the one who is always profitable.
Show these weekly trading reports with thousands of pips, with high win rate, post lambo and fancy life.
The goal is to sell a subscription one time and mute a client forever and search for a new one.
Most of the people want easy money, and the sad thing is that they truly believe that easy money really exist.
While they keep believing it, scam will remain the best way to capitalize on that...
