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A small analysis of the signalmen's scam-scheme.
Signals are messages about deals made by “trusted” traders and services. For subscribing to them or access to VIP, where signals are published, you will be asked to pay a certain amount.
I will leave aside the general moral and financial side of the signals for now. I will only talk about the nuance that is most often used to deceive and make money on new subscribers.
This is setting goals (take profit).
Signal providers almost always set not one but several goals (from 3 to 10). This approach pursues purely marketing functions that do not help you make money in any way. Moreover: with a single goal, 95% of such services would not be able to work!
We will not even analyze services that do not indicate stop loss (especially on margin trading). Suppose a signal always consists of two elements:
1. Stop loss price.
2. Exit price by profit. Let's say three goals are given:
C1 (goal 1);
C2 (goal 2);
C3 (goal 3).
Let's look at an example.
A long signal is given for BTC / USD from $ 40,000 with a stop loss of $ 35,000 and three targets:
C1: $ 41,000;
C2: $ 45,000;
C3: $ 60,000.
1) Why is C1 so close to the entry point? It is 5 times closer than the stop loss ( 1,000 vs 5,000 ).
This means that the probability of taking it is 5 times higher. This is a marketing gimmick. If the price drops to $ 41,001, and then rolls back and gives a loss (stop loss triggers), the signal provider can always declare that the first target has worked! You could close the whole long there. Or move the stop loss to breakeven. In general, after C1, the provider never recognizes the signal's loss. The mathematical advantage and freedom in the interpretation of the result are on his side.
2) Ts2 - between the first and last goals, there can be any number of intermediate goals.
3) C3 (last) is indicated more than the distance from the entry to the stop loss. There is always a possibility that the price will go up to it. Because the provider is already protected from recognizing a loss by taking C1, he can roam on C3. And if from $ 40,000 the price rises to $ 60,000, you will receive a proud report of + 50% profit. As if not a percentage of the position was closed on the previous targets.
The final statistics is built taking into account the complete closure of positions on C1, if a rollback followed, or on C3, if the growth continued. Although such an actual result will never be - for this you would have to guess each time for what purpose to close the entire position.
Most subscribers close equal shares of their longs and shorts for each goal. Therefore, the result is an average, but almost always worse than in the provider's reporting statistics.
Verdict:
Do not trust signal providers that ignore stop losses.
Before paying for the service, be sure to clarify whether money management is given for each position (not leverage (it does not matter!), But the risk from the deposit, which is included in each specific transaction and which can be calculated through the exchange calculator).
Clarify the mode of closing a position by goals (on C1, C2, C3, etc., so as not to leave the provider freedom in the interpretation of the trading result).
Signals are messages about deals made by “trusted” traders and services. For subscribing to them or access to VIP, where signals are published, you will be asked to pay a certain amount.
I will leave aside the general moral and financial side of the signals for now. I will only talk about the nuance that is most often used to deceive and make money on new subscribers.
This is setting goals (take profit).
Signal providers almost always set not one but several goals (from 3 to 10). This approach pursues purely marketing functions that do not help you make money in any way. Moreover: with a single goal, 95% of such services would not be able to work!
We will not even analyze services that do not indicate stop loss (especially on margin trading). Suppose a signal always consists of two elements:
1. Stop loss price.
2. Exit price by profit. Let's say three goals are given:
C1 (goal 1);
C2 (goal 2);
C3 (goal 3).
Let's look at an example.
A long signal is given for BTC / USD from $ 40,000 with a stop loss of $ 35,000 and three targets:
C1: $ 41,000;
C2: $ 45,000;
C3: $ 60,000.
1) Why is C1 so close to the entry point? It is 5 times closer than the stop loss ( 1,000 vs 5,000 ).
This means that the probability of taking it is 5 times higher. This is a marketing gimmick. If the price drops to $ 41,001, and then rolls back and gives a loss (stop loss triggers), the signal provider can always declare that the first target has worked! You could close the whole long there. Or move the stop loss to breakeven. In general, after C1, the provider never recognizes the signal's loss. The mathematical advantage and freedom in the interpretation of the result are on his side.
2) Ts2 - between the first and last goals, there can be any number of intermediate goals.
3) C3 (last) is indicated more than the distance from the entry to the stop loss. There is always a possibility that the price will go up to it. Because the provider is already protected from recognizing a loss by taking C1, he can roam on C3. And if from $ 40,000 the price rises to $ 60,000, you will receive a proud report of + 50% profit. As if not a percentage of the position was closed on the previous targets.
The final statistics is built taking into account the complete closure of positions on C1, if a rollback followed, or on C3, if the growth continued. Although such an actual result will never be - for this you would have to guess each time for what purpose to close the entire position.
Most subscribers close equal shares of their longs and shorts for each goal. Therefore, the result is an average, but almost always worse than in the provider's reporting statistics.
Verdict:
Do not trust signal providers that ignore stop losses.
Before paying for the service, be sure to clarify whether money management is given for each position (not leverage (it does not matter!), But the risk from the deposit, which is included in each specific transaction and which can be calculated through the exchange calculator).
Clarify the mode of closing a position by goals (on C1, C2, C3, etc., so as not to leave the provider freedom in the interpretation of the trading result).
