When I was a college student, I finished reading Rich Dad Poor Dad by Robert T. Kiyosaki, since then, my passion burst into the financial field. I recalled myself in the past where I researched from mutual funds to cryptocurrency (and will try to research NFT next), and from that, I focus on forex trading as it suits me well for trading while others are just my investment. During my first time of knowing the forex market, I only rely on a signal that was provided by other people which is a "wonderful" experience that led me to "donate" my money to the forex market.
Trading Signal
Before we delve more into a signal trader, it is better to know what is trading signal first. This can be seen from Downey's (2020) explanation where he wrote that a trading signal is where you can choose to follow the signal to buy or sell that is generated by analysis. From the previous explanation, I perceive that a trading signal is useful if you are the one who designs it and know that the signal is proven to be good. This can be based on the technical analysis or fundamental analysis or both of them.
However, apart from the good side, there is always the bad side just like yin and yang. What I am trying to convey here is a signal that is provided by other sources such as other people who open up a business where they claim that they are "proficient" in trading and have a "high chance of success" in trading "by just following their signal". Thus, the signal trader was born from this which you can see in the explanation below here.
Signal Trader
Above this paragraph, I wrote that a signal trader was born from the business of people who claim themselves as "proficient traders" where this can be seen such as people who are always talking about their new brand car, watch, or whatever they have in their possession saying that they got it from their trading career. Well, to be honest, it is just their strategy to attract newborn traders who are looking for a shortcut to spend their money on the signal that is provided by that business.
Now, let us zoom in more about the signal trader. In my point of view, a signal trader is a "trader" who only rely on other people's signal. An example of signal traders can be seen where they are like soldiers during the war ready to protect their commander even if it means death. In forex, traders are staking their forex account to other people's analysis because of their laziness to go through the process of learning the forex market and continuously learn it.
Can A Signal Trader Be Profitable?
After you know what is a signal trader which is simply like a soldier, you can think independently of the bold text question above here. Before you answer it you should think logically, can a signal trader be profitable knowing that they can die anytime during the war in the forex market for their commander while at the same there is a small chance gain honor from your commander?
If you say no, then, you know what I mean that you are the one and only who has authority over your forex account and will not be wavered by other people's opinions by designing a trading plan for yourself. But if you say yes (even if your commander always giving you a "free meal"), then, beware if you have put your money while following their signal because their style of trading may not be suitable for you (aside from they may have an ulterior motive you do not even know) and if your commander leaves you behind, you will have no knowledge on how to trade the forex market properly. Thus, when you trade independently, you will only head straight to the abyss.
Conclusion
In the case of signal traders themselves, they are like soldiers who follow their commander to the death door if the commander is bad and only wants to take benefit from the soldier. However, if you think your commander is good and a kind person, then, keep it up but stay aware just to prevent something bad that may happen later. Overall, being a signal trader is not wrong if you are a beginner because you want to know the operation of the forex market. However, if you want to climb up the stair, then, you should think independently about how you approach the forex market by having a trading plan that is specifically made for you.
In short, you can ask yourself, are you a soldier type or a commander type? If you are suitable to be a soldier, you can just follow other people's signals in which you stake your money on them where you do not know their strategy is suitable for you or not just like a soldier who follows the commander whether it is going to the abyss or to the heaven. However, if you are a commander type, then, you are in control of your forex account where you clearly know the probability of your strategy, how you handle loss, etc. Which then will indirectly improve your personality on how you approach the forex market.
Written by Andre I.
Reference
Downey, Lucas. 2020. Trade Signal. Retrieved from Investopedia (Accessed 20 March 2022): https://www.investopedia.com/terms/t/trade-signal.asp#:~:text=Trading%20signals%20are%20triggers%20to,allocations%20or%20take%20new%20positions.