If you follow all our suggestion on handpicking signals provider here, there is only one thing left to do: test it against current market condition using a demo or a small account. And yes, losing $30-$40 for a month subscription fee is small price to pay compared to blowing up a whole account following untested signals.
So what I did was taking a month VIP subscription on one of the biggest signal channels around, setup a demo account, and test the signals vigorously. Remember, even only a week test would give a very realistic picture of the service’s actual value.
The Testing
The service I subscribed to provides 2-6 signals per day with 3 TP and 1 SL given for each signal. Note that for consistency sake, I keep taking same lot size during the entire test.
First Test: keep taking TP1
My initial test by keep taking TP1 was very impressive, I kept scoring winning trade after winning trade and my history screen was painted beautiful greens. However on the 2nd day I hit 2 SL, then another SL on 4th day and my equity plummeted.
Here’s the catch: every SL hit negates profits generated from 5-7 winning trades. TP 1 is generally just 15 pips while the SL is around 80-90 pips. At the end of the day I came out with almost nothing gained. I figured maybe taking TP2 would fix this situation.
Second Test: keep taking TP2
After I started to take TP2, I noticed a few things:
- my profit per winning trade increase (of course)
- I hit TP less frequently and hit SL more frequently
- I have many opened positions and they last for days
Meanwhile my equity plummeted even further due to more than 8 positions in floating minus. At this point my balance already lower than when I was at the beginning of the test.
The Almighty Daily Profit Report
Here’s the cherry on the top: each day the channel deliver report of yesterday’s trades result and boy the report is lit! Hundreds of pips per day without fail.
Every. Single. Day.
But wait, my equity says otherwise! What’s going on? Upon further inspection, here’s what’s going on: For each signal, they post THE HIGHEST TP hit. If for example, signal #1 hit TP3 they will count TP3, if signal #2 hit TP1 they will count TP1 and so on.
What does it entails?
- It means if you put in TP3 and it went to hit SL, the report ignore that because it hit TP1 (it’s counted as a profitable signal)
- If you put in TP1 and the market actually went and hit TP3, you were missing out.
- To put it simply, in order to get similar result you need to KNOW EXACTLY when to put on TP1, TP2, or TP3. And of course, this is impossible to do.
Conclusion
So here’s my conclusion from the test:
1. TP1 acts as a buffer. It is very short, will almost always hit. This will ensure most of the signal can be reported as profitable. However, due to it’s short nature, it cannot mitigate the damage when SL hit. This make it impractical to actually follow in real trade.
2. TP2 offers more profit per winning trade but has poorer hit ratio. Additionally you will hit more SL and have many positions open for days, making it performs worse than TP1. At the end of the day, you cannot grow an account by following TP2.
3. TP3 is convenient pip booster. I can’t even imagine what would happen if I decide to follow TP3. And at this point, testing it would be a waste of time. TP3 is there to crank up the pips count on report but seeing how TP2 performs, I believe that would be its only purpose.
4. There is no way to utilize this service to grow your account. The whole system is conveniently arranged to give them 100% win because they will always get and report the best possible result while regular followers need to pick one TP or the other, greatly diminishing their chance of getting something out of it.
What you’ve read above are exactly the reason why none of these screenshots signal provider able to provide proper portfolio, it’s just impossible for them because they run multiple demo accounts so they can keep showing you the best possible result.
Now that you hopefully know better, check out our free verified signal at SmoothGain Signal. But wait, don’t just take our word for it, verify every trade at our Myfxbook page here. It’s the only way you know that we put our money where our mouth is.
