Every trader, who is just starting his way in trading, immediately turns his attention to various trading channels or platforms with signals. In anticipation of immediately starting to earn 100% to their trading account, beginners often apply with the following search queries:
KEY QUESTIONS:
- What are crypto signals?
- How to get crypto trading signals?
- Where to find signals for Bitcoin and Altcoins?
- Best Crypto Signals, Crypto Signals for Binance Futures and more.
But of course, most people look for crypto signals in telegram, groups that offer crypto signals, and channels in discord that provide information on crypto signals.
In this article, we will answer all these questions and tell you why 90% of beginners lose their money trading signals and what you need to do to be the 10% who make money.
What are crypto trading signals?
Trading Signals is a service that allows signal subscribers to receive recommendations for opening trades in cryptocurrency and other markets from traders with extensive trading experience. Unlike analytical reviews and trading ideas, a signal is a precise recommendation to open and close a sell or buy deal to be executed in a precise time frame at a recommended price.
In general, what are crypto signals is a good opportunity for novice traders to start earning without much experience in trading.
From the beginning to the end of the deal, traders monitored and communicated the situation in the chat. They talked about how and when to fix the profit in order to get the biggest profit. As a result, the transaction reached the Take Profit point.
When signing up for signals, novice traders expect that they will simply open trades and earn every time, but unfortunately, not everything is so simple, and without prior preparation and following clear rules, your trade will have negative results. That is why we highlighted the main causes of losses.
Top Reasons Why Newbies Lose Money Trading Signals
Lack of training
One of the main mistakes of beginners is that they start using signals without sufficient experience. In order to copy trades, it is desirable to understand the rules and principles of the trading strategy used by the trader.
In order to correctly work with recommendations, you must know:
- how to control risks
- how to work with platforms
- where and when to put SL
- when and how to enter and exit trades
- Without this knowledge, it is strictly forbidden to trade on signals.
Signals are not the holy grail in trading!
When starting to receive signals, beginners expect that 100% of trades will be profitable, but this is impossible. It is necessary to understand basic concepts such as: win rate, risk per trade, risk per day, enter at the same price points and understand the strategy used by traders. All these concepts are disclosed in more detail in other points.
The main task of a trader is not to guess the direction of movement 100%, but to earn more than to lose. For example, the screenshot below shows the statistics, which highlight that the percentage of profitable deals is only 46%. At the same time, the profit of our balance is about 300%, and the ratio of profitable deals to losses is 4.3.
The ratio of winnings and the ratio of risk and profit
The winning ratio is one of the main concepts. You will be surprised, but you can be profitable even if you have 8 out of 10 bad trades and only two good ones. It all depends on your winnings and risk/reward ratio.
The table below shows the different risk-to-reward ratio and win ratio of the trades. For example, if your trading win rate is 20%, then your strategy should give you a risk-to-reward ratio of at least 5:1. This means that you can have 3 out of 5 losing trades and you will be a profitable trader. If your risk to return is 1:1, that means more than 50% of trades should be profitable, and so on.
Read later: Cryptocurrency Trading Signals - How They Work