Signals Are Bad Even If They’re Profitable: Here’s Why
I personally think signal services are terrible for trading psychology, even if they’re profitable. Here’s why:
When you use a signal service, you have little to no insight into the strategy and the edge you have over the market. You also lack clear expectations because you don’t know the win rate, loss rate, profitability, etc.
Having your own edge, which you have backtested, provides clear expectations. You understand your losses and wins and anticipate a certain amount of each. In contrast, with signals, you have no such expectations.
This lack of clarity is similar to gambling. When you win a trade using signals, it’s unexpected and gives you a euphoric feeling, much like winning a bet. This feeling can become addictive. If you become accustomed to this excitement and later start trading with your own strategy, your trading psychology could suffer significantly.