The Danger of Trading Tips and Signals

By Martin Hills, founder of Financial eLearning and former LIFFE floor trader

Scroll through social media for five minutes and you’ll find someone selling trading signals. A screenshot of a big winning trade, a sports car, a beach – and a monthly subscription that promises you can have the same.

I traded on the LIFFE and IPE floors and on screen for years. Here’s why I’d tell anyone starting out to steer well clear.

A story close to home

A friend of our family was saving for their first house. They followed a trading influencer online who only ever posted winning trades, and paid a monthly fee for his “signals”. Within three months the whole deposit was gone – three years of saving, wiped out. As I said to them afterwards: if someone really had a winning formula, they wouldn’t sell it to you for a monthly fee.

1. You only ever see the winners

Signal sellers post their winning trades. Nobody has a 100% record – not the best traders on the floor, and certainly not someone on Instagram. When you only see the wins, you have no idea what the real track record looks like, or how big the losses were along the way.

2. If it really worked, why sell it?

Ask yourself this: if someone had a genuinely winning formula, why would they share it for a monthly fee? Honestly, if I had one, I wouldn’t share it with anyone and risk diluting my own profit. For many signal sellers, the subscription is the business – not the trading.

“If I had a winning formula, I wouldn’t share it with anyone.”

3. A signal tells you what to buy – not how much

A tip might tell you to buy oil or sell sterling. It won’t tell you how big your position should be for your account, where you’ll get out if it goes wrong, or what happens if the market moves against you before it moves your way. On the floor, the traders who got wiped out usually didn’t pick the wrong market – they were simply too big, and they held on hoping for a retracement instead of cutting the trade.

4. You learn nothing

Following signals means handing your decisions to someone else. When it goes wrong – and it will – you don’t know why, so you can’t improve. Losses are part of every trader’s education, but only if you understand the decision behind them: the planning, the entry, and when to flatten your position.

5. Wealth isn’t quick

There are very wealthy traders out there, but only a tiny percentage reach that level, and none of them got there overnight. Trading is hard work, dedication, discipline, long hours, education and experience. Anyone promising quick, easy profits is selling you something.

What to do instead

• Learn how markets actually work before you risk your own money
• Understand risk and position sizing first – they matter more than any single trade
• Be wary of anyone who shows only wins or promises a lifestyle
• Choose structured, recognised learning over tips and shortcuts

That’s why our Level 3 Certificate in Financial Trading starts with the foundations: how markets work, the different roles in trading, risk management and trading psychology – taught by people who traded for a living.

See the Level 3 CertificateRead learner reviews

Trading involves risk. No course can guarantee trading profits.