The media, Youtubers, and Crypto Twitter might make it sound like all trading signals groups are out to scam people. Still, there are always some tell-tale signs that can give away whether or not a signal group is legitimate before joining.
In the following paragraphs, we will discuss these red flags to make an informed decision about whether or not to join a crypto signals group.
What Is A Crypto Signals Group?
In the simplest terms possible, a crypto signals group is an online community that provides trading advice for its members interested in investing in digital currencies like Bitcoin and Ethereum. Their information services range from price alerts and chart analysis to more advanced technical analysis and swing trading strategies.
You may consider going it alone while trading or investing in the crypto markets, but consider the upsides of joining forces with a trading group.
Cryptocurrency traders have a tough job. They analyze trading charts to find patterns that predict the future of Bitcoin’s price, and it can be risky business!
If they’re right about price direction, their crypto holdings or profits go up. But if they’re wrong, their losses could be significant. The best way to make money in the crypto markets is to have a game plan with clear entry and exit points before each trade.
Trading signals groups help traders like you find patterns and plan trades around an established risk management model, sometimes automatically (via auto-trading bots).
In a nutshell, crypto trading signals can provide market insight that would otherwise require hours of research.
Most free crypto signal groups are typically low-effort. They may not give you accurate information or a long-lasting strategy to follow. Paid group memberships often offer higher-level trading signals with greater accuracy and risk management parameters and often a system for automating or rapidly executing trades.
But before you join a paid crypto signals group, here are some caution signs to keep an eye out for.
Top Red Flags You Should Know Before Joining a Paid Crypto Signals Groups
There are some common red flags to look out for when evaluating the legitimacy of a crypto signals group before deciding whether or not to join it.
First of all, make sure you know what type of service they provide. Paid crypto signals groups may offer various services but typically focus on giving traders buy and sell signals by predicting short-term price movements.
Suppose they are not focused on buy-sell signals but offer other services, such as crypto education or strategy development. In that case, you will need to investigate whether the value of the group outweighs what the monthly subscription will cost you.
Many crypto trading groups do not necessarily offer “signals” but do offer a robust community of professionals from all walks of life, as well as detailed and regular analyses of the markets, discussions of macro events, and collaborative research of various investable projects.
The monthly cost outweighs the services offered
Many paid crypto signal group owners have been found guilty of manipulating their trading performance record to convince new.
Suppose the lion’s share of the group’s trading info uses Youtube and Crypto Twitter as its source. In that case, it could mean they are not following any specific strategy for trades but rather going with what’s popular at the time.
If they are not offering anything you can’t get for free on Youtube or Twitter, look for greater value elsewhere.
A crypto signals group worth the monthly subscription will often source information directly from exchanges and platforms such as TradingView, CryptoQuant, Santiment, and on-chain analysis hubs or other experienced traders.
Failing To Encourage Crypto Trading Education
Crypto signal groups are not all created equal. Some crypto signals provide in-depth analysis of trends, what’s triggering other events, and how to intelligently make calls for future trades with little effort on the user’s behalf.
Unfortunately, most crypto signals groups try their best to spoon-feed traders.
While most people join these groups for the time-saving aspects of thoroughly crafted signals, a group worth your time will aim to develop your independent trading skills.
Suppose a crypto signals group expresses no interest in trading education. In that case, it’s a red flag that the only thing they want from you is money. Their heart’s not in it, so find a group with a heart!
The Monthly Cost Of Membership Outweighs The Services
Make sure you know the monthly cost of membership. Suppose it is more expensive than another legitimate group that does similar work but offers lower-priced options to new individuals who want to join. In that case, you should consider whether this group is worth the high cost.
A crypto signals group charging more than $500 per month is steep, considering that’s on par with basic subscriptions to Delphi Digital, Messari, Forbes, and Medium combined.
Ask yourself this – Does a signals group promise you’ll cover your monthly subscription in no time without promoting proper risk management? If that’s the case, consider looking elsewhere for your crypto trade ideas.
The Group Centers Around Pump And Dump Schemes
Be aware of any red flags that may alert to possible pump and dump manipulation. Evidence includes traders coordinating pump and dump signals through group chats, members publicly discussing upcoming pumps, or members promoting pumps in other groups.
Members of pump and dump groups sometimes even create fake celebrity tweets or falsify news to affect a targeted crypto token price. Often, even exchanges participate in these pumps.
Pump and dump signals groups make up the bulk of all signals groups when not counting outright scam groups that only exist to steal a users’ private information.
Consider this research paper tracing the message history of over 300 Telegram channels from June 17, 2018, to February 26, 2019, identified 412 pump events orchestrated through those channels.
If there were a way to track all pump events from 2018 until today, that statistic would likely be astronomically higher. What newcomers to crypto trading should know is that more than 60% of pumped coins have a lower “post-pump” price than the “pre-pump” price.
Be aware that “pump and dump” schemes are illegal in many countries, including the United States. We don’t need to explain why one would want to avoid crypto groups that encourage breaking the law.
Consider how over 80% of Initial Coin Offering (ICO) fundraising from 2018 was reportedly for funding scam operations, with only 4% of total ICOs succeeding in raising funds. The market’s hype cycle has different players and themes in 2021.
However, you can bet that the statistics for Initial DEX Offerings (IDOs), private sales, NFT auctions, and so on will look very much the same.
Another critical issue with pump and dump groups is that they often disappear overnight. Crypto signal groups are only as strong as their leadership. If the people leading these signal groups decide to pack up and leave, there’s a chance you’ll lose out on any promises made in exchange for your membership fee.
When a signals group team decides to cut-and-run, it usually goes in one of these two directions.
First off, the leaders may grab every penny in membership fees from members who invested time and money into the group, then vanish before completely delivering their promises.
The second trajectory entails someone new taking charge over an existing group without new or old management communicating clearly about what happened beforehand. Members might not know the new person at all, and there’s a chance that they’re not even in charge of what will happen with the provided signals.
Evidence Of Manipulating The Group’s Performance Record
The monthly cost of membership may seem worth the money when a group claims to outperform Bitcoin by 300% or more but is it telling the truth?
Fraudulent groups will typically use new traders who are inexperienced with crypto trading to manipulate their performance records according to how they want the numbers to look.
Evidence of someone manipulating or falsifying trading data on any platform to create such an appearance is a clear red flag to stay away from them immediately.
A better strategy would be to invest your money and time into a crypto signals group with proven and audited past performance records to see for yourself that the group is legitimate.
Prominent Members Steal Crypto Signals From Competitor Groups
Stealing premium content from other crypto signals groups shows that a crypto signals group is not committed to its members.
If the owners of a crypto signals group steal signals from other competing groups, there is no guarantee they’ll always be honest or committed to their paid members.
Many paid crypto groups extract all of their value from other crypto signals groups. Some of these group leaders subscribe to larger groups, then filter down the premium crypto signal calls to their own paid groups. Their members are none the wiser.
Some paid signals groups provide a constant stream of buy or sell ideas without providing analysis. More often than not, the signal group leaders are siphoning those ideas off other cryptocurrency groups.
Because you’re trusting the signal provider to provide signals backed by a strong reputation for performance, signal theft drastically lowers the signal provider’s integrity.
Such underhanded actions are unfair and often illegal. You must ensure the crypto signals group can provide a third-party audit and has earned genuine testimonials.
Suppose you can speak to people on the team as well as current and past paid members. In that case, you’ll have a better idea of the group’s value, as well as the origin of their signals and analysis.
Targeting New And Inexperienced Traders For The Purpose Of Manipulation
Paid crypto signals groups often target traders that are new and inexperienced in the market. When crypto is hot, it’s time to focus on growing memberships more than retaining current members, so targeting newbies isn’t always a bad thing.
Targeting newbies is an issue when the group manipulates members’ emotions, sentiments, and trading actions.
As we mentioned before, paid signals groups often claim that new members can make their money back quickly and turn a profit. There is no guarantee of profits, and only a handful of people are qualified to make such bold claims.
Either way, it’s one of the low-hanging fruit for attracting new market entrants to join your signals group.
Watch for when the group turns their attention away from education towards claims about making money quickly. An example would be claiming they can turn $100 into thousands of dollars within weeks or days with little effort.
Such outrageous claims use manipulation tactics in the message like fear, uncertainty, and self-doubt (FUD). A corrupted signals group may also publish anger or FOMO-inducing content with no evidence or adequate analysis involved.
Avoid signals groups that target newbies with outrageous claims about how much profit potential lies ahead while disregarding the risks involved. Encouraging people to spend their life savings, use heavy leverage, or trade using credit cards are clear signs of a dangerous signals group.
Takeaway: Never Trust a Crypto Signal Trading Group if You Spot Any of the Red Flags in this Article.
A crypto signals group is a closed community of people who share trade information such as charts, buy/sell signals, and commentary. Please know these warnings before deciding on whether or not to join an expensive crypto signals group.
Only you are accountable for any losses accrued in the market at the end of the day, so do the work before joining a crypto signals group, and never stop learning!
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Our win rate is exceptional, and we deliver the data to back it up. Importantly, we never shill, will always report our losses, and highly encourage members to follow a strict risk management system.
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