What Are Crypto Signals and How to Read Them?

Crypto signals refer to buy or sell signals generated by a third-party provider. In simple terms, these signals are recommendations to trade a specific token at a specific price. Crypto signals differ from trading indicators in that indicators require traders to interpret the data. Instead, they serve up trading recommendations on a silver platter.

These signals can be either manual or automated. Manual signals come from experts who study the data and make trade recommendations, whereas automated signals use algorithms to determine price targets and trade recommendations.

How Can Crypto Signals Help Traders?

As many as 97% of day traders lose money. Crypto signals, when they’re accurate, offer a path to the other side of this statistic. Ideally, they also provide an opportunity to earn outsized returns. Many call for gains of up to 5x or more. However, popular signal channels can move a token price considerably in a short amount of time, so it’s important to act quickly and be mindful of recommended entry points. There may be hundreds or even thousands of traders receiving the same information.

More than 5,000 people saw the example below.

Signals can also alert traders to potentially profitable crypto trades that weren’t on their radar. Many traders follow the largest coins, like Bitcoin and Ethereum, but often, the biggest short-term gains can be found with smaller coins and tokens.

Key Components of Crypto Signals

The elements provided by signal providers vary. Some, like the previous example, offer only a chart, trading pair, and a time range for the expected reversal. The signal provider in this example focuses trading opportunities on the Binance exchange.

Although trading signals vary in detail, many share some common components.

Types of Crypto Signals and How to Read Them

The primary difference between the types of signals from a trader’s perspective is how much information they provide and how to interpret the information. However, crypto signals can come about in different ways or have different time frames. Let’s look at the various types of signals.

1. Manual and Automated

• Manual: A manual crypto signal is generated by a person or a team. Real people analyze the charts and trends to make predictions, often centered on a trend reversal. Often, the human touch is preferred to in-depth marker analysis and puts a face to the signals channel.
• Automated: An automated crypto signal uses algorithms and artificial intelligence to produce trading signals. Providers like HIRN Signals use this method, using computers to analyze the chart patterns, volume, and other factors to generate trading signals. Some platforms, such as Binance Killers, also support exchange integration, allowing automated trading.

2. Long-Term and Short-Term

• Long-term: Long-term trades are generally measured in months. These trades ignore much of the day-to-day volatility, focusing on a long-range price goal.
• Short-Term: Short-term signals target trade periods measured in days. These take advantage of daily volatility to return profits in a few days to a week in many cases. Short-term signals often target reversals rather than long-term trends.

3. Buy Signals and Sell Signals

• Buy Signals: A buy signal typically refers to a spot market purchase. Some signal providers quote potential returns based on using leverage. Advanced trading platforms like Binance offer leverage trading using your funds on the platform as collateral for the trade.
• Sell Signals: A sell signal can work in two ways. If you already hold a position, a sell signal suggests exiting the position to protect your capital. However, a sell signal can also suggest opening a short position. Short selling requires borrowing cryptocurrency to sell at the target range and buying it back later, hopefully at a lower price. The difference between the two prices is your profit (or loss) less trading fees.

How Do Crypto Signals Work?

Most trading signals come through subscriptions to Telegram or Discord channels. Subscribers typically receive signals before they are released on the public channel or reported on social media channels. Some services offer exchange integration, whereas others simply provide the relevant information you’ll need to make a trade.

However, free signals may be less frequent, delayed, or even non-existent with some providers. Expect to pay a monthly or quarterly subscription fee for full access. For example, Binance Killers, one of the leading signal providers on Telegram, currently costs $290 monthly or $480 quarterly. They also offer a lifetime membership, which is $600 at press time.

Membership means you’ll have access to the latest signals, as many as two per day, with some providers. If the provider offers Cornix integration, you’ll be able to enter or close positions without visiting an exchange. Cornix supports spot trades on seven exchanges, including Binance and Coinbase, and futures trading on six exchanges.

However, many crypto signal providers do not offer exchange integration. In this case, you can use the information from the signal to trade manually on an exchange that supports the token pair. Signals typically include an entry price and a stop-loss recommendation so you can set up your trade accordingly.

How Accurate are Crypto Signals?

Accuracy for trading signals is hit or miss. Let’s explore some examples from Telegram signal providers.

Binance Killers SSV/USDT

Binance Killers is one of the most popular crypto signals channels on Telegram. Free subscribers get updates, whereas paid subscribers get early access to many signals. This signal provider focuses on Binance pairs but also supports additional exchanges.

Binance Killers announced a signal for VIP members for the SSV/USDT pair on October 11, 2024.

The signal called for a long entry between 18.5 and 12.65, with an OTE of 20.5.

Short-term targets for the trade began at 21.9, with additional targets at 22.2, 22.6, 23, and 24.

By October 17, 2024, the signal proved accurate, having hit four of the five short-term targets, as shown below. Binance Killers estimated a 34.8% profit after sending the signal, assuming 5x leverage on the trade.

Exit timing proved crucial, however. By October 18, 2024, SSV was trading close to 21. SSV dipped after reaching a short-term high on the 17th.

Overall, Binance Killers reports a 92% accuracy rate, with 100% accuracy for their Mega Signals.

Today Trader $TURBO

Next, let’s look at a meme coin signal from Today Trader, run by Mark Kelly, a YouTube creator with a growing following.

Premium subscribers got the trade signal on August 20, 2024, calling for a buy at $0.0045, with a stop-loss recommendation of $0.0036. Meme coins often see greater volatility than other cryptocurrencies, so a lower stop loss can prevent you from losing your position.

The signal called for a first target at $0.0070 and a second target at $0.0100. Binance listed $TURBO in mid-September 2024. On the Binance chart below, we can see that $TURBO hit the first target on October 11, 2024, and reached the second target at $0.0100 on October 13th.

$TURBO went on to reach a high of $0.013434 on the 14th. Traders who bought at the signal ($.0.0045) and sold at the high saw a 3x gain. Leveraged trades at 5x would have seen 15x gains on the trade, turning a $100 investment into about $1,500.

Those are two samples chosen at random, and both signals proved accurate in the long term. However, that’s not always the case, which makes a strong argument for using stop losses. In fact, $TURBO fell below the recommended stop-loss before the end of August. While the signal proved extremely profitable for those who held, those who used the recommended stop-loss would have sold before the run.

How to Use Crypto Trading Signals?

In most cases, you can use crypto signals with just a few apps, some of which you may already have installed. Most crypto signal groups are on Telegram, so you’ll need to install the Telegram app to access these groups. Others use Discord, which is a separate install. Both messaging apps offer desktop and mobile versions.

In addition, you’ll need a trading account to trade on centralized exchanges. Major trading platforms like Binance and Coinbase offer web and mobile apps. However, many trading signals focus on Binance pairs, some of which may not be available on other exchanges.

If the token is traded on decentralized exchanges (DEXs) like Uniswap but isn’t available on centralized exchanges, you’ll also need a self-custody crypto wallet that can connect to DEXs.

• Telegram: All you need is a phone number to set up a Telegram account. Install the app and create a username.
• Discord: Download the Discord app, then create a username and a password.
• Trading App: Centralized exchanges like Binance offer web access and a mobile app. Install the app, create an account, and verify your identity. You’ll also need to choose a funding source for your trades.
• Crypto Wallet: If you want to move your crypto off a centralized exchange or use a decentralized exchange, you’ll need a self-custody wallet like MetaMask or Rabby. Uniswap also offers a self-custody wallet with support for swaps. Be sure the wallet you choose is compatible with DEX you want to use. You can fund the wallet by buying a compatible cryptocurrency on a centralized exchange.

Tracking Your Trades

Some paid services track your trade performance for you, including signal providers like Binance Killers. If you’re using free crypto trading signals, you can use a spreadsheet to track your trades and profitability.

Exchanges and wallets can show your trades but may not show the profit or loss from trades. Tracking this data on a spreadsheet helps you focus on the big picture and avoid emotional trades. This step helps you treat your trades like business decisions and document trade details you may need for tax time.

Is Paying for Crypto Signals Worth It?

Whether crypto signals are a good investment depends on the accuracy of the provider and perhaps a bit of luck. Even a provider with high accuracy can miss several consecutive calls, which can devour your trading capital.

However, some traders report that they covered the subscription fee in a matter of days. Nonetheless, profitability after subscription fees and trading fees depends on several elements.

• Trade Amounts: To be profitable after fees, you may need to trade in larger amounts, generating larger profits in dollars with your trades.
• Monthly Subscription Costs: The monthly cost creates a hurdle to clear before your trades are truly profitable. Some providers charge hundreds of dollars monthly.
• Accuracy: No provider is always on the money, and misses can come in rapid succession.
• Leverage: Many trades require 5x leverage or higher to reach profit targets. Using leverage puts your collateral at risk, which can affect your ability to trade again. Additionally, some platforms don’t offer broad support for leverage trading, particularly in the US.
• Discipline: While trading signals often offer stop-loss and take-profit recommendations, some traders may ignore these. Emotions like greed and fear can affect profitability.
• Trading Fees: Exchange trading fees can vary dramatically, making some trades much less profitable than expected.
• Availability: Trading pairs for some signals may not be available on exchanges that service your country. For example, US and Canadian traders cannot access Binance according to their terms of service and prohibited countries. This restriction may place a substantial number of trades off-limits.

Conclusion

Crypto signals can offer a solid value in certain situations. Possible candidates might include high-value traders and those with access to margin trading. Traders outside the US are also likely to find more value in crypto signals because fewer exchanges service the US, limiting pair availability. However, there are also risks to consider, centered on the cost of the provider itself. Subscription fees create an ongoing cost to trading that requires consistent performance. If you’re choosing a crypto signals provider, research their track record relative to the cost and consider a monthly subscription as a short-term test before committing to a longer subscription.

FAQs