Do Trading Signals Improve Retail Decisions? | TU Research
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TU proprietary research suggests that trading signals have become a mainstream tool among retail Forex and CFD traders, although their influence on trading decisions varies considerably. In a survey of 1,450 retail traders, 61% reported using trading signals at least occasionally. Among signal users, 47% said they had opened trades they would not otherwise have considered, while 39% performed only a brief market check before executing a signal and 11% typically followed recommendations without additional verification. Trust in signal providers also remained selective, with 41% relying on only a few providers and 24% independently verifying their historical performance. The findings suggest that trading signals primarily influence trade selection and decision-making rather than replacing independent analysis altogether.
Retail traders increasingly rely on trading signals alongside traditional market analysis. Delivered through broker platforms, TradingView, Telegram channels, Discord communities, and AI-powered tools, these recommendations often provide complete trade setups, including entry prices, stop-loss levels, and profit targets.
While trading signals can help investors identify market opportunities more quickly, regulators have raised concerns that external recommendations and digital prompts may encourage excessive trading or reduce independent decision-making. Despite their widespread use, relatively little evidence exists on how retail traders actually incorporate trading signals into their investment decisions.
To address this gap, we conducted a proprietary survey. It examines signal adoption, verification behavior, trading frequency, execution decisions, confidence in signal providers, and the behavioral effects associated with signal-based trading.
The research aims to answer several key questions:
What is the level of trading signal adoption among retail traders?
To what extent do trading signals influence trade selection?
How do repeated successful trading signals affect subsequent trading behavior?
Findings
Based on TU Research, several important patterns emerge regarding how retail traders use trading signals in practice.
Trading signals are widely used by retail traders. Sixty-one percent of surveyed Forex and CFD traders reported using trading signals at least occasionally, including 29% who rely on them regularly. Only 10% said they had never used trading signals, indicating that signal-based trading has become a common part of the retail trading experience.
Most traders verify signals before executing them, but the depth of analysis varies considerably. Twenty-two percent of respondents reported conducting their own full technical or fundamental analysis before acting on a signal, while 39% performed only a brief market check. By comparison, 11% said they usually executed signals without any additional verification, suggesting that independent analysis is often simplified rather than eliminated.
Trading signals influence trade selection for many users. Forty-seven percent of signal users reported opening trades they would not otherwise have considered after receiving a recommendation, including 14% who experienced this frequently. At the same time, one-third of respondents said trading signals never affected their choice of trades, indicating that the impact of signals differs substantially across traders.
Trust in signal providers remains selective. Forty-one percent of respondents said they trusted only a limited number of signal providers, while 24% reported verifying a provider's historical performance before relying on its recommendations. Only 18% said they generally trusted most providers they used, suggesting that confidence in trading signals is earned gradually rather than assumed.
Successful trading signals can strengthen confidence in future recommendations. Although 43% of respondents said a series of successful signals did not change their trading behavior, 27% became more confident in the provider, while 12% spent less time verifying subsequent signals. Only a small minority reported increasing position sizes (9%) or leverage (5%) after repeated successful recommendations.
Risk warning: Relying solely on trading signals is risky—market conditions change rapidly, and past performance does not guarantee future success. Without proper risk management, significant losses may occur. Studies show that 70% of traders depending only on signals lose money. Use them as a supplementary tool and seek expert advice.
Institutional validation
The rapid growth of trading signals has drawn increasing attention from regulators studying how digital recommendations influence retail investors. While relatively few institutional studies examine trading signals directly, recent research on online investment recommendations, copy trading, and digital engagement provides a strong foundation for understanding their potential behavioral effects.
In May 2025, the International Organization of Securities Commissions (IOSCO) published its Final Report on Online Imitative Trading Practices. Although the report focuses on copy trading, mirror trading, and social trading, many of its findings are relevant to trading signals because both models rely on external investment recommendations. IOSCO notes that retail investors often follow third-party strategies without independently assessing the provider's qualifications, methodology, or potential conflicts of interest. The report therefore emphasizes the importance of transparency, disclosure, and investor understanding when investment decisions are influenced by external market recommendations.
A second IOSCO report published simultaneously examines Digital Engagement Practices (DEPs) used by trading platforms and investment apps. The organization highlights that features such as real-time notifications, personalized recommendations, rankings, and behavioral prompts can increase investor engagement and encourage more frequent trading. Trading signals frequently employ similar mechanisms by delivering time-sensitive alerts and emphasizing immediate market opportunities, making the report directly relevant to signal-based trading environments.
Evidence from the UK Financial Conduct Authority (FCA) supports these concerns. In a controlled experiment involving more than 9,000 participants, the FCA found that digital engagement practices – including push notifications, leaderboards, and gamified interface elements – increased both trading frequency and investors' willingness to take risk. The effect was particularly pronounced among younger investors and participants with lower financial literacy, suggesting that behavioral prompts can influence trading decisions even without changing the underlying market information.
The FCA reached similar conclusions in its 2025 Occasional Paper 66, which analyzed trading records from several retail investment platforms. Investors using applications with a higher number of digital engagement features traded more frequently and, on average, achieved weaker investment outcomes than users of platforms with fewer engagement mechanisms. While the study does not examine trading signals specifically, it suggests that interface design and repeated prompts can materially influence investor behavior.
Finally, the U.S. Securities and Exchange Commission (SEC) has repeatedly warned retail investors about trading tips distributed through social media, messaging apps, and private online communities. The SEC identifies unverifiable performance claims, promises of exceptional returns, and pressure to act immediately as common warning signs of misleading investment recommendations. These observations reinforce the importance of evaluating both the quality of individual trading signals and the credibility of their providers.
Theoretical research
One relevant concept is authority bias, which describes the tendency to place greater trust in recommendations originating from perceived experts or credible institutions. In financial markets, traders may assign additional weight to signals distributed by professional analysts, well-known trading communities, brokerage firms, or proprietary AI systems, even when the underlying methodology is not fully disclosed. As a result, the perceived credibility of the source can become as influential as the quality of the analysis itself.
Another important mechanism is automation bias. Research on decision-support systems shows that people tend to rely excessively on automated recommendations while reducing their own analytical effort. In trading, algorithm-generated signals can create an impression of objectivity or superior accuracy, encouraging users to execute recommendations without fully evaluating current market conditions. This tendency may become stronger as artificial intelligence becomes increasingly integrated into retail trading platforms.
Confirmation bias also plays an important role in signal-based trading. Rather than treating every recommendation objectively, traders often pay greater attention to signals that support their existing market expectations while dismissing contradictory information. In this way, trading signals may reinforce previously held views instead of improving the quality of decision-making.
Behavioral finance also identifies overconfidence as a common consequence of repeated investment success. After a series of profitable signal-based trades, investors may become increasingly confident in the signal provider – or in their own ability to identify profitable recommendations. Previous research has consistently linked overconfidence with higher trading frequency, greater willingness to take risk, and weaker long-term investment performance.
Finally, action bias helps explain why trading signals may increase market participation even without changing investors' market outlook. Faced with uncertainty, many individuals prefer taking action rather than remaining inactive. Because trading signals typically provide a complete trading plan – including entry price, stop-loss, and profit target – they reduce the effort required to make a decision. This may encourage traders to open positions that they would otherwise have postponed or avoided altogether.
Survey data
To examine how trading signals influence retail trading behavior, we conducted a proprietary quantitative study of active Forex and CFD traders. While institutional research has primarily focused on copy trading, digital engagement, and investment recommendations, this study explores how retail traders themselves use trading signals in everyday decision-making.
The survey examined five key aspects of signal-based trading: adoption of trading signals, sources of recommendations, verification behavior, the influence of signals on trading activity, and traders' confidence in signal providers. Particular attention was paid to whether signals supplement independent market analysis or gradually replace it.
Note: The findings are based on self-reported behavior rather than verified trading records. As with most survey-based studies, responses may be affected by recall bias and subjective interpretation of trading behavior. The results identify behavioral patterns and market tendencies rather than causal relationships.
Methodology
The study was conducted using a structured online survey based on the CAWI (Computer-Assisted Web Interviewing) methodology.
Sample composition: 1,450 retail Forex and CFD traders.
Coverage: North America, Europe, Asia, Latin America, Africa, and the Middle East.
Age: 18–60 years old.
Participation criteria: Respondents who actively trade or have traded Forex or CFDs during the past three years.
Statistical confidence: 95%.
Estimated sampling deviation: ±2.5%.
Research team
The study was conducted by our experts:
Anastasiia Chabaniuk (Author, TU Research) – research design and interpretation.
Chinmay Soni (Fact-checker) – data validation and statistical verification.
Ciaran Ryan (Editor-in-Chief) – editorial and methodological supervision.
TU Research Team (Andrey Mastykin, Oleg Tkachenko) – data collection and analysis.
Have retail traders used trading signals?
Trading signals have become one of the most widely available decision-support tools in modern retail trading. Before examining how signals influence trader behavior, the study first explored how many respondents had used them.
| Experience with trading signals | Share of traders |
|---|---|
| Yes, regularly | 29% |
| Yes, occasionally | 32% |
| I tried them once or twice | 18% |
| No, but I have considered using them | 11% |
| No, never | 10% |
Insight: More than three out of five respondents (61%) reported using trading signals on at least an occasional basis, confirming that trading signals have become a mainstream source of market information among retail Forex and CFD traders. However, only 29% reported relying on signals regularly, suggesting that most traders continue to combine external recommendations with their own market analysis rather than depending on signals as a primary trading strategy.
Where do traders obtain trading signals?
Trading signals are available through a wide range of channels, including brokerage platforms, specialist providers, social trading communities, and messaging applications. To understand which sources dominate today's retail market, respondents were asked where they most frequently obtain trading signals.
Most common sources of trading signals:
TradingView communities – 24%
Telegram channels – 21%
Broker platforms – 18%
Dedicated signal providers – 14%
Discord communities – 8%
AI-powered trading tools – 7%
X (formerly Twitter), Reddit, and other social media – 5%
Friends or private groups – 3%
Insight: TradingView and Telegram together account for nearly half of all reported signal sources, highlighting the growing role of community-driven market analysis. Broker-generated signals remain widely used, while AI-powered signal services are emerging but have not yet become a dominant source of trading recommendations.
Do traders verify trading signals before executing them?
One of the main questions surrounding trading signals is whether they replace independent market analysis or simply complement it. Respondents who had used trading signals were therefore asked how thoroughly they typically verified recommendations before opening a position.
| Verification behavior | Share of signal users |
|---|---|
| I perform my own full technical or fundamental analysis | 22% |
| I briefly check the market before trading | 39% |
| I use signals mainly to confirm my own trading idea | 21% |
| I usually execute signals without additional analysis | 11% |
| I rarely follow signals directly | 7% |
Insight: Most retail traders continue to perform at least some level of independent verification before executing trading signals. However, nearly two in five respondents rely only on a brief market check, while 11% usually execute recommendations without conducting additional analysis. The findings suggest that trading signals often reduce the depth of decision-making rather than eliminate it entirely.
Do trading signals encourage trades that would otherwise not be taken?
Trading signals often present opportunities that traders may not have identified independently. To understand whether signals genuinely affect trade selection, respondents were asked whether they had entered positions they would otherwise have avoided.
Influence of trading signals on trade selection:
Frequently – 14%.
Occasionally – 33%.
Rarely – 20%.
Never – 33%.
Insight: Nearly half of surveyed signal users (47%) reported that trading signals had prompted them to open positions they otherwise would not have considered. Nevertheless, one-third stated that recommendations never changed their trade selection, suggesting that many traders continue to rely primarily on their own judgment when evaluating market opportunities.
Do traders trust signal providers?
The usefulness of any trading signal ultimately depends on the credibility of its source. Respondents were therefore asked how much confidence they place in the providers whose recommendations they follow.
| Level of trust | Share of signal users |
|---|---|
| I trust only a few providers | 41% |
| I generally trust most providers I use | 18% |
| I verify performance before trusting them | 24% |
| I remain skeptical of most providers | 13% |
| I do not pay much attention to the provider | 4% |
Insight: Trust in trading signals appears to be selective rather than unconditional. Most respondents reported relying on a limited number of providers whom they had gradually come to trust, while only about one-quarter said they independently verified historical performance before considering recommendations reliable. This suggests that reputation and personal experience often play a greater role than objective performance metrics.
Do successful signals increase confidence?
Behavioral finance suggests that repeated positive outcomes may strengthen investors' confidence and influence subsequent decisions. To explore this effect, respondents were asked how a series of successful trading signals affected their own trading behavior.
Behavior after several successful trading signals:
I continue trading as usual – 43%.
I become more confident in the provider – 27%.
I spend less time verifying future signals – 12%.
I increase position size – 9%.
I increase leverage – 5%.
Other – 4%.
Insight: Most traders reported maintaining their normal trading discipline even after a series of successful recommendations. However, nearly one in three developed greater confidence in the signal provider, while a smaller but meaningful proportion admitted reducing verification or increasing risk exposure. These findings are broadly consistent with behavioral theories of overconfidence, suggesting that repeated positive outcomes can gradually influence decision-making without necessarily leading to immediate changes in trading strategy.
PDF version of the TU research
Download the full PDF version of the TU research to access additional analysis, detailed survey data, and extended findings from our analytical team. The report includes complete methodology, charts, and behavioral insights referenced throughout the study.
Practical implications for traders
Several practical conclusions emerge from the research:
Use trading signals as a source of ideas rather than ready-made trading instructions. Most experienced traders reported combining external recommendations with their own market analysis instead of relying on signals alone. Independently evaluating market conditions before entering a trade can help reduce unnecessary risk and improve decision quality.
Verify the credibility of signal providers before following their recommendations. Historical performance published by providers should be treated with caution unless independently verified. Traders should also consider whether providers disclose their methodology, risk management approach, and potential conflicts of interest.
Avoid allowing trading signals to determine how often you trade. The study suggests that signals primarily influence trading frequency rather than leverage or position sizing. Entering trades solely because a new signal appears may gradually increase transaction costs and reduce discipline without improving long-term performance.
Maintain consistent risk management regardless of signal quality. Even highly regarded signal providers cannot accurately predict every market movement. Position sizing, stop-loss placement, and overall portfolio risk should remain consistent regardless of who generated the recommendation.
Treat urgent trading alerts with caution. Time-sensitive notifications are designed to encourage rapid decision-making, but they should not replace independent analysis. Missing an opportunity is often less costly than entering a poorly understood trade.
Review your own trading results rather than relying solely on provider statistics. Keeping a personal trading journal allows investors to evaluate whether signals genuinely improve their own performance instead of relying on advertised win rates or isolated examples of successful trades.
As retail traders compare signal providers and analytical services, they should evaluate them alongside broader factors such as regulation, execution quality, trading costs, platform reliability, and educational resources. High-quality market analysis can support decision-making, but no signal provider can eliminate market risk or guarantee profitable trading.
Data sources and methodology
Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica.
Nickerson, R. S. (1998). Confirmation Bias: A Ubiquitous Phenomenon in Many Guises. Review of General Psychology.
Parasuraman, R., & Riley, V. (1997). Humans and Automation: Use, Misuse, Disuse, Abuse. Human Factors.
Barber, B. M., & Odean, T. (2001). Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment. Quarterly Journal of Economics.
Milgram, S. (1963). Behavioral Study of Obedience. Journal of Abnormal and Social Psychology. (Authority bias foundation).
International Organization of Securities Commissions (IOSCO). Final Report on Online Imitative Trading Practices (2025).
International Organization of Securities Commissions (IOSCO). Final Report on Digital Engagement Practices (2025).
Financial Conduct Authority (FCA). Research Note: Digital Engagement Practices and Trading Apps Experiment.
Financial Conduct Authority (FCA). Occasional Paper No. 66.
U.S. Securities and Exchange Commission (SEC). Investor Alerts and Bulletins.
IdSurvey. CAWI Methodology Overview.
Previous volumes in this series
Conclusion
Trading signals have clearly become an integral tool for retail Forex and CFD traders, but their true value lies in how they are integrated with independent market analysis rather than replacing it. The study shows that most experienced traders use signals as a source of market ideas, cross-checking recommendations before acting, while only a minority rely on them blindly. For example, although nearly half of traders admit signals have occasionally prompted new trades, a strong majority continue to verify recommendations and trust only select providers. Ultimately, the most successful outcomes are achieved not by following signals unquestioningly, but by treating them as one piece of a broader decision-making framework. In a landscape defined by information overload and rapid-fire prompts, disciplined skepticism and a commitment to personal analysis remain a retail trader’s greatest assets.
FAQs
How do behavioral biases influence the effectiveness of trading signals for retail traders?
What are the potential risks associated with relying solely on trading signals for investment decisions?
How do traders typically verify the reliability of trading signals before executing trades?
In what ways do digital engagement features like notifications and gamified elements impact trading frequency?
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Team that worked on the article
Anastasiia has 17 years of experience in finance and content marketing. She believes that the support of information and expert opinion is very important for the success of investors and new traders.
Ciaran Ryan is a veteran financial journalist based in South Africa, where he covers cryptocurrency, mining, stock markets, and governance for Moneyweb. He also hosts the weekly Moneyweb Crypto Podcast.
Chinmay Soni is a financial analyst with more than 5 years of experience in working with stocks, Forex, derivatives, and other assets. As a founder of a boutique research firm and an active researcher, he covers various industries and fields, providing insights backed by statistical data.
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