June 10, 2010

Zulutrade: Final Thoughts

10th June

During the turmoil surrounding  the proposed Greek bailout my chosen Zulutrade Signal Provider, ‘The Hunter’, made 38 pips from a few trades on a few Forex pairs then promptly proceeded to lose the lot on one trade leaving me just $5 in profit at the end of this trial period comprising more than two months of their trading my demo account.

A trial of this type suited me well because of the myriad of other responsibilities I have that severely restrict the amount of time I can devote to blogging systems and services and had it been successful it may have warranted further investigation.
I admit that I am still intrigued my some of the concept of Zulutrade, however, I have to  forge ahead with my own studies now.

The Signal Provider I chose to focus on (The Hunter) did not set the world on fire during
the trial period although apparently they had amassed Ca. 120 pips between 2/3/10 until last week when my third demo account expired – it is just that they didn’t manage it with
the trades placed on my demo account during that time. In fairness and to mirror Live Trading, I did apply modest trading restrictions to the account as mentioned in previous posts, in order to protect the demo funds just as I would have done if I were running a live account with them, nonetheless, just a few pips profit in over two months, and  three months if one includes the fact that The Hunter was on my first month Zulutrade list also but made just a couple of trades, is pretty shabby by any standard.

From examining the hundreds of Signal Providers on Zulutrade it is clear that many use
a trading strategy of holding on to floating losses (open positions) until they turn around into profit, although of course, the positions are not guaranteed to do so. Positions can be open for long periods, tying up one’s margin and thus funds, if one wished to move to another SP or quit Zulutrade altogether.

On Zulutrade I examined 50 ‘Performance’ pages with 75 SP’s on each (many Signal Providers operate under multiple usernames) and many of them show greater than 1000 pips drawdown and on closer scrutiny reveal that at any one time;

There are only 6 pages (Ca. 450 Signal Providers) showing drawdowns less than 1000 pips;
30 pages (2250 Signal Providers) with drawdowns of greater than 2,500 pips,
20 pages (1500 Signal Providers) with drawdowns of greater than 5000 pips.

Some have failed completely showing current drawdowns and losses into tens of thousands of pips and much more and this is a further issue; The Signal Providers basic trading competence not known. The onus of responsibility is wholly on prospective account holders and not on Zulutrade to police the Signal Providers themselves. One could argue that raw performance figures by Signal Providers should be enough to give one a good idea of their ability.
I would say that Zulutrade is an interesting and novel concept that has not quite worked for me although it may be working for others. Zulutrade’s home page claims that huge amounts of funds are being live traded through them by the Signal Providers on the site, though I have no way of confirming this statistic.
Thus whilst I cannot fully endorse signing up with a live account with a Signal Provider on
Zulutrade I feel someone with the time and patience could be rewarded by the odd gem of a Signal Provider but perhaps it requires some effort to try to filter out of their weaker trading areas whilst retaining the stronger aspects.
It was an interesting experiment, however, the rational side of me would probably find it extremely difficult  to permit itself to handing over control of finances to someone whose Forex ability and trading mentality could not be accurately determined, especially over such a short period of time.
Thus, whilst I like the idea in principle, my experience of Zulutrade has yet to wholly convince me that it will work for me in practice,  and further, that at this moment the shortcomings outweigh the positive aspects of the service and with that in mind I feel it only fair to apportion a Neutral rating to Zulutrades service.

You can try Zulutrade here:

http://www.cash-master.com/zulutrade.php

Filed under Forex,Spread Betting by Jon

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