I have noticed a very strange trend on zulutrade. Why does it often seem that a signal provider will get consistently good results, but then once they have built up a large investment of around $1m, they will suddenly lose most of it, seemingly on purpose, and then just disappear. I see this trend happen again and again. This seems quite shady
They disappear because they blow most of their account and their credibility.
It’s not deliberate. [I][U]Inevitable[/U][/I], yes - but not deliberate.
The reason they blow their accounts, or nearly, is that their “systems” are designed to take advantage of Zulutrade’s internal ranking mechanism (without having a very high score on that, they can’t attract customers and nobody will know about them), and that ranking system rewards very high-risk, very dangerous “systems” which inevitably crash and burn.
The emphasis for those traders is on profit-maximisation (while it lasts) rather than on risk management. And those “systems” are inevitably going to crash and burn at some point.
The rankings of traders at Zulutrade are almost terrifying.
The last time I looked at Zulutrade’s own “performance table”, the maximum drawdowns of their top-ranked five traders at the moment were (in this order) 35%, 52%, 48%, 85% and 108%!
Also included in their “top ten” to follow were two traders with drawdowns of 2,000% and 4,000%!
If you input your own search parameters, using their search engine, to try to identify any traders who have been there for 6+ months, have real money accounts and maximum drawdowns under 15%, there’s only [B][U]one[/U][/B] listed (and he’s apparently done a grand total of 4 trades in over a year)!
They use “grid systems”, “Martingales” and all kinds of ludicrous nonsense.
It’s very much “[I]caveat emptor[/I]”, and that’s putting it mildly … :5:
The sites lend themselves to people with a “shortcut mentality”, I think, at least to some extent. If I’d listed there all the trades from which I’ve made my living over the last year, I wouldn’t really expect to attract any “followers” at all, and have absolutely no interest whatsoever in fiddling about with it. I imagine that I’m far from alone. The people posting their trades there to attract followers are successful [B]marketers[/B], not successful [B]traders[/B]. 
I think the idea behind it is that providers are able to trade with other people’s money, not their own, meaning they can basically trade without risk to their own money.
I still don’t understand why many of these providers get consistently good results for around 6 months but then lose it all in one go. Just doesn’t seem right to me.
Many will run multiple accounts all with high risk strategies. When 1 of these hits a winning streak they push it to unsuspecting traders who buy into it. Eventually the streak ends and the account blows.
Then they start again.
It seems to me that this is based on pure luck rather than experience, knowledge and professionalism but they manage to twist it like it’s a successful and profitable trend so that traders who want some fast profits to sign up. And once the accounts blow up, the ugly truth comes to bite them. That is why I don’t trust such kinds of signals, EAs, etc.
There’s a specific [B]selection-bias[/B] involved, in that the ones you see are the high-ranking ones, and because of the way the internal ranking criteria work, those tend - overall - to be the most dangerous ones which have a good run for a while and then crash and burn (because they use grids, Martingales and other idiocies, which is how they came to rank so high, temporarily).
It’s really not much more complicated than that.
There are thousands of others that you don’t see at all, because they crash and burn too quickly ever to ascend the rankings enough to become visible.
It’s easy to look at a small selection of things (sometimes without even knowing that it [I][U]is[/U][/I] a small and unrepresentative selection) and wonder why they all apparently have something in common which you’d expect to be unusual; often, the reality is that those are (for some reason you haven’t taken into account) the only ones you’re looking at, and that’s why you notice it.
They important “key concept” here is simply that these are people making their livings by selling signals (while they last), not by trading. This is all you need to know, really, to give the place the wide berth it deserves.
So agree with you… And they will continue to do it, because there always will be people tempted to make easy money without putting any effort.
After all, if you have a profitable strategy that is actually working, you wouldn’t sell it to other people for 20-30 bucks per month. Or at least this is how I see it