The current position of Zulu traders top trader is pretty bleak, with a significant draw down which clearly has no way of being resolved in the short term.
The practise of opening several trades in the same direction because the markets go against the said trades has clearly not worked out.
It seems to me that there are 2 schools of thought - one where further trades are opened in the same direction due to worsening markets (martingale) and one where the trades are simply closed due to stop losses being incurred.
I.e. would it not have been better for the top Zulu trader to simply close his trades earlier on and call it a day rather than throwing good money after bad and ending in a vice like grip where he is now.
I know hind sight is a wonderful thing I just wanted other opinions.
For me, one of the appeals of Forex is that it offers effectively unlimited profits coupled with strictly limited losses. For that to work, good money management practice needs to be in place. To me, adding to a losing position flies in the face of that logic. Adding to a losing trades is counter to my whole approach. My losing trades are strictly controlled and taken off the table once it is clear that they are not working, my winning trades run nicely and make me a lot of money. A quick scan of the ZT chart suggests to me that it is at the arcade game end of trading and is not a serious route to a career in currency trading.
Quite apart from anything else, holding large open positions with large negative pips attached is quite different when there is serious money attached: as a rookie, novice experiement the psychology of it is quite different, whereas when there is some real money exposed like that - which is surely the aim of getting into currency trading in the first place - then for me the psychology of adding to losing positions is all wrong. Limit losses, maximize profits, make money.
Some of the numbers and trading behaviours on ZT are a complete joke from a trading point of view.
'Fraid I’m not the expert here - there was such a hubbub about ZT recently that I looked in on their figures to see if it was worth a secondary account, but that’s the extent of my research.
When I first started currency trading I intended for it to be a long-term career, and was persuaded early that the only reliable way to ensure that was to put in a lot of work and learn to trade for myself, from the ground up. So I took a course, had coaching, read (and continue to read) everything I can find on trading. I just trade my own money and my own analysis, I don’t trade on behalf of anyone else, and I don’t trade other people’s analysis.
As I say, I looked into ZT to see what all the fuss was about, and unfortunately it turned out to be more Brother Beyond than The Beatles, so I won’t bother with it again. So I’m the wrong person to ask about signal providers, sorry, as I don’t use them. I don’t even have a wider view on whether or not they work in principle - I just know what I think of Zulutrade.
Stop calling “averaging down” a “Martingale”.
And if you don’t know the difference, Google is your best friend.
Most of the idiots on ZT are using modified grids that don’t change lot sizes. They just keep piling on orders until price eventually comes back, or they margin call.
Im not going to argue over technicalities it’s hardly helpful.
I will close any attempts to “average down” - this will limit my exposure. Also - to limit number of traders per currency as well as take profits when I feel it is levelling off.
I never would have thought that the top boys would have “averaged down” to such an extent - lesson learnt and never again.
I’m in my third year. I had a few losing months at the outset while I got to grips with things - my previous career was entirely unrelated, this trading idea came from Mrs Templar who thought I might be suited to it, at least to the point of it being worth us giving it a go - but I gave myself a steep learning curve by trading from the outset how I envisaged doing it long-term. So I monitored a lot of Pairs from the very beginning, gave it my full-time attention, put a lot of work in. Fortunately I did all that learning on a smallish account, then upped the account size twice more as things began to click, and we developed some confidence that the idea had legs. I was very lucky in that Mrs Templar (who has a career job) agreed to fund us for two years to give me a decent run at it, plus we have a pretty low-impact business on the side, so I still got to spend some time on familiar territory.
The first six months or so were pretty demoralizing - I think I lost money every month, certainly five out of six - but for the past couple of years I have been consistently profitable. There are seasonal/market fluctuations, sure, and obviously I still have losing trades, but they don’t hurt any more as they are in a context where I don’t have losing months.
Anyway, I’m rambling but basically I have been trading two and a half years or so, I was profitable in six months and have spent the last two years refining my approach, communing with my inner trader and tuning out the stuff that doesn’t work for me. My advice, if I can presume so much, would be to focus on learning to trade your own money on your own behalf. Particularly as the sums of money increase, I think that you will want to understand exactly why you are in a given trade, rather than trusting to a third party whose performance could drift away overnight and take your account with it.
Although that said, it depends on what you want from trading: if you want a hobby, with little time impact and the chance of a little extra cash, then I can see the argument for signals (although they’re still not for me). If you want to make a lot of consistent money over the long term, then I think you will want to understand trading from the ground up and keep complete ownership of the whole process. £10 risk a trade is easy to chuck around. £1000 (or more) per trade is a little tougher.
Apologies for the stream of consciousness response, just back in from various kids-related errands.
Im an accountant so of a similar field - I also work from home with my mortgage business - but I would like a 2nd income stream. I’ve taken a bit of a beating with ZT, it’s a dangerous place and I need not to 100% trust that the signal providers on there are completely trust worthy - Ive referred to the 900 pip draw down which was caused by ZT’s no1 trader following the same trade time n again.
In an ideal world I would love to be a trader and own by own trades - I realise that you have gone through a lot of pain to get where you are but may I ask - what would you recommend I read in order to try and grasp a knowledge of how to trade. I do have a decent working knowledge.
I am very grateful for any information you can provide.
Personally I would always equate a drawdown to a percentage of my account rather than the number of pips. If one takes a 150 pip loss and that represents half a trading account, then that is a disaster. If it is just 1% of the account then it’s not good news but can be fine within an overall strategy. To me this game is all about percentages, so I would urge anyone who wants to keep a handle on profit and loss to think in those terms. I don’t care about pips - it’s all about percentage return, as that is how I analyze the impact on my account size. I will sometimes risk 1% on a 30 pip SL, other times I risk 1% on a 150 pip SL. It’s the same money.
Anyway, you asked about books, apologies for (yet) another ramble. Well I did not learn from books, so I was already trading when I read my first trading book, and it does rather depend on the type of trader you seek to be, but for me there is a clear, two-pronged recommendation:
[B]‘Market Wizards’ and ‘New Market Wizards’ by Jack Schwager[/B]. These are just a series of interviews with successful traders - mostly non-Forex - but they really helped me, particularly in two areas: firstly, they showed that trading can really work. Secondly, they showed me that it is okay to disagree with the majority. One drawback of BP is that it is easy to read others’ posts and suddenly doubt a trade idea. These days, I don’t mind being a minority of one, I trust my own analysis, and these books helped me get there. Great for psychology, imho.
[B]‘Reading Price Charts Bar By Bar (The Technical Analysis of Price Action for the Serious Trader)’ by Al Brooks[/B]. This is a much drier read than the Schwager books, and is very much focussed on Technical Analysis (like me, Brooks largely tunes out fundamentals), and the examples are by no means all Forex. Also, Brooks trades the 5 minute chart, while I focus on higher timeframes. It’s also a pretty heavy read - took me a few goes through to get to grips with all of it, and I still see new stuff when I read it now. That said, however, the principles contained in here can be applied across any timeframe, and although as I was going through the first time it just seemed a lot of detailed waffle, by the time I got to the end I had a more solid understanding of why Price does what it does, and how I might interpret that into trading setups. As I say, this one is very technical, but it really brought my understanding on, and I think that it is vital to understand why one is in a particular trade at a certain moment, and to understand whether the reasons for being in that trade remain valid. You say that you have a decent working knowledge, so this book could be a good next step.
There is nothing about fundamentals in there, as I mostly ignore them - I might use them to provide added confidence in a trade, or perhaps as a reason not to take a setup, but I will never enter a trade because of fundamental factors. So if you want to trade in that style that second one might not be the right book for you. It is all pretty dry, so I would not recommend trying to learn to trade from it. But it definitely helped me once I was up and running.
I hope that that helps, and apologies for the extreme length of these posts!
It’s like calling an apple a banana.
There many noobs that visit this place. If something is incorrectly identified, it’s easy for them to get the wrong ideas.
As for ZT, and the lovely trading displays presented by the “top” traders, they shoot for high win percentages.
Grid trading will give you extremely high win percentages. In the high 90’s, and even 100% for a while, but eventually, the piper comes calling and collects.
The gist of it is, that is what I was trying to tell you and Uptick in the other thread when you two decided I didn’t know WTF I was talking about.
You can’t have a successful system that allows a trade to run 185 pips against you only to claim 65 later.
As an accountant, you should be able to see how that can’t be a long time profitable strategy. Eventually, it won’t just be one trade. It will either be an aggregate of trades, or several in a row. The odds of trading will catch up, and a margin event will occur.
However there ARE ways to make a grid work. And work very, very, well. But I’ll let you figure that out.
mmmm, lessons in successful forex trading that ZT seems not to take. Let the winners run and cut the losers off.
What happens if they make an incorrect trade at the start of a trend reversal. The AUD climbed from 94c last year to 1.08 and now back to 97c. Trended strong both ways. Without a true stop, you are really putting yourself at risk.
Obviously, it is different for different people, but the money I have invested in Forex is very hard earned money. As such, I want full control myself over how it is placed in the market. I currently have a mentor helping with a trade method. He has quite a few mentee’s with him and we go through the charts and trading each day live. Now, when he says that he is entering a trade, I go through my own little checklist, and as such, take about 70-80% of his trades. I’m in nice profit, maybe would have been more if I traded all his trades as well, but it is more important to have the trades right in my own head first.
I hope that makes sense.
Also, martingale. I considered that, but as I trade a normal trade at 2% risk, a martingale system would prove disaster in a losing run.
The Martingale System goes against all good money management practice because it allocates far more than 2% per trade after each losing trade. Even if you were to start with 2% risk in your first trade, and double it after each loss in accordance with the Martingale System, it would only take 5 trades to wipe out 62% of your account. If you started out with an even more conservative 1% risk, it would only take 6 trades to reach that same 62% loss.
After the recent disasterous draw down on ZTs to traders, whereby they averaged into a trade without any stop losses (and lost over 900 pips) I’ve decided to implement the following - which is working so far - albeit one day but it’s the concept I’m in favour of:
To implement my own stop losses
To close any attempt to average into a trade - I did the sums and I would have lost 100 not 900 pips
To reduce certain traders number of trades per currency
To close a trade if in profit if I’m happy with the amount - all too often $50 becomes -$50
Hi meseany,
Without knowing the methodology you use, if you even understand it (no offence intended, sounds like you are using a signal service), it is a bit hard to comment too much accurately. I will give insight to my scenario though and maybe you can apply it to yours even??
I use VSA, and always use a stop. Where do I place it? Basically when the setup becomes invalid. I do not want to be part of the trade if it is not a valid setup. Stoploss goes there, and whatever the stoploss is, it is always 1-2% risk.
I used to be a big online poker player - won me a nice big tv amongst other things - so Im used to the emotional side - I now see how Im doing in the day and will call it a day once Ive made enough
- this will limit my exposure. Also - to limit number of traders per currency as well as take profits when I feel it is levelling off.