Zulutrade

[Bravewildheart]

CAUTION - BACKTESTING, REQUIRED EQUITY and MARGIN-CALL -O- METER.

Zulutrade is an excellent innovative trading platform, but I would just like to inform and caution all my Zulutrading peers about some of the very expensive lessons that I have learned through the unnecessary loss of capital due to misrepresentation of historic data on the Zulutrade platform.

THE BACKTEST

1. Please take note that the backtest is only useful to determine the estimated profit that could have materialised in the past, with the maximum open trades and maximum open lots followed by the Signal Provider, without taking into account any stop losses or stop limits.

2. The backtest does not take your own maximum open trade settings, maximum open lot settings and stop losses or stop limits into consideration. When you change these settings, the backtest remains the same. The only factor which influences the backtest graph is your own ‘lots multiplier’ setting.

3. Do not, however, measure the Max DD on the DD graph and adjust your lot multiplier accordingly, as you will receive a Margin Call sooner than expected. The real DD is, in some cases, up to 10 times more than the Max DD displayed on the backtest graph.

4. The drawdown graph on the backtest only displays the max DD of a trade on the day that the trade closed, not on the day that it happened. It is totally skewed. You can do your own comparison by comparing a SP’s backtest with the SP’s drawdown graph on the SP performance page.

MINIMUM REQUIRED EQUITY

1. The NFA helped traders a great deal by requiring that Zulutrade state the minimum required equity for each signal provider and that they provide a more realistic performance graph.

2. I finally got the formula for your ‘minimum required equity’ from Rose, after numerous attempts. To all my requests I have received various answers – from no answer in the forum, to that it is an algorithm not available to us from the support staff.
   She wrote the following:
   “The minimum required equity is calculated based on the assumption that you will receive all trades executed by this Signal Provider, and withstand any drawdown that has occurred during his trading activity without receiving a margin call, assuming that you are trading 1 micro lot for each of his trades, with 100:1 leverage.”
   For the first time in months I could calculate the Max DD in currency by inversing this formula:
   MaxDD($) = Min Required Equity – max open trades x $10
   Now I can do my own calculations according to my own leverage and the risk I am prepared to take. My leverage is 200:1 so I multiply by $5 instead of $10. (I am still a little concerned about the accuracy of the ‘minimum required equity’ when it comes to a SP with multiple pairs and SP’s with low percentage winning trades. I have, however, tested and confirmed the accuracy with single pairs.)

3. Note that the required equity value changes as you change the time period, for example from ‘all’ to 6 months history, so you can make your own decision on what historical timeframe you would like to base your risk.

MARGIN CALL -O- METER

1. The margin meter has some benefits, but could also be a bit deceiving in some cases. The margin meter reading is determined by the calculation of the worst case scenario by multiplying the worst trades with the max open trades and possibly a few other parameters.

2. The problem is that many SP’s started over a year ago with some bad trades, but noticeably improved their strategy during the last 6 months. Their first few trades will always influence the margin meter reading and it will read a lot more that it needs to be.

3. On the other hand, if you use a SP with a low winning percentage and a low DD you will get a very low margin meter reading. The problem with this is that you could easily lose all your capital – not due to a DD but due to a string of losing trades before the winning trades start! This also applies to the minimum required equity. (In this case it could be best to do a backtest and measure the worst dip in the graph and add the max DD to determine if you have sufficient equity.)

A FEW TIPS ON PROTECTING YOUR CAPITAL

1. The biggest challenge we have with Zulutrade is that any SP could change his trading behaviour in an instant and destroy your account. The auto trading system keeps on auto trading until you run out of money and there is no programmable stop!! I suggested a programmable stop on various occasions to Zulutrade on the forums etc., but doesn’t seem as if that is going to happen.

2. One SP can easily destroy an account with 5 other excellent SP’s. The best solution that I have found thus far, that works with great success, is to open multiple accounts with one SP on each account. For instance, if you have 5 accounts with the same balance with 5 different SP’s loaded and one changes his trading behaviour, you only lose 20% of your capital at most. (One problem is that AAAFx only allows us 2 accounts, but SunbirdFX, with the lowest slippage and the lowest costs, allows unlimited accounts. For personal service and benefits for Zulutrader’s , ask for Michelle)

3. Using Zulutrade could be very profitable, but we need to challenge Zulutrade all the time to improve the essential information on the platform, that we base our decisions upon, instead of improving the marketing bells and whistles.

[planetmongo]

Nice detailed writeup on the inadequacies of Zulu. I personally don’t like the minimum equity numbers as it complicates the settings discovery process. If only they would report the actual equity DD, then they wouldn’t need to hide behind all this mumbo-jumbo.

I have used Zulu with multiple small accounts before. No one in their right mind would use them with more than a 3k account. Just the rebates alone that your missing out on is enough. I don’t like Currense for the same reason. I think if anyone knew just how much these “autotrading” companies make from broker kickbacks alone, no one would use them. And I’m not talking about commissions, but the actual broker rebates that anyone who deposits money to use these companies never know about.

There is only a few companies out there that don’t operate like this, RAS, ZIP, etc., but I won’t discuss that here and take over your thread!

In short I think Zulu should give their clients a fair shake instead of a shakedown.

[TehCount]

Hey Guys,

I myself signed up for ZuluTrade about a month ago. I was drawn in by the amazing profits these signal providers were supposedly making. I quickly learned using a $500 account that most of the numbers and figures were BS without some additional research. That’s NOT to say that you can’t make money with ZuluTrade, because I have made incredible gains in the last month, and with a risk level I would consider relatively safe as well.

*NOTE: I am assuming your max leverage is 50:1 in this post. If it’s higher, your risk will be different. For a 50:1 account, you need 2% margin to open a position. That’s $3000 to open up a standard lot of EUR/USD. If your margin was 100:1, you would only need $1500.

*NOTE: Most of the time when I talk about “max positions” on a provider, I mean total max (multiplier * number of positions they can open). If I say give a SP a max of 5 minis, I mean TOTAL, not multiplier. If they open up their max amount of positions, they should have 5 minis.

I would appreciate any feedback on my current strategy. Here is a general idea of how I do analysis on a signal provider to see if they are viable:

1. Profit

The first thing I do is assess how much profit the signal provider makes, and how consistently. The more months they have been profitable, the better. Now the first thing you need to do is visit the zulutrade.co.uk site INSTEAD of the zulutrade.com site. The reason is that they display some ridiculous “ROI” figure on the .com site which is completely useless. I don’t even know how they calculate it, but it will not give you any kind of idea as to what profit/loss you will get. Therefore, go to the .co.uk site and you will see the gain of PIPS per month.

Once I have the number of pips gained per month, I get an average (usually over 6 months). I then divide this number by their max open positions. Basically you want their max open positions for the last 3-6 months. You get this number by holding your mouse over the “max open positions” indicator on the left and it will display by 3, 6 months. Now you divide their monthly pip gain by this max number of open positions you came up with. This gives you their pip gain PER position for a typical month. This gives you a number to compare against other signal providers. The more signal providers you analyze, the more you will realize how much or little each one makes. Some SP like to open 30 positions, and you may realize that per position they don’t really make anything.

One important thing is that YES you can multiply their positions with the multiplier field and therefore make more money (and you say “why does the profit per position even matter”?) True, but we are also going to analyze risk per position, and we need a way to compare SP to each other. This is the best method I’ve found so far…

2. RISK

This is by far the most important thing. It determines when you get margin called, and it determines how good a trader is. I don’t care if they make 500 pips per month per position, or 50, without proper risk management you might as well kiss your account goodbye.

I completely ignore most of the figures on the providers page which ZuluTrade came up with. Again, use the co.uk site instead of the .com site for more useful information. “Necessary Minimum Equity” is an indicator of how risky the provider MIGHT be, but don’t count on it too much. Now what I like to look at first is how many positions the provider likes to open up. I have noticed that the more careful SPs open up less positions. The “shoot from the hip” providers like to open up 10-30 to increase their pip gain and make their system appear to be more profitable (which it WILL thanks to ZuluTrade’s flawed calculations for performance). So the less positions a provider likes to open up, the more seriously I usually take them. Now some SP do open up lots of positions in a legitimate strategy, and that’s fine. Just keep it in mind…

The next thing I look at is their trading history. We already have the performance calculated, so what we are focusing on here is RISK. Go through their trading history and look at the “Low” column. This represents how low each trade went, which is extremely important in calculating risk. First, get an idea of what their max low is. You can sort by the “Low” column. The high risk SPs will have lows up to 500 pips and beyond. THe low risk careful SPs stay at around 100-200. Now this doesn’t mean everything, as it’s really the last few months that matter. It just gives you an initial idea.

Now go into more detail. Go through the last few months (chronologically) and look for their worst lows, and even more importantly how many they have in a row. Assume they had their max amount of trades open, and look for the worst periods. Do they have 5 trades in a row at -300 pips? You’ll need to make damn sure you can handle this with your account without getting margin called to follow them. I look for their worst period of consecutive lows and average the low column, then divide by the amount of positions. So for example, say a guy likes to have 5 positions open. I find in his history, that last month he had 5 trades in a row which were down -50, -100, -200, -200, and -300 respectively. I will add these numbers together and divide by 5. This number comes to 170. At the very least I need to make sure I can handle such a low in the future. KEEP in mind that this will not predict future performance. There is ALWAYS the chance that a SP could screw up their strategy and blow up worse than ever before. This is why you should have multiple accounts, using different strategies and following different SP to be safe (as a previous poster mentioned).

As for the “Margin-Call-O-Meter”, once you do your own manual risk analysis, this becomes almost worthless. DON’T rely on that thing to calculate your risk. Think of it as using a thermometer only to diagnose somebody’s illness… Sure in some situations when they have a fever it will be useful, but what if they have a brain tumor? That’s about how useful the meter is.

3. Position Sizes and Maxes

What you do now is look at your account value. Say you have $5000 in your account, and you want to trade 1 lot at a time. This would only be a good idea if you were using a VERY low risk SP, but just for example… You want to make sure your SP is limited to the number of max open positions you want. Let’s go back to that example where the SP wanted to use 5 open positions. OK fine you allow this. Now you want them to trade 1 lot max. So in the multiplier field you put down 20 micros, 2 minis or .2 lots. With his max positions open he will now have control over 1 lot.

This is where the risk becomes so important. Back to that example we found that the SP had a lowest average of 170 pips across all 5 positions. With one lot trading EUR/USD, you are looking at a loss/low of $1700. On top of this you need margin to open a lot in the first place. This should be $3000 per lot. So your available margin goes from $5000 to $2000 as soon as they open up a lot of EUR/USD. Now you have $2000 left to handle the lows. If they go down 200 pips average across all positions, you will get margin called.

If it was a very low risk provider, such as ZuluMaster1 currently is, they only ever go down 100 pips in trades and are very careful. You could therefore let such a trader open up a lot on $5000 if you wanted some fabulous gains. They would need to go down to 200 pips per position to margin call you. This is not likely going to happen, unless their strategy changes. Again, this is why you diversify. If I had $5000, I would follow ZuluMaster1 with probably 5 minis or .5 lots to be safe. It’s up to you, but ensure you understand WHEN you will get margin called and calculate your risk accordingly.

If it was a high risk provider such as Shooting Pips currently is, he HAS gone down 300+ pips per position in his recent history. You certainly don’t want to risk trading a lot with this guy on $5000. Remember you need $3000 JUST to open up that lot. You then have $2000 left for Lows. A 200 pip loss on all of your positions will margin call you. With a guy like Shooting Pips, I would only risk trading much less, something like 1-2 minis on a $5000 account MAX.

4. Trade Length and Holding Losses

I’m currently doing a lot of thinking on how to deal with this issue. ZuluTrade has a LOT of SPs who like to hold onto losing positions until they turn around. This is great for their win ratio, but during the time they are holding losing trades, your margin is being used up, which prevents other profitable trades from happening. There’s also the danger that these losses will continue to get worse until they close the position out at a huge loss. This is why I prefer SPs who have the shortest trading periods and most calculating strategies…

I still prefer the SPs who use stop losses over SPs who let a low ride for 2 weeks. Unfortunately, there are not many SPs who use stops on Zulu (at least successfully or in the top 100…) If anyone has any tips let me know… For now I will just try to diversify over different accounts and follow as many short-term SPs as possible.

[fxautotrading]

Seems like Bravewildheart has become TehCount.

Nice analysis you got there TehCount, care to share some print-screens…u got me curious

[TehCount]

Well I stopped using ZuluTrade, but here is a screenshot of what last happened there. All I can say is, if you’re going to put your hard earned money into FX, be careful with it. I wish I had followed my own rules, but I got greedy (just once) and that one time was when zulumaster & company blew a USD/CAD trade (just look at a chart you can see it explode recently… guess what side all the “experts” took without a stop loss? Yep, the wrong side…)

I actually “got lucky” because I didn’t open my positions until zulumaster was already down -50 pips. LDD is just a zulumaster clone who opens up more positions to cost average. I ended up closing at near -150 pips and I felt sick I lost so much money (this is just one of my accounts I was using). Zulumaster and friends are currently down -500 PIPS on that USD/CAD trade, or they have closed them out at 200-400 pip losses. I got out at 150 pips but was using so much leverage that I decimated my accounts pretty well.

I bragged to my friends when I opened up this trade (I had about 8 lots total in it) because I was so sure I was going to make $4000 and I figured what’s the worst that can happen? Zulumaster always wins his trades and I thought it was low risk. Well greed is what destroyed my accounts. As I said I didn’t even follow my own money management rules (I should have opened up maybe 1 lot max with a reasonable stop at 50 pips.

PS- As for the image itself, I have since pulled my remaining money out of that account. As you can see from the history graph I was making money until that disaster happened.

).

[apaipi22]

Why did you wait so much before closing the negative open position? IF I were you i would have closed it immediately on the 20th. Don’t you monitor the portfolio and see when it goes bad until it gets too worse…I am wondering. I suppose it is not the system to blame but your own greediness as you indicate yourself.

Keep in mind that most successful traders have developed their approach and methodology over a long period of time. Start with demo accounts to get comfortable with what your doing and stay with demos until you begin to make consistent profits. This is a game that rewards patience and pays off on experience. Most importantly , be aware of the type of trader you are. Are you long on analytics and fundamentals, can you ride with a loss over a substantial period of time untill the trade works in your favor, or do you seek instant gratification and are really a scalper in your heart. Both types can make money , the question is where’s you’re comfort zone. And this is what happens when you get too aggressive.

[TehCount]

I let hope cloud my judgement. Having seen zulumaster never lose a trade in an entire year, I just refused to believe that THIS could be his first meltdown when I had risked so much. By the time I closed my positions I was down -150, because I let emotions rule me.

[apaipi22]

I am soo sorry mate!! You should not be so emotional. This is how these type of markets just are. I used to trade stocks and trust me everytime my portfolio was loosing I just didn’t know who to blame it to - the company, or the index/es, the wallstreet, or the economy as a whole…that’s why turned into forex, at least here the no control/no news intervention would not affect the dd (to a certain extend of course!).

Do not let it down! Just learn from your mistakes and go on - but always know when you have to stop! cheers!

[fxautotrading]

Guys finally I read in the official forum that zulutrade is updating the back-testing features to include include max lots, customs stops, max open trades - basically everything we were requesting previously

[acheikhrouhou]

nice reading and explanations on this page : AutoAllocationModeDetails.aspx in the zulu web site

Regards
Aref

[sngerge]

What SP you following in Zulutrade?

[EDDY_MO]

check my recent players

[sngerge]

That’s a lot of SP! how you handle margin?

[EDDY_MO]

153.8%…little bit too much but im got my back covered
what about you sngerge? who are you following?

[sngerge]

yf68, xiaozha111, TradeGuru, HighProfitFactor, denganyouqianle
only using small margin for long term trading…

[EDDY_MO]

thats a nice selection you’vr got there!!!
whats yor margin?

[EDDY_MO]

whoever you are following do not forget two things:
always keep your margin down
and always zuluguard !
you do this two and you will survive longer

[EDDY_MO]

So, guys anybody here still following ? or you all busted your accounts?