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Archive for the ‘zulutrade.com’ Category

Week 52: up 1.19%

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Total test result for the last 2 months is about minus 0.9%. Hectic trading volume and markups are beneficial to intermediaries, but so far there´s little evidence that the service produces positive investment returns. In other words, where are the customers´yachts

During the last week ditched one system which seemed like another 1 pip system, i.e. the kind of which sits through massive drawdowns waiting for the market to come back. It´s really a source of discomfort to watch as system vendor takes, effectively, unlimited risk to gain very limited profit for the customer. Somewhat disappointingly, I´ve found that by far too many systems on the 1st page of zulutrade performance rank are such 1 pip systems.

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Written by A.S.

January 6, 2010 at 7:24 am

Week 51: Test account down 2.1% for the week. It´s more than just a headline figure.

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As empirical evidence suggests, some of the top-rated systems on zulutrade.com are money loosers in live accounts and zulutrade stats are misleading, to say the least.

Here is an example. A trading system Isunia.

This is what the performance graph shows on Zulutrade.

… and this is what it looks in real-life trading

Of course, there is a disclaimer — the account was not enabled for no limit trades. It was enabled for 3, 9 or 10 max open trades at any time. Still, during the month there are 90 trades executed into the account to make the findings statistically significant. There are no outliers, this is a steady, systematic decline of the account equity.

I removed Isunia from my test account system mix. Also, for the same reason, I removed monte financial and hii as two other smooth performance curve systems. They showed a marginal profit of 1 and 3 pips, but my conclusion was that, due to their style of trading, those systems will fail eventually.

Basically, those systems take risk of 350-400 pips or more per trade to go for the average gain of 15-20 pips, often averaging loss. There is one system I’ve left in the system mix for the test purposes, it’s named fx168fx. I was aware of the fact that the system is not free from the sins of averaging or taking indefinate loss for a limited gain, but it seemed to happen very rarely. However, now it seems that averaging down is systematic.

As an example, I give the current log of the test account.

He keeps buying GBPUSD in what is a strong downtrend.

…. but he keeps booking profits … ok, usually 1 pip at a time, but still profits … at least, before real-life slippage is accounted for …

and it’s consistently profitable …

… no wonder, the system is ranked #2 un zulutrade as at the time of writing …

So, should I be grateful and happily stay as a subscribe to the system. My answer is definate No. I remove it.

His stragegy looks like averaging the loss. It´s like doubling bet after every loosing roulette bet. Eventually, none has sufficient capital to execute the strategy for any substantial period of time. As I´ve heard in London City ¨averaging has killed more people than Hitler¨.

As the stats show, the guy takes more risk in one day (or even a single trade) than he books in profits for the whole month. My bet is that the strategy will fail, eventually.

P.S. As a hindsight, if I remember fen shui meaning of number 168, then it symbolises eternal wealth. For the trader, may be … not for the customer, definately. The guy is Chinese, it´s likely he knows the meaning.

Written by A.S.

December 18, 2009 at 9:03 pm

Turning Up Heat on Zulu/Saxo Account

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Zulutrade has a feature called “Margin Call -o- meter”(MCOM). Generally, it is very useful tool, particularly to discourage unexperienced persons to take excessive risk. Just like warning signs on the cigarette packs …

I’ve added 7 signal providers to my account. Each is enabled for one trade and one lot only. MCOM is in the red with a reading of 103.8%. Every time I log in, there is a warning that the positions limits exceed recommended trading size and there is a risk or margin call.

However, if all the signal providers open max allowed positions, the account would be exposed to about 1:1.8 leverage. In real life, max margin utilisation in Saxo account is just about 1%. Even is all signal providers open max positions and close each and every trade with 200 pip loss (a remote, yet real possibility), the damage would be limited to about 5% of the account value.

I’ll override the recommended trade limits to increase the leverage limit to about 1:5 and set % of equity stop-loss limits. If at any time loss exceeds 10% of account equity, I’l review the limits again.

P.S. Unless you check your account at least daily, I’d suggest to stick with trading limits as recommended by zulutrade MCOM.

Written by A.S.

November 9, 2009 at 9:03 pm

Zulu/Saxo: I Won the Lottery

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Today I [finally] got SaxoTrader platform activated. I still received nothing from customer support to my e-mail, but called technical support and he was very efficient — the access problem was solved and key activated withing, literally, seconds.

On first log-on I was surprised to discover a ton of residual open positions. The positions were not visible on zulutrade log. I should admit that I made quite a number of manual trades of various sizes through zulutrade and this may have somehow derailed the system. The positions were profitable and I felt as if I’ve won a vacation in Miami. But the very fact of gross position mismatch between zulutrade log and broker account is alarming …

Once I closed all the residual open positions, I had a bit of more user experience of struggling with a really “sticky” long USD/CAD position. It was closed by the signal vendor, but it was displayed as open in Zulutrade log. The broker account was short. I clicked on “Close” — the trade added more short position in Saxo acc, but remained open in zulu. I clicked on “Close All Trades” in zulu — again, this added one more position to saxo and still remains open in Zulu. I squared the position in Saxo account and contacted Zulu with a request to remove the trade from the log. They said that the trades in the log will sync with trades in broker account and I only need to wait. Ultimately, it synced indeed.

The conclusions are: (1) Zulu to Saxo interface is unreliable and regular manual position checking is mandatory, (2) do not place manual trades through Zulu as this may somehow derail position match, (3) Saxo records closing trade as new trade rather than a trade to offset a previous position. As a result, a lengthy trade log gets created in the broker account and it needs to be cleaned manually.

Written by A.S.

November 6, 2009 at 8:48 pm

Zulu/Ava Live Account Testing (ongoing, details soon)

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To open account with AVAFX is a breeze. Fill out an online form, fund the account with a credit card and you’re ready to self-trade the account in, literally, less than 5 minutes.

No need to send original documents, you can upload them.

I’ve set the account up several days ago, but still waiting for either AvaFx or zulutrade to send a message that the account is enabled for autotrading through zulutrade.

Written by A.S.

November 6, 2009 at 12:16 am

Zulu/Saxo Live Account Test

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I opened a test account with Saxo Bank to trade it through zulutrade.com. On Zulutrade there are probably thousands of trading signal providers who compete globally, they have all the motivation to perform and everyone with an eligible brokerage account at any time can add or remove their signals by just a few clicks. Saxo Bank is a licenced and regulated Danish bank, deposits are covered by deposit guarantee programm and as such it probably meets the requirements of even the most conservative investors.

The quick observations are given below.

There are major issues with reporting
The equity figures just don’t add up. Equity figure looked strange throughout the week. At the end of Friday I closed all the positions, but the equity value continued to fluctuate. I contacted Zulutrade, but they suggested to contact the broker as the equity updates they get from the broker. Zulutrade couldn’t offer any valid explanation why in an account with no open positions current equity is so different from what it logically should be (i.e. initial equity + P/L)..

Another telltale of reporting saga — a record in the history log shows 111 pips profit while the corresponding EUR value is 0.

Saxobank doesn’t respond to service request
Incidentally, I can’t perform first-time log-in into Saxotrader account with the password as provided by Saxo Bank. A few days ago I’ve sent two inquiries about the issue, but there have been no response so far.

Brutal slippage
Expectation
The promotional e-mail said “2 pips spreads”. What I reasonable expect is 1.5 pips added per round-turn to cover rebate to zulutrade.com. That would make the spread at 3.5.
Reality
At closing of the trade, the broker adds 4.5-5.5 pips. This is systematic beyond shade of doubt. Subsequently, the actual spreads are 7-8 pips or about twice what could be reasonably expected.
As a real-life example: if there is a sell stop for EURUSD at 1.4845, you’ll get a fill at 1.48405.
The implication is — if you autotrade a system with, say, average 20 pips profit per trade, the real-life profit is likely to be 10-11 pips due to slippage (i.e. the expected performance will be just about half of Zulutrade reported performance).

Low Leverage Level
Zulutrade has a built-in risk evaluation tool called “Margin Call – o – meter”. This is a good thing as it helps to evaluate risks arising from excessive leverage and, as the name implies, helps to avoid margin call (i.e. liquidation of open positions by the broker).

For most of the signal providers, 3-4 times leverage can be applied before the “meter” goes into the danger zone. There is no reason to question the meter’s accuracy and, consequently, customer can expect to trade at about 3 times leverage.

Equity value not too informative
The equity value is constantly updated and displayed in Zulutrade “Positions” section. Unfortunately, value of funds tied-up as margin for open trades, are deducted from the equity value. This is a poor practice as it treats margin as a loss while the trade is open. A more correct name for the “Equity” line would be “free margin” or “unused margin”.

Endnote
Does anything of the above came as a surprise? Not exactly. It was well below expectations. Technical risks in autotrading are still considerable and not only on Zulutrade. Does it somehow devalue the autotrading as an investing method? Not at all. The concept is very sound. Services like Zulutrade are very efficient in sourcing trading talent globally and, effectively, allocating capital to profitable traders and their trading systems. This is the future of investing and technical issues will be sorted out sooner rather than later.

Written by A.S.

October 30, 2009 at 10:37 pm

Recent Twist of Turtle Brand: EA for $299

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I’ve a confession to make: I don’t believe that so called “Turtle Trading Rules” work anymore. I’ve tested them myself. But the “brand” still gets promoted …

Recently I spotted an offer to buy Turtle Trader Expert Advisor (EA) for $299. This is so 80’s. I wouldn’t buy it and do not suggest anybody else to buy it. Not because the number of trades is too low to be statistically significant or because I’ve done my own back-testing and have all the reasons to question the performance claim.

But just because today none should trust “packaged” trading system product.

The way it’s done today is you put your system (if its any good) on zulutrade.com or collective2.com  or covestor.com for independent verification and ranking.  Then prospective customers can evaluate it and, if they like it,  subscribe to it or buy EA.

Written by A.S.

October 26, 2009 at 11:34 pm