Account blow-out

Greetings fellow Zulu-traders. I'm sorry to say that my Zulutrade experience has come to unpleasant conclusion.

I suspect the same happens to many other fellow traders/bloggers including our friend over at http://www.zulutradeblog.com/. His last post was on February 25, and we haven't heard from him since. He has probably blown out as well. So rather than leave you all wondering what happened, here's my story. Perhaps you can learn something to avoid a similar fate.

All was going well as of about Wednesday of this past week. My account was standing at about $9200 after an initial investment of $10,000 late last year. I had been through a series of providers with some questionable characteristics. I had been as low as $8600 and was struggling back to even and about 2 weeks ago was back up to as high as $9600. I had settled on the 3 providers listed last week and was holding my own.

Between 3/9 and 3/10 HomerPoet pulled in 4 straight wins and I was looking good. All was well until Wednesday when he went short at EUR/USD at 127.10. That trade went badly wrong and I was stopped out for my -150 pip stop times 2 or a $300 loss. I did a manual trade and tried to go short 2 EUR/USD figuring my stop was just a bit too tight, but that didn't go well either and I lost about 24 pips on that trade as well.

On Wednesday, our friend High Rollers came in a day earlier than usual and sold GBY/JPY in the late morning EST which is his pattern. This time he appeared to struggle and his first 2 trades went -66 pips into the red, but I hung in there and he came back and closed them for a small profit. the same thing happened early Thursday.


He could have call it quits then, but he came back and sold GBP/JPY again at 134.70 and again and 134.85. This time his luck had run out and the dealing desk at the FCM were finally in charge, ready to get their revenge and run some stops. Run they did and by the end of the day I was dangerously close to my 150-pip stop at about 136.25. Figuring this run had to be over, I raised by stop to 200 pips at 136.75 and tried to hold on. It amazing how the charge toward 136.26 seemed to slow as soon as I pulled my stop.

At this point, GPY/JPY began to slow and I was in all-or-none mode because I knew if I was stopped out of High Rollers, I would be down to $8500 and close to my mental stop-loss for this account of about -15%.

So I took one last chance and sold 2 more of GBP/JPY at about 135.98 (this time with -150 pip stop) figuring a move back to the low 131 where it was just 2 days prior would bring me well back into the green. In the midst of the Thursday action, HomerPoet came back in and sold EUR/USD again at 1.2828 and that was going badly also. So at this point, i'm short 4 GBP/JPY and 2 EUR/USD, looking at about a -700 loss if just the GBP/JPY's go bad. At that point, I did what every currency trader must to do at some point - I went to bed!

Friday morning came around and I was nervous logging in because I knew it could be ugly. Sure enough GBP/JPY rallied again and look out my 200 pip stops in addition my 2 additional trades put on. At this point, i'm down at about $8100 and well below my walk-away figure.

At this point I put disabled my account and waited for HomerPoet's trade to stop out. As of Friday, EUR/USD was at 1.2918 with my stop at 1.1978. I expect i'll be stopped out of this before Monday morning in NY and leave my account with just under $8000.

Lessons learned:

- There is no such thing as a safe signal provider

- Its not smart to let other people trade your money for you because you can't tell when they are just being lucky - and when their luck is eventually going to run out which everyone's luck eventually does. Remember these people could be playing with fictional money and can take a whole lot more pain than your live account can.

- Currency trading requires large drawdowns - don't even bother with a stop less than -150 pips. And -150 pips probably isn't large enough.

- Don't try to fight the market and trade your way back to even because the market owes you. It doesn't and it won't pay you back on trades 5-6 just because you lost on trades 1-4.

- Based on a mini (10K) position size, $1,000 isn't enough. In fact, in my case, even $10,000 wasn't enough.

I haven't given up on currency trading, and i've learned alot from Zulutrade, but i've given up on trying to make money by picking signal providers. More to come.