Zulutrade - Back to the drawing board

Greetings Zulu fans-

After last week's wipeout, i'm back into research and demo-account mode. So I scanned the top 20 providers and applyed this criteria. See my Feb 2009 post for some rationale behind these criteria:

1) No large, open drawdowns.
2) Consistent effort
3) 80% or better winning percentage
4) No "Painting the Tape"
5) No large drawdowns in History - ability to take reasonable size losses

Here are the raw results, those with an asterisk (*) are demo-worthy:

• Rascave - Large open losses - almost -3000 pips
• LowestDD - Large open losses - over -5500 pips
• Coolie1997 - Different pairs, worthy of a demo account - 83% win rate *
• scalp trades - He got whacked by GBP recently, I've seen that movie too.
• pipking - Promising if not for large losses in the history - 400 pips, -500 pips
• Got pips? - Large open losses - almost -1400 pips
• Trendcatcher - Looks good - only 1 large open loss *
• Euro-Asian Capital - Large open losses - over -400 pips
• Pro-B5 - Still demo worthy, but small profits remain a concern *
• Pipsvitamin - Large open losses - -5700 pips
• FXMachine - Large open losses -8300
• fxicb - Large open losses - 1460 pips
• FAST PIPS - Large open losses - -4000 pips
• AkhterFX - Nice record, only 1 large loss - looks like a winner!*
• zun - Sometimes days/weeks w/o trade, but good win size!*
• Signal - Large open losses, too many aliases
• pippingfx - Large open losses - 11,900 pips
• Active FX Trader - Looks too much like Bigwin, clobbered by GBP/JPY
• GasCan69 - Keeps losses around -150 pips which is good*

As a result, I created 5 different demo accounts, with these providers:

• Coolie1997
• Trendcatcher
• Pro-B5
• AkhterFX
• Zun
• GanCan69

I didn't limit the accounts for multiple positions, but put a -180 pip stop on each position.

Let's see how they make out. Have a good week and happy trading!

Bigwin blows up, skips town

Greetings to those of you brave enough to venture into the Zulu-jungle.

My one remaining Zulutrade provider Bigwin blew up this past week sending my account to fresh lows. This time at least the stops worked properly and held at -180 pips per position.

Looking at the chart, Bigwin went long GBP/JPY at 1.47 which was a reasonable support point on the chart and corresponded to the lows set back in July. But instead, GBP/JPY dropped like a stone and closed the week at 143 down a nasty 700 pips on the week.

Looking at Bigwin's overall affect on my account (chart above), he left me up $600 which was more than I ever made on any other provider, even after his recent losses.

What really got me about Bigwin (just when I thought I had seen it all with Zulutrade) is that he vanished off the Zulutrade system! He did the same thing with his other account Forex Bridge. Rather than giving us the macabre satisfaction of showing a spectacular wipeout (anybody remember High Rollers?), he skipped town!

This is reminiscent of the traveling snake-oil salesman who comes into town, sells everyone a bill-of-goods, then leaves just as he is discovered as a fraud and a charlatan.

On a more serious note - this is what the big guys call survivor bias. The accounts that show profit on Zulutrade are still there - and those who fail miserably disappear off the system. This tends to build up the winners and leave the rest to ignore the "graveyard" of hidden evidence we never get to see. Thanks to Nassim Taleb (author the Black Swan) for that one.

This is yet another opportunity for improvement in the Zultrade system - don't let people delete accounts at a whim - leave them around so we can see the full extend of the damage they caused.

One other thing I learned from my experience with Bigwin was that you have to pay close attention to what's going on in the underlying. When he had a drawdown back in early August on the GBP/USD move up to 170, I was on the case enough to cut his loosers and go the other way which helped to minimize the damage. This time I was asleep at the switch and not aware enough to see the major breakdown going on in GBP against all pairs.

The lesson here is that money is made when value is created. And value is created as a result of careful and deliberate effort expended by talented people. No effort expended, no care taken, no value created.

Anyway, tomorrow is another day! Enjoy your weekend.

Pro-B5 wipeout

Greetings Zulu-fans. Well all good things come to an end, and the recent love-fest with Zulutrade provider Pro-B5 has come to a nasty conclusion. After last week's -174 pip drubbing, I was still in the money using Pro-B5.

This week had a series of 3 GBP/JPY trades (2 lots each) that hit my account hard, -172 pips, -124 pips and the last one (-500 pips). Now recall that I had a -180 pip stop in place, so the first 2 losses are somewhat understandable. But for the last trade, I would expect the most I would loose would be 180*2 or -360 pips, right? Wrong. I woke up Friday to find myself down a nasty
-500 pips on that last trade. I've learned from experience not to bother asking Zulutrade support, since it doesn't make any difference.

So at this point, Pro-B5 has cost my account almost -800 pips and that's more than 3 times as much money as he ever made for me. So for now, he's out as a provider, and I will have to put my faith in my one remaining provider Bigwin. Bigwin managed to side-step the nasty drubbing the GBP took this week.

BTW - I'm really starting to despise GBP/JPY as a pair. It has a very nasty habit of making big, unpleasant account-draining moves. Contrast that with GBP/USD or EUR/USD which seem to make more measured moves.

The only bright spot for the week was the equity market where I had a pretty good week. Check out my stocks blog at http://tcxsystems.blocks.com/.

So for now its back the drawing board. Enjoy your weekend.

Pro-B5 takes a hit

Welcome back Zulu-traders.

One of my favorite providers Pro-B5 took a bit of a hit early this week. After about 3 months trading without more that a 15-pip loss, Pro-B5 took an 85-pip loss on a GBP/JPY trade this past Monday.

This loss hit me twice as hard since I recently updated him to 2 lots. So instead of loosing -85 pips, I lost -174 pips. I can't blame anyone but myself for that one. But undaunted, Pro-B5 got right back on his horse and picked up another 44 pips before the week was out. He may have picked up a bit more, but I had him set to 2 lots with but limited to 1 open trade.

If you've been reading this blog lately, its developed into a bit of a love-fest for Pro-B5. All the blog comments regarding Pro-B5 have been positive with one writer saying Pro-B5 was his "last hope for Zulu." So does this loss tarnish his record in any way? Let's put it into perspective and examine his actual performance in my account over some longer time periods:

-130 pips - This past week

-102 pips - September 1 through today

+ 30 pips - August 1 through today

+139 pips- June 1 through today

This isn't even a fair comparison since i've had him on 1 lot through the summer and just recently upped him to 2 lots. So his gains in July and August were on one-lot, but this recent loss was a 2-lots. Take a look at his public results and find his performance was even better than my actual results above.

So what's the take-away?

We all take hits in life and certainly in trading. The measure of a true winner is someone who can take a hit, then get up, brush themselves off and get back in the game. For Pro-B5, that means slow, methodical recovery of losses. He has shown the ability to do so in the past - and let's hope he keeps it up!

Open a free account on Zulutrade at http://zulumon.zulutrade.com/

Watching the Gas Can

Greetings from the land of Zulu.

I've been watching a provider called Gancan69 since I stumbled upon him on Twitter under the keyword Zulutrade. That's one of the great things about Twitter is that you can free-form search the Twitter universe and see everyone's tweats - bypassing the tyranny of the Google search engine.

Anyway, I added Gancan69 in a demo account back on 8/21/2009, two lots max with a 180-pip stop. Since then he's netted 219 pips. Out of 18 trades, he's had 14 winners with a max drawdown of -125 pips where he closed a loosing trade. His performance might be characterized as "lumpy" in that he tends to take larger losses than some other providers. But if the profits are larger also, it should work out on balance.

A few observations. First, he's able to take a loosing trade which puts him above 95% of Zulu providers. Second, he is able to take a profit of more that 15-20 pips. One frustrating element of being a Zulu customer is that providers will routinely risk 75-100 pips etc, then when the trade goes their way, they take a 15-20 pip profit. Under those parameters, the provider would have to win on 80% or better of trades just to break even. Gascan isn't afraid to let his winners run which is key to survival in trading. Most Zulu providers will be happy to take a profit whenever they get it because - after all - they get paid per transaction.

From the larger perspective, Gascan has been on Zulutrade for 11 weeks, he has 84 subscribed users and a 77.3% win rate. I'll be watching Gascan to see how he makes out going forward.

Open a free account on Zulutrade at http://zulumon.zulutrade.com/

Zulutrade - Dialing up the risk

Greetings Zulu-fans.

Here's an update on performance of my 2 favorite providers - Bigwin and Pro-B5. This past week I realized that after Bigwin's early August drawdown, I lowered him to 1 lot. He has since regained his footing and this setting was causing me to underform. So I re-updated him to 2 lots.

Similarly, I updated Pro-B5 to 2 lots per trade (with a max of 2 lots) since he rarely opens more than one trade anyway. Stop-losses on both providers are set to -180 pips.

The graph above shows Bigwin's performance from August 15th through September 4th inclusive. He netted 148 pips without a single loosing trade and a max drawdown of -28 pips. I would have made about twice as much with my new size settings. In fact about half of that (71 pips) was made in this past week with the new 2-lots setting.

Pro-B5 also had a solid performance netting 63 pips over the same 3 week period with 13 winning trades and 2 loosing trades. Maximum drawdown was -74 pips.

Let's face it, Forex trading is a minefield, and prices seem to slosh around in wide range and shake out as many players as possible.

Both Pro-B5 and Bigwin handle this risk by taking positions only for short periods of time and staying out of the market most of the time. Also, they seem to have relatively good entry criteria which lead to high percentage win rates and low drawdowns. Pro-B5 has an 85% win rate and Bigwin has a 76.4% win rate.

I regularly scour the top 100 Zulutrade providers to find providers meeting my criteria and currently, I can't find any providers better than Pro-B5 and Bigwin!

Open a free account on Zulutrade at http://zulumon.zulutrade.com/