Zulutrade - Lot Limit and Stop Loss results

Welcome back Zulu-fans!

Well I've been promising it and here it is. To your left, please find analysis of the top 20 providers in Zulutrade after my 2 lot, 180-pip stop filter has been applied.

Before we get to lessons learned (and there are plenty), let's examine the results overall.

Of the 1084 providers analysed, only 499 (just under 50% of them made any profit at all. When I add up the total pips earned across the group, they actually lost -480,966 pips. When I sum up the draw down, that equals -1,230,294. That means the profit factor (profit earned for draw down encountered) is actually -0.39! That means the system as a whole loses money when lot limits and stop losses are used!

It's no wonder that Zulutrade won't let you filter the results for the stop and limits, because if they did so, you probably wouldn't want to trade on the system! And that's where the Zulutrade dream meets hard reality. Use of stop and position limits in general kill profitability.

I went back and ran the same stats for the database without use of stops and lot limits. For that sample, the entire system earned 667,176,917 pips but had -769,083,710 of drawdown. So for the entire system (without stops and lot limits), the profit factor is only 0.86, less than one. That means the Zulu system as a whole is a "Risky Provider" meaning drawdown exceeds profit earned!

Now let's focus on the top-20 graph from above. Most providers (with the exception of Real Conservative Trading and Crocodile have drawdowns greater than -500 pips. That's explains why I have consistently lost money on Zulutrade. Its because I usually drop providers once their drawdown exceeds 500 pips or about 5% of my original $10,000 investment. Even with the top 20 providers, you would have had an average of -717 pips drawdown.

So what does all this mean? It means that Zulutrade is mostly a losing proposition, at least from the customer's perspective. Of course, the FCM's, the Providers and Zulutrade themselves make money. But the customers have the odds against them for making any money.

Another key takeaway is that the more conservative you are with your money (by use of lot and stop losses), the more likely you are too lose it! Put another way, the use of stops and limits keep you in the game longer, but in the end, they just prolong the pain and you loose you money over a longer period of time instead of losing it all at once.

Overall, this is a pretty depressing set of circumstances. I'm going to need to assimilate these results and decide whether I want to risk any more real money with Zulutrade. I love the concept, but I'm having a hard time with the reality.

All that said, some providers do have an uncanny knack for making money, even with stops and lot limits. Some of my favorites are #16 Bigwin, #24 Coolie1997, #69 Cheetah. Cheetah himself is pretty amazing overall in that according to my simulation he earned 1123 pips with a max drawdown across trades of only -50 pips.

Another example is TheKillerz who is #124 on the filtered list with 733 net pips and 395 pips drawdown. And TheKillerz has only been active on the system for about 9 weeks! So I think you can make money with good providers overall, but if you can't handle a drawdown of -1000 pips, you're probably going to lose your nerve (and leave the table) before your provider can make your money back.

That's all for now, thanks for reading. And for those of you based in North America, have a Happy Thanksgiving!