Bigwin is back!

Welcome back Zulutraders!

After a 2-month hiatus, Zulutrade provider Bigwin is back!

Bigwin disappeared from the Zulutrade scene after that nasty GBP/USD breakdown that occurred at the end of September leading to my post Bigwin Blows up, skips town. I was disappointed at the time because of all the providers on Zulutrade, I made more from Bigwin than any other provider. The graph above shows his total affect on my account. At one point he was up over 1000 pips, but gave it back on a nasty GBP/JPY trade.

Its good to see Bigwin sticking to the GBP/USD and EUR/USD which are his core strengths. When he starts trading GBP/JPY it gets a little dicey.

Looking at Bigwin's trading history across all timeframes, he positive in every timeframe from 3 days up to one month. The 3-month history looks nasty and shows down about 5,800 pips. Then he's positive in the 6-month and every other timeframes out to his 8-month history on Zulutrade.

The difficulty is that at times he opens a large number of positions which exaggerates his returns, both good and bad. It would be handy to see how he did if I could limit it to 2 lots with a 180 pip stop. Its so frustrating that Zulu doesn't give you the ability to see how the provider would have done with a 2-lot limit, and some type of reasonable stop loss. I have to get that query going, stay tuned.

For the time being, i'm thinking of dropping Coolie and going in one lot on Bigwin. We'll see.

Tcxmon

More on the Margin Call -o- meter ™

Many thanks to Digian and James over at
http://www.zulutradeblog.com/ for bringing up the issue of the Margin Call -o- meter ™. I must confess James is the originator of the Zulutrade blog concept, and i'm just a wanna-be.

Anyway, the Margin Call -o- meter ™ is a quick, graphical way of letting the user know how likely they are to blow-up their account based on their provider and account settings. The data appears as a thermometer-like zero to 100 scale. They even color-code it so that low numbers are a nice soothing green and the higher-risk values are a high-blood-pressure inducing orange to red. As you can see above, the meter shows my current odds of blow-out at 82.8% which is pretty high for a conservative guy like myself.

By way of background, Zulutrade updated the o'Meter in the past few months to include a calculation regarding the number of open positions each provider is likely to open. To prove this, let's take a look at a few sample setups.

First, setup your account for provider Bigwin. Click the Advanced link and set him for 1 Max total open trades with a Stop value of 180 pips. The screen will look like this:






Next, setup your account with provider Pro-B5. Click the Advanced link and set him for 1 Max total open trades with a Stop value of 180 pips. The screen will look like this:






That's a pretty big difference, 58% chance of blow-up versus 2.1%. What's the difference? You can't see it on the setup screen but its the number of concurrent positions opened by the provider.

Why should Zulu so strongly consider the number of open positions? Its because Zulutrade is merely an interface which passes orders to the FCM for execution.

Consider the scenario where ZT sends a trade to the foreign currency merchant (FCM). FCM executes the order but for whatever reason the confirm doesn't make it back to ZT. Signal provider sends another order, but ZT's order limits are not honored because as far as ZT is concerned, you don't have a position open. From there it gets ugly and you can imagine what happens next.

I've had some minor issues with Zulutrade executions, but nothing that bad yet.

What's the moral of the story? Don't bet your mother's, grandmother's or your kid's college fund on currency trading. And btw...

Cheers to James and his Mrs for their new arrival!

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

Bigwin stumbles - gets back up

Back on 8/4, I took some heat in an anonymous comment regarding my support for Zulutrade provider Bigwin. The criticism compared him to FxMarkets, a provider who whacked my account with a 600-pip loss (in almost no time) back on 1/5/2009.

Later it was revealed that FxMarkets was one and the same as about 1/2 dozen other providers on Zulutrade who were among the best performers and had the biggest followings. I found out the hard way that this provider tended to open many GBP/JPY positions, let them run into the red and then wait for them to come back. Check out my blog entry for 2/22/2009 for more info.

Anyway, I don't think the comparison is warranted and here's why.

Bigwin took a hit on the recent run in the GBP/USD up to 1.70. He went short at the breakout point at 1.67 and at one point he had almost 86 positions open at once which is clearly unrealistic. I stayed with Bigwin during that period with a 2-lot limit and a 180-pip stop thanks to feedback from Zulutrade provider Pro-B5.

The performance graph from above shows that at one point I was up almost 900 pips using Bigwin. His recent stumble cut those gains in half, yet he was able to come through the period and sustain and upward trajectory. Some of the gains he made on the rebound came from a later short he put on after I got stopped out of one of his earlier positions in that same run.

Of course, you could make the point that the only thing that bailed out Bigwin was the fact that the breakout failed, and GBP/USD moved back toward 1.67 and below in his favor.

In his performance last week, Bigwin managed to pull in 46-pips even though he didn't trade at all on Thursday and Friday 8/20 and 8/21. So for the time being, i'm still sticking with Bigwin with a 2-lot limit and 180-pip stop.

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

Bigwin on a Big Roll

Provider Bigwin is on a major roll. Since adding him as a signal provider back on 6/4, he has pulled in over 450 pips. Better yet, he seems do be able to do so without any significant drawdowns.

Bigwin seems to be able to let a profit run, unlike any other Zulutrade provider I have ever seen. In my second trade (back on 6/8/2009) we were in the midst of a major rally in GBP/USD, he picked up 259 pips on a single trade. Shortly after that, he had a pair of losses (-91 and a -55 pips). Since then it has been onward and upward with 40 trades with 36 winners and 8 losers. The biggest loser in that 40-trade run was -17 pips!

The only fly in the ointment with Bigwin is that since he trades 10-20 times per day, the Zulutrade "Margin-Call -o -meter" gives him a high-risk rating. I have him set for 2 lots with a 500-pip stop for each position. With $7500 in my account, you would think I can handle a 500 pip-loss times 2. But in the strange world of Zulutrade, he has a risk of blowing up my account. How is that possible? It goes something like this. Signal provider puts on 10 simultaneous trades - typically all the same currency in the same direction. Currency gaps -500 pips against the position. A technical glitch occurs where the stop loss is not honored, or the Zulutrade's signal to FXCM to close the position is somehow rejected by FXCM. As a result, my account is now socked with a -500 pip loss times 10. While is doesn't seem likely, its possbile and is clearly part of Zulutrade's thinking when they put this meter together.

For now, i'm not too concerned about the Margin call - o - meter. I am concerned about the fact that Bigwin has 708 users following his signals. Let's estimate that 500 of them are with FXCM. That means that every time Bigwin trades, $5 million dollars of positions get put on for every lot that Bigwin trades. Multiply that times 10-20 lots and Bigwin has the potential of causing some large losses for FCM if they are unable to offset those trades in the Interbank FX market. Since these trades tend to be scalps (take positions only for short periods of time), its more difficult for the FCM to offset those positions. Thus Bigwin has the potential of causing the FCM's to loose money and hence pressure builds to for some big price move to occur in which the FCM's get even for all those losses. One way to avoid this is to keep positions open only for short periods of time and to trade only during active hours (2AM-12 Noon EST for the GPB) which Bigwin has been doing. Its harder to manipulate currency prices when all players are active, much easier after hours.

For now, i'm sticking with Bigwin, 2 lots with a 500-pip stop loss. Stay tuned for updates.