Before you EVER trade Forex on Zulutrade, READ THIS FIRST!!!

... After a about a year of using Zulutrade and looking for signal providers on Zulutrade,
I wanted to make this special note to any newbie that may be considering using
Zulutrade, or may be in the process of using Zulutrade.

Zulutrade is a place in which a user such as yourself can create a live account with an
FX broker and link that account to Zulutrade.  You can then select from a vast pool of
signal providers to trade with.  Any signal provider you have added, when they make a
trade, you make that same trade.  Zulutrade similarly calls this receiving signal provider
"advice".

Zulutrade makes their money by snagging a pip or so from the spread, per trade, that is
made to your account.  Simply, when a trade is opened and closed in your account, if
the trade 'were' to make 10 pips gain, you will only see 8 or 9 pips instead.  I believe this
is accomplished through a slightly increased pip spread.
These pips Zulutrade pulls from the trades are divided up between 3 parties.  Zulutrade
of course takes their cut,  the signal provider takes their cut, and if someone had
referred you to Zulutrade, they take a cut.

That is the basic money flow structure of the business.

In regards to referrals...  When ever you stumble onto a site that goes through and
positively plugs Zulutrade as a place to have a currency trading account, and how great
it is and such, with a referral link attached.  Remember, if they refer you and you sign up
for a live account, they get a part of that Zulutrade cut I mentioned above on 'every'
trade you make.  Keep that in mind, as it is in their best interest to get you signed up. 
This happened to me when I stumbled onto a blog, and this lady blogged about how
great her method was and posted how much money she was making each day.  She
"said" she traded for a living.  In the end, she got my referral, her blog is now inactive,
her method on Zulutrade did not work, and the signal provider account is now gone.

In regards to signal providers...  This is an area that can be quite extensive to talk
about and even complain about.  I want to keep it as short as possible.  In my year of
using Zulutrade and trying to find signal providers to use, I have NOT found any signal
providers worth using.  "Every single signal provider" I have put in my live account to
trade for me has lost me money.  Why is this?  Is it because I don't analyze and
research the signal provider?  No.  It is because, quite simply, the signal providers on
there are not any good.  In part Zulutrade platform adds to help hide that these signal
providers are not any good.  I'll get into that later...
So in my year experience, I wanted to point out to you some of the current symptoms
you can find in a signal provider on Zulutrade, that are sure signs to lead your live
account to disaster...
 The multiple open positions at the same time trick:  This is quite possibly the
most visible sign danger sign on Zulutrade for the signal provider.  You will
see 5, 10, 20... trades all opened a few seconds apart.  So why does a signal
provider do this?  To deceive you of course.  #1, the more open positions
made by the signal provider, chances are the more open positions are made
in your live account.  This means more money made for the signal provider in
that Zulutrade cut I talked about earlier(not to mention more money for
Zulutrade). #2, this tactic creates appearance of, more money made, more
trades to better history data (history shows thousands of successful trades),
and help win percentage stay high. 
 Low draw downs on individual trades and never taking a loss trick:  This one
typically goes hand in hand with my first bullet item.  I have a lot to say about
this one.  Quite obviously if the signal provider lets their position draw down to
huge amounts and it comes back months later, it does not show up as a loss. 
During that time of being stuck in that bad position, the signal provider
continues to make trades, as if nothing is wrong.  You can easily spot this
when you see a signal provider with thousands of trades made and a win
percentage of 97%-100%.  This means they are making multiple open trades
and never taking a loss.  Just to keep you in perspective on this...  Many of
these draw downs these signal providers take you go to -600 to -1000 pips or
even more.  This is VERY unrealistic. Now for some reality for you newbies. 
Imagine having a $1000 micro account.  You decide to have 5 open lots /
open trades.  All five open trades are made but the signal did not work and
started to draw down.  Now what do you do?  Allow 5 more open trades for
this signal provider so you can keep trading, or wait it out?  If you wait it out
you, might be waiting for some time.  Say the signal provider draws down to
-600.  That is $300 of your account with no guarantee it will come back!!!  
You have basically locked your account up for months if not longer.  And you
hope that you are not against the roll over fee either.  Okay, lets keep trading
instead. You open another 5 lots with this signal provider.  Another bad trade
happens.  Now you draw down on those 5 as well.  You can see where this is
going...  You might say, well if I put a safe stop in, I can avoid this.  I got
caught with this same notion as well.  What happens is these signal providers
draw down low all the time; -200 to -300 pips and many do come back.  The
key problem here is, if you notice, the signal provider does not make very
many pips on their wins.  Their average pip gain is low.  So lets paint the
scenario.  I put a safe stop at -120, I trade just one lot, the signal provider
makes an average 10 pips per trade.  This means I need to roughly make 12
trades to make 120 pips. With the high frequency of a trade drawing down
past -120 pips you will note that you will start to steadily loose money if that
frequency of the low draw down is within 12 trades.  Enough said here. 
Check their trade history for low draw downs.
 Multiple lots used on a single trade:  Many signal providers have this in their
history.  What does it do, how does this affect me?  Well, it is a tactic to hide,
and to make things look better than they really are.  Example, if I in reality
make 5 pips on a trade, but Zulutrade shows me with 10 lots on the trade,  I
 am going to show 50 pips in Zulutrade.  A nice deep green is shown.  You
hide that you only made 5 pips, and made it look like a spectacular trade was
made and add more $ to your history.  Typically, the losses are very red but
fewer, and the disadvantage, I suppose, is you can still see the draw downs
on those losses.    
 Open trades in deep negative, with many open trades:  This one is very easy
to note, and I suggest anyone looking for a signal provider look at first.  When
you open a profile in Zulutrade, you will note something called "Open
Positions" with a dollar amount next to it.  If that dollar amount is in -$1000's,
move on to the next signal provider.  If you are feeling like it, do a check on
open positions.  If you see 10 or more open positions in the list, MOVE ON to
the next signal provider.  This is a quick way to avoid the first two bullets
mentioned above.
 Few pips gained many pips risked:  Regardless of what I have mentioned in
previous bullets, there are signal providers out there that don't do those
things.  This is where you come in to make that educated look at their history. 
You need to total up their wins and total up their losses.  You need to divide
those numbers by the number of wins and number of losses for true
percentages.  You need to simulate where you would put your safe stop
(never trust signal providers to stop you out, always use a safe stop).  There
are many other things to look at as well.  Many times you will find that the
signal provider shows positive in their profile but running your scenarios will
show his gains made do not outweigh the losses incurred.  True average pips
gained is not good enough, to outweigh the size of the failures.
 Great numbers, not enough history:  This one has got me several times.  I
find some good history, and demo for a bit, then put them in my real account. 
Later they blow up, and I loose my gains with them and some.  Demo, demo,
demo, then demo some more.  You need at least 6 months or more of
consistent behavior, then demo for 6 months more.  In any respect, don't be
so quick to jump into putting the signal provider in a live account.  "Only fools
rush in, those who wait gain wisdom and knowlege."

Having mentioned the things to look out for when looking for signal providers on
Zulutrade, I want to remind you that these signal providers are trading the currency
market "risk free".  They make the signals, they get part of the Zulutrade cut.  They don't
need to be using a live account, they have unlimited capital, they have unlimited trades
they can open, they can always move to the next signal provider account if they ruin the
one they are working on now.  Zulutrade allows this, and why, because it is their
business, it is how they make their money.  There is a lot of money to be made on the
naive greedy nature of human kind.  Each step from referral to live account, is in their
business plan to make money.  As soon as Zulutrade goes in and starts hindering the
signal provider, they will be hindering their own wallets from getting fatter.  That 'is' in
regards to Zulutrade on the matter of this message...

This is my experience folks.  I can't stop you from making the same mistakes I made, or
making new mistakes at that.  Many of you may read this and just ignore my warnings
and have "a need to feed your greed".  Will there be a signal provider on Zulutrade
worth trading someday?  Maybe, which is why I still look, and why I still wish to report
about my findings.

Take heed my fellow traders, and good luck.

Update: 03/29/2010 -  I wanted to link to a post that helps support this post, and also
helps you, the new to Zulutrade, get an idea of what you are about to step into. 
Reviewing Everything Forex.

Thanks for reading. 

Posted by townjet at 12:34 PM

22 comments:

stevetrade said...

Excellent post JT, and it needs saying again and again and again until
people get the message.

It sickens me the way most of the providers on ZuluTrade run their accounts.
Some of my subscribers have fallen for the stats and have been trading
other providers along with my signals.

Suffice it to say it's ended in massive drawdown.

This is one of the reasons I prefer Tradency over ZuluTrade. If you don't
pass the trial with Tradency you don't provide signals, ZuluTrade will let
anybody sign up and provide signals.

January 15, 2010 12:41 AM

stevetrade said...

Hi JT,
Just thought I'd make you aware of my post here in case you haven't seen it.

http://stevetrade.wordpress.com/2010/02/01/dropping-my-signals-from-
zulutrade/

February 2, 2010 12:43 AM

townjet said...

Thanks Steve,

I read the post and have to say that Zulutrade is very disappointing in its
stability to the user. Back in July 09 I ran into several problems with Zulu as
a user. Orders not executing, signals not sending the order close... I should
have probably backed away at that time.
It seemed that as a user of signals on Zulu, I kept having problems, and
support did not take responsibility correct or to reimburse me for their
mistakes.
When it came to an issue with my signal provider account, Zulu jumped in
and fixed my problem immediately with little delay. This kind of gives you a
feel for where Zulu loyalties sit.
Hindsight being being 20/20 I wish I would have spent $1000 on a good EA
from Forex Robot World Cup competition (Chris' blog), rather than throw it
away on Zulu like I did.

February 2, 2010 11:25 AM

Kevin said...

I agree most of the signal providers are cheats, but its not true that all of
them are the same. There are good ones too out there.

Its same like looking for an EA that is a consistent winner (commercial or

non-commercial), I haven't seen any EA that does well forever. Then, it
doesn't mean all EA's are bad, I am sure there must be good one's too, its
just that I can't find.

Keep the hunt on, EA's or a good signal provider!

February 12, 2010 7:08 PM

nick said...

Hello,
Very nice post
Id like to say that i have a live account with zulu and its doing good.
 I ve managed to get a decent ROI by choosing some signal providers
carefully, not based on zulutrades rank, but based on their history and open
positions.
Ive setup a custom stop value, based on the average lowest value that each
trade they made reached. So if the average value is eg. 80, then with a stop
at 70 you might get on average good results in the end.
Also i never allow more than 3 max open lots.

February 26, 2010 4:25 AM

townjet said...

That is a good angle Nick. I am glad you found something that works. If you
want to mention whom you use, you don't have to if you don't want to, but
others may be interested. Thanks for the comment.

March 5, 2010 5:45 PM

Kevin said...

So far I have found www.shivfx19.com to be a sound signal provider. Tight

stops and big targets.

March 5, 2010 8:14 PM

sina said...

Hi , Nice posit , just wanna know anybody knows any good and reliable
singnal provider ... I heard fxmaster.net is quite good ... any advice ?
[email protected]

March 7, 2010 11:52 AM

nick said...

I use the hunter and mayfairswing

they dont give many pips, but overall are careful when they trade and they
usually win.
i have mini account

March 9, 2010 4:44 AM

townjet said...

Thanks for comments guys. I have noted The Hunter before. There has
been some controversy over him with some anonymous commenter's in the
past on this blog. It was said that he trades on news. I say if it works, then
what is the big deal. I know it is not standard, but those that go against the
grain often tend to succeed. The familiar "Rich dad, Poor dad" is just that
concept of going against the grain.
Anyway, I will have to take a look at mayfairswing. I think I may have
crossed this one but not really looked at.

Thanks for your comments.

March 9, 2010 7:49 AM

SAM said...

I'm a signal provider on zulutrade and i don't use above mentioned tricks. I
have just started and don't show up in performance list yet. An hour ago I
placed a trade quickly to get a good fill and didn't put stop. A minute later I
tried to add the stop put wasn't able to because platform was frozen up. It's
been an hour and even their website isn't loading up. If trade turns against
me I won't be able to stop it. Three years ago when i first tried zulu this
platform freeze ups happened all the time and I hoped they had fixed the
problem. I'm giving up on zulu and start focusing trading my own money with
a good broker.

March 29, 2010 9:34 PM

townjet said...

Thanks for the comment SAM,

I too tried the signal provider account. I kept it private though (kind of just
playing around). I did not experience the problems you mentioned, but I am
not surprised that you had such problems. It's that middle man problem. The
more platforms, networks, and actions, you place between you and the
broker making the trade for you, the worse. Opens up room for more error,
 and Zulu falls into this middle man category. And sadly enough Zulu platform
does have problems, and it costs the users money. I lost a few hundred back
in June 2009 to July 2009 when I was missing signals in my user account to
close a position. Zulu would not reimburse me for their problems, I got lucky
and FXCM decided to give me back a few bucks on one of the mistakes.

JT

March 30, 2010 8:24 AM

Anonymous said...

In zulutrade there are some good signal providers such as treasuremap101

and demandcurve, in the forex business to lose 10 trade or more in a day is
very common, experience and professional traders like us can even lose
more than 15 trade in a day, the main reason why they are successful is
because they are using low leverage(good money management) and their
account is well capitalizee(funded)
the chance of becoming successful in forex trading are greatly reduced if
you are using a minimum starting capital, it is imposible to withstand the
nagative effects of leverage in a small account, low leverage with a
sufficiently capitalize account will give you a big chance and opportunity to
succed in forex trading,it will alow you to realize small losses and give you
many chance to trade another day. i use only demand curve and
treasuremap101 as my signal provider and i am making good money from
them in zulutrade

April 8, 2010 10:48 AM

Anonymous said...

I have been losing money with most signal providers, as well. The only one
where I seem to be making money consistently is Isunia. I trade only 2
minilots and set a stoploss at 1000 pips (in case my broker gets
disconnected from Zulu, which it regularly does). The drawdowns (often 300-
500 pips) do take some nerves, but the signal waits for profits to reach 70 or
so pips, so I can make profits of 10k pips per month (and easily drawdowns
of 20k). Overall, not a smooth but rewarding ride.

April 13, 2010 5:40 AM

Webmaster said...

Nice articles. Success for you. Thanks.

forex robot video

April 29, 2010 8:00 AM

Anonymous said...

I make good money following fxmaster.net signals. Those guys are really
good in what they do

May 7, 2010 4:12 PM

Anonymous said...

Great article - as a newbie I understand more now why I can't seem to make
money on Zulutrade. I also am using a Forex signal provider on Collective2
and am making progress. It seems like their system does not encourage the
problems you have identified with Zulutrade.

May 8, 2010 8:27 AM

Andrew said...

Another trick used by some SP's is a Martingale money management

scheme. Martingale is also known as Gambler's ruin because it doubles the
stake after every loss in the hope to win back the loss on the next win. A
nice idea in theory but it's a disaster in practice because a relatively short
run of bad luck will wipe out your account. Look at the return graphs if they
go relentlessly upwards with the odd deep cut downwards they're using
Martingale and depending on your capital level that spike could have wiped
you out.

Proper strategies will wander up and down but slowly gaining upwards most
of the time i.e. no deep drawdowns just the normal wins and losses of
roughly the same magnitude with a slight upward bias.

Also don't get too hung up about high win rates. Win rates are unimportant
 what matters is profit. I have a strategy that only wins around 40% of the
time but when it does it usually wins big and so is still very profitable over all.
I would be suspicious of any win rate over 70% simply because the markets
are largely random and no system is going to get much more accurate than
that. It's all about statistics - you will win and lose in equal measure but a
good strategy should make modest headway most of the time when
considered over a number of trades. Most hedge funds look for around a
30% return per annum with low risk to capital - that's the sort of strategy you
should be looking for as anything more will be cranking up the profits at the
expense of greatly increasing your risk.

One final thing to consider is that ZuluTrade's business model puts the
investor at a disadvantage because of the high spread after everyone has
taken their cut. Many of the strategies on there will probably have been
tested using standard retail spreads and may not tolerate such a high
spread. Collective2 seems a better model for the investor.

July 15, 2010 2:38 PM

Frank said...

Thanks for this very detailed article and - you are right. ZuluTrade is not the
way of making money quite easy but it is possible to make some money
steadily by choosing the right signal provider. The most important thing is not
to open too many lots at the same time. Anyway a much better managed
forex platform than zulu is ayondo.com as you can get in touch with your
signal provider personally and discuss their strategy.

September 20, 2010 6:45 AM

Mark said...

I know this is an old post but its still valid. I think you've misjudged a lot of
things about Zulutrade but I don't disagree with any of your points.
Most successful strategies will wipe out accounts that are over leveraged but
that is always true with Forex, the mugs who think $1 in = $1,000 out will
always fail. I don't think a lot of newbies understand drawdown fully and how
that will clear you out.
Btw Mayfair swing is a robot I think its just FAP Turbo and it doesn't succeed
on live accounts as it scalps at 0.2 to 3 pips and loses at -40 to -60 pips but
 is in the 'top 10' on zulutrade provider rankings.
Basic rules of money management apply at all times and some others -
when you finally find a system that works for you check the spread on their
currency pairs against your brokerage add commission and deduct that from
their average pips per trade and watch for slippage like a hawk. When (not
if) trades don't close out consistently change providers and always
remember its YOUR money they're gambling. Real stats like their Sharpe
ratios are whats really needed not the often bizarre and inconclusive
numbers that Zulutrade offer from their bespoke and vaguely explained
ranking system. No one system works forever and hedging principles are
required to spread risk and increase the likelihood of steady gain.
GET RICH QUICK AND LOSE IT QUICKER

October 30, 2010 8:40 AM

townjet said...

Thanks for your comment Mark.

This post is old, but still seems to be a popular one. Zulu has changed a bit
since this post. I have changed my view a little in that it really is not so much
the signal providers trying to be sneaky and take your money, its just the
users that don't know how to take the data and analyze it properly. The stuff
that still seems to get people to hook onto a signal provider are seeing that
high accuracy and not really correlating that with draw down and other points
of data. Users just think they will keep on wining and not ever take a loss.
There is some conflict with my view on FLY ON THE WALL signal provider
and a recent commenter (I get them coming here some times...). The signal
provider is 100% accurate because he does not set a Stop Loss. He recently
took his positions down past -200 pips. This was bound to happen and it will
happen again. You can make all the 20 pip gains from this guy for a while
but when some bad trades come along, and they will, those gains will be
gone. This same scenario happens over and over with signal providers on
Zulu. They have high accuracies and you do well for a short term gain, but
latter you take the losses and loose it all. I fell prey to this a couple of years
ago, and like you mentioned I should have been using my money more
wisely, but I had 3-5 mini lots for a signal provider Bigwin on a 2K account.
The signal provider at the time had a high accuracy and his max low on a
 trade was -180's or something like that. I was up 1K in a month then the next
month I adjusted my money management to add 2 more mini lots. Then it
happened, he drew down past -200 pips and hit my safe stops and I lost my
1K gain. A few days later it happened again, more trades past -200 pips. So
in the end some things have not changed since a couple a years ago. New
users find Zulu and see the same high accuracy and don't manage their
money and blow their accounts. I still have yet to hear from someone that
has made 1 to 2 years of gains on Zulu with some signal provider(s) and
show proof of it.
At any rate I could blab on about Zulu, but the bottom line is new users will
find Zulu, use the same dangerous signal providers, practice poor money
management, and loose their accounts.

JT

October 30, 2010 10:58 AM

Mark said...

Hi Townjet, I couldn't agree more.

Most of the necessary data for judgement is on Zulu but most people will
look and only see what they want to see. It's far more difficult to enter a
place like Zulu with a greed free strategy and stick to it when you get great
percentages very quickly but its the only way to hang onto what you get, and
using your own stops is vital - provider drawdown is only a historical figure,
also I don't think newbies consider drawdown beyond % if a starter account
can't handle a providers drawdown in pips it'll blow out.
Your right about "THEFLY" et al. as well after all the only way to be 100%
right is to hold out when your wrong but that always shows up in open
trades, the real issue I have is the way they can just open a new profile as
"thefly" did after the May flashcrash. Btw they have a profile called "Currency
Changers" again GBP/JPY but around 98% success and shorter trading time
with lower drawdown which is worth a look.

As always if it looks too good to be true...CAVEAT EMPTOR