Ok, so I’m a couple of weeks into testing Zulutrade’s copy trading platform, and although this is obviously very early days, I thought I’d report on progress. The account is doing OK, but more importantly, my progress raises the issue of how ‘valuable’ is the ‘reverse trade’ option in the advanced trade settings?
I’ve had the demo account open for just over two weeks, and the graph and data below show my progress over that period. As noted, 2 weeks is not really a sound period of time over which to make judgements, however, my current experience does bring two things to light. Have a look at the data and graph below before we move on.
Firstly, although the profit in real terms is not huge, proportionally it is good. Bearing in mind I only have just over 1,800 dollars dedicated to copying signal providers, 308 euros in a very short space of time is not a bad result.
To be honest, I haven’t done much ‘tweaking’ of this account, I merely picked several traders, and although I did look at things like their worst trades and other important factors, in all honesty I did not do a thorough assessment of the traders from all angles.
The point I’m slowly getting around to, is that the ROI proportionally in terms of cash and time hasn’t been bad at all. Obviously, if I’m not careful, in a weeks time the balance could be reversed into the ‘red’, but, what I’m reiterating here is the potential to increase your account within a very short space of time (although the key is continuing that success).
The account could have had even better results if I had reassessed performance, looked ‘deeper’ and also altered lot sizes (Or maybe not…). One change that I did make was when I learned about the ‘reverse trade’ function, which to date, has provided the largest percentage of the profits.
Midway through my first couple of weeks of trading, I discovered the ‘reverse trade‘ function and applied it to ‘Climber SB’, and that is where my account really turned around (it is literally pinpointed in the image above). Of the 308 profit above, 165 was down to reversing whatever the ‘SB’ did. (I did reverse another trader, and although not as much profit resulted, it is still ‘in the green’). Previously, his trades had been ‘dragging’ the profits of the others down because his was a larger lot size.
However, despite the profit, I am not completely naive on this point. Climber SB has $731,605.71 worth of trader’s accounts following him, so, maybe I just ‘hit it lucky’, and if I was trading with real cash would seriously consider ‘holding off’ for a bit and maybe removing him/her from my list, and doing some re-thinking.
So, how valuable is the ‘reverse trade’ as a tool? Pick a ‘bad trader’, reverse their trades and ‘bingo’, the cash comes rolling in? I sincerely doubt it. (By the way, maybe you should check out the forum on ZuluTrade, and grab other opinions/experience). Even if you followed the ‘worst trader’ on ZuluTrade (some of them literally scream ‘reverse me’ – which I’m a tad suspicious of…), what if you take your eye off the ball, and all of a sudden this guy actually turns his game around, and starts winning? Worse, this guy was so bad, that you decided to increase the lot sizes on him?
Obviously, if you are serious you are going to monitor your account like clockwork. The thing is, copy trading is IMO not too different from manual Forex trading in the sense that you still need to pay attention to the details. But it is also down to money management – and setting limits is vitally important, and once you have established your own maximum loss limits, never copy a trader who has ‘broken them’. (Just looking back into my account as I write this article I notice SB has a trade open with no stop loss applied – WARNING).
Another consideration is that a ‘bad trader’ will strive to improve their trading, either that, or blow their account and disappear. So, surely it is wiser to copy someone who is also striving to improve their account but also winning and not reverse their trades? (A bad trader can only continue to be bad for so long…)
Thinking back, choosing Climber SB in the first place was a ‘rookie mistake’, not really thought out, based on his long term ‘gain’, when I should have been looking deeper into his stats (those nasty dips). And also, I chose to ‘reverse’ his trades as an experiment, something I probably would not have done if I wasn’t on a demo account.
If you look at his long term performance, you will see that he does well (hence the amount of cash following him), but, please take note of the potentially catastrophic ‘dips’ (for a small account) that occur along the upward curve.
(I’m a couple of days late publishing this article, so I thought I’d have a quick peek to see how the situation is, and profits from his ‘bad trades’ at time of publishing have gone up to just under 200 euros – but I am convinced that he may break out soon, and to reverse him for a long period of time may prove disastrous).
I will continue to test the reverse trade function, though in all honesty am skeptical of using it as a strategy, but will report back nevertheless. In the meantime, I will be refining my criteria for selecting good traders to copy.
Copy trading is portrayed as being easy, but in some ways, it is almost as difficult as manual trading, especially if you want to make a real profit. However, I do think it can be achieved using ZuluTrade (and will endeavor to do so, and report on it). What is important is (IMO), that you do your homework, and don’t rush into things, and if in doubt, leave it out. In the meantime, if you fancy a go at testing the system out without having to spend any money, try out the demo account.