Having reviewed a few more social trading platforms over the past few weeks, it’s high time to start reviewing some traders again. Today (12th March 2014) we’ll review breadman-09, currently ranked #1 in the ZuluRanking with a bit over $630,000 following them. This trader has been on ZuluTrade for exactly 1 year and based on breadman-09’s ZuluTrade profile and historical trade data, here’s our review of this Chinese based trader:
- profitable and fairly consistent results
- good average pips per trade profit
- 1 year trading history
- does not trade with own money
- no stop levels used (level is 500)
- potential very high drawdown periods
- fairly high risk reward ratio
- very limited strategy description and communications
Breadman-09’s profit graph (see image below) exhibits an overall increase which is relatively gradual. A few months did however stand out (April, July and August 2013 and January 2014). Excluding the unrealized PnL, each month would have been profitable, though breadman-09 clearly caries over trades and taking those into account, not each month-end would have been profitable.
Over the past year breadman-09 returned 13,388 pips on ZuluTrade which is a very healthy 1,100 per month average (I’m excluding current losing open positions). These results were achieved against an open trade drawdown of 2,160 pips (as reported in the ZuluTrade profile). However, because at the height of this drawdown period 2 trades were closed at -500, this would have reduced the open trade drawdown at that stage but not your account drawdown. Difficult to get a scientific correct number on maximum total drawdown (account + open). However looking at the individual trades in breadman-09’s ZuluTrade history it looks like the market did start reversing closely after those two trades were closed, so roughly adding another 300-400 pips would be more correct in my opinion. Hence with a maximum drawdown for breadman-09 of 2,500, the average returns of 1,100 per month look slightly less good, considering risk/reward.
So what strategy did breadman-09 use to get the results so far? The strategy description in their ZuluTrade profile is unfortunately not very descriptive. It mentions that breadman-09 uses their own investment techniques and methods, while trading the major pairs, EURUSD, GBPUSD and AUDUSD. They mention mainly 1-5 positions each time. However this was clearly the maximum open trades strategy at the beginning because since last July breadman-09 started opening up to 8 open positions at the same time.
There’s no information provided on any stop levels used by breadman-09, and looking at the individual trades, it’s clear that breadman-09 uses -500 pips as their only stop level. This is easy to check because none of their other trades were closed at their lowest level (i.e. they were not stopped out). In addition when their highest drawdown occurred, all 8 trades were opened in the same direction against the USD (though arguable in 2 different pairs). When the 2 trades were stopped out at -500 pips, some new trades were opened in the same direction to replace them too. Hence the risk you’re taking when breadman-09 starts a trade cycle is pretty high, because if the market doesn’t reverse, drawdown can accumulate with 8 concurrent positions. Arguable, this will not always be the case. When you look at breadman-09’s current open trades in ZuluTrade (and by this I mean at the time of this review) you’ll noticed that some GBPUSD buys are combined with some EURUSD and AUDUSD sells. I.e. while the drawdown is about -450 at the time, some of the positions are hedge against the USD. Overall this is clearly a longer term strategy and some significant periods of drawdown will be inevitable.
With regards to profit taking, breadman-09 normally targets between 10 and 30 pips per trade, though some trades were closed with over 200 pips profit. When we just purely look at the historical performance indicators for breadman-09, the 18 pips average profit per trade stands out as a fairly healthy number. It’s pretty good compared to many other signal providers on ZuluTrade. Considering that some form slippage is inevitable, the higher this number, the less impact slippage will have when you want to compare your actual results with those of the trader you copy.
On a more negative note breadman-09 doesn’t trade or risk their own money at the moment. They also only recently hit the #1 spot in the ZuluRanking and from experience, trading styles and performance sometimes changes once a trader starts getting more followers (and hence more potential commission). It doesn’t look like they breadman-09 has any other accounts running on ZuluTrade, though their feedback score is only just over 50% (not helped by the long drawdown periods, which normally turns off plenty followers).
In summary, breadman-09 has clearly achieved some positive results over the past year on ZuluTrade. Average returns per trade are good, though the fact that no stop levels are used also make this a more risky longer term strategy. So far the maximum drawdown was still contained though it can (and will) no doubt be higher at some stage in the future. I.e. this is something you need to take into account when evaluating risk/reward, and when you consider following this type of trader. The fact that breadman-09 doesn’t trade with their own money obviously also adds to the risk factor.
Please note that this ZuluTrade trader review is included on Social Trading Guru for educational purposes only. This doesn’t constitute investment advice. Trading forex can be very risky. Never invest money you cannot afford to lose and always consult an independent financial advisor if you’re not sure whether this type of investing is right for you.