Essam Elmolla ZuluTrade Signal Provider Review 2012

Essam Elmolla Review ZuluTrade SP October 2012

This review is being written on November 9th 2012. At this date Essam Elmolla is ranked 2020th in the official ZuluTrade ranking and but they have over $4.4 million balance of live accounts following making them the 5th most popular Signal Provider at the time. This Egypt based SP has been trading for 67 on ZuluTrade and based on the Essam Elmolla historical trade data on ZuluTrade, here’s our review:

Essam Elmolla Pros:

  • only a few loosing months
  • 4 star and 79% rating by 91 live followers

Essam Elmolla Cons:

  • high historical drawdown
  • no use of stop levels
  • strategy not clearly defined
  • not many communications
  • high risk and potential to high future drawdown

Review Summary:

The first thing you’ll notice when looking at Essam Elmolla’s profile is the massive amount of pips they’ve made over time, over 1.1 million so far. The reason why this number is very high is that historically they’ve been mainly trading gold (XAY/USD). The pip moves in gold are much higher, i.e. with a mini lot a 100 pip move up make you $1, while a 100 pip move up in EUR/USD makes you $100. I.e. a 100 pip move in gold is equivalent to a 1 pip move in EUR/USD or GBP/USD. Hence the very high pip gains.

The fact that Essam Elmolla has been trading both gold and currencies on the same account, makes it slightly more difficult to analyse the number, though ZuluTrade allows you to show the historical trades per trading instrument. Doing this makes it clear that profits were made both in trading gold and in trading currencies.

Essam Elmolla describes their strategy as “Trend analysis , chart pattern recognition and News analysis” which is very broad. Looking at the actual trades it’s clear that Essam Elmolla uses a long term strategy since losing trades are carried forward and hardly ever closed until they move (eventually) back into profit. Over time they have a 93% winning ratio and for the past 3 months this has been 100%. While this sounds very good, any trader will know that this can lead to very high drawdowns (a warning displayed by ZuluTrade as well). In fact looking at the traders it doesn’t look like any stop levels are applied and most of the losing trades were closed at 500 pips, the arbitrary stop level suggested by ZuluTrade. This type of strategy works of the principle that the markets will over time reverse, however, in the case of currencies, significant losses will be taken when the market make sharp 500 pip moves in one direction without reversal.

Nevertheless, Essam Elmolla does seem to have a large number of live followers who like this trading style and the feedback scores to date are fairly high. For anyone considering investing in Essam Elmolla they must realise that this is a long term and very high risk strategy. Your account will need to be able to sustain significant drawdown levels. Essam Elmolla does suggest the minimum amount of $10000 per 1 lot being required, which based on the most recent trading history seems about ok. However, with 20 maximum open trades and no stop levels (or stops at 500), this could easily lead to 10,000 pip losses and drawdown in currencies which will get you a margin call with this allocation.

Hence you need to consider whether the risk you take merits the reward. E.g. investing 1 lot with a capital of $10000 would have roughly return 28% over from Aug, Sep and Oct 2012 in currency trades alone. So that’s indeed a very healthy return, though as mentioned before this is risking your full capital as there’re no safe guards.

Please note that this review is included for educational purposes only. Trading Forex instruments on margin is very risky. Always consult your financial advisor if you’re not sure. Never invest money yo cannot afford to lose.

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