As per suggestion from one of our visitors, today (March 26th 2013) we’re writing a review on Forex Sleep Mode. This German based ZuluTrade signal provider has also moved into the number 1 spot of the ZuluRanking in the past few days and are now being followed by almost $1,280,000, making them 17th in terms of popularity. Based on Forex Sleep Mode’s 22 week trading history (still very short time), here’s our review of this trader:
Forex Sleep Mode Pros:
- overall profitable
- current trading style matches current strategy description (for past 6 weeks)
- follow their own signals with live account (but have not done so all the time)
Forex Sleep Mode Cons:
- performance very inconsistent
- this year’s results are inflated by trades carried over from 2012
- current strategy well off the proposed profit targets
- high account drawdown in 2013 for relatively low returns
- some trades opened seconds after scheduled news events
- still limited trading history and even less with current strategy
As normally we start by looking at the ZuluTrade pips profit performance graph (see below). While the graph certainly shows some hefty total gains, it’s not a very smooth increase and we can already notice that most of the gains were made in December. Looking at Forex Sleep Mode’s performance per month we notice a similar picture, i.e. December sticks out compared to the other months, even more so if we include unrealised PnL.
Profit to date has been 11,336 pips against an open trade drawdown of 314 pips and an account drawdown of 743 (i.e. peak to valley if followed from start). Hence, based just on these numbers and the graphs you might well think this performance is fairly impressive.
However, you should certainly question coming to such a conclusion looking when looking at the “Profit made from following this trader” table and low feedback rating (albeit by only 20 followers). While they have more than $1 million following them, the most an investor has made from following Forex Sleep Mode until now has been $69. I.e. this is very low for the large amount of money following them, so let’s look at their ZuluTrade historical trade data in a bit more detail.
Since most of Forex Sleep Mode’s gains were made in December it’s worth to start looking there and specifically look at the trades which generated the most pips profit. Most of these were opened on December 11th 2012. In fact, a total of 15 trades were opened that day which benefited strongly from the weakening JPY (either via the EURJPY or GBPJPY pairs). The best one generated 1,582 pips profit, but was only closed on March 21st 2013. In fact, Forex Sleep Mode carried over 3 of those trades into 2013 where they were closed for significant profits. However, this trades would only be relevant to people following this trader before December 11th 2012, and it doesn’t look like anyone did at the time. Hence we’re now actually more interested in looking at this year’s results without those 3 trades (2 of which were closed in January and 1 in March). The easiest way to calculate those is by exporting the trade history results from ZuluTrade to Excel. We then get the following results for Forex Sleep Mode: January -776.5 pips, February 829.6 pips and March 288.6 pips. I.e. not as impressive as the 977.7, 829.6 and 1,871 pips respectively posted by including those carried over trades. Also, the total profit for this year to date would only be 341.7 pips compared to the 3,678.3 currently posted! Yes, still profitable, but hardly impressive.
Forex Sleep Mode describes their strategy (click here to read) as intra-day range/breakout trading with close SLs 20-25 pips, risk reward ratio 1:2 and up to 6 open trades. It’s clear this strategy is only relevant to the past few months since in December still up to 15 trades were opened at the same time. Looking at the trades for the past weeks they actually seem to match the current strategy description. Forex Sleep Mode mentions in their strategy description a monthly profit target of 550 to 1200 pips. However, as discussed in the previous paragraph, those results were only achieved by closing some profitable carried over trades which were not opened or managed according to this current strategy. Hence for this year to date the ZuluTrade performance for this trader is only about 114 pips per month and hence well off the proposed targets. Also, only looking at the trades for 2013, the winning % has only been 53%, so lower than the 60% mentioned.
We do agree with Forex Sleep Mode’s description that their intra-day strategy of using close stop levels should shield you from the large open trade drawdowns from ZuluTrade signal providers with high winning ratios. However, if you started following Forex Sleep Mode on January 1st 2013, your account would have taken a 1110.9 pip loss before it recovered to its current profit total of 341.7 pips (for 2013). With regards to the small stops, using a 20 pip stop on volatile pairs like EURJPY and GBPJPY, which often have daily ranges of over 200 pips is considered extremely tight. Please also note that spreads on these pairs are often 3 to 5 pips (depending on your broker) and hence those trades don’t need much movement to get stopped out and hence don’t have much “breathing space”.
Forex Sleep Mode also mentions they consider news events since these create a lot of market volatility. In fact looking at the trade history we see quite a few trades being opened a few seconds after scheduled news releases. Please note that with ZuluTrade (as with any other social or auto trading platform) there’s always a slight delay between when the trader puts on the trade and when this trade is copied in your account. Since during important scheduled news releases (e.g. NFP, national bank rate release & statements, GDP releases, …) the price often moves 50 pips or more within the first few seconds. Hence it’s not very likely you get filled at the same price and there’s a good change your trade won’t be filled if the price is moving with the direction of the trade. However if the price is moving against the trade, you will still be filled since your broker can fill you at the same or a better price. Hence there’s a higher chance a winning trade will be missed (i.e. not copied) than a losing trade. In addition, some brokers may also increase the spread significantly during these news releases, adding more cost to these trades and additional risk that they get missed.
While Forex Sleep Mode is currently following their own signals with a “real” money trading account, it’s fairly clear this wasn’t always the case. There’re two ways to check this. Firstly, 11,336 pips were made to date, so even if they followed their signals with 1 micro lot, they’d have made more than the $69 maximum someone made by now. Also, when you look at the individual trades for Forex Sleep Mode in the ZuluTrade interface you notice a ‘D’ sign next to most trades up to mid December, meaning up until then it looks like no live followers were copying the signals (and hence no one would have managed the current results posted which included those massive gains on the falling JPY which were carried into 2013).
In summary, while overall the results for Forex Sleep Mode have been positive, you have to evaluate the current strategy against the results which exclude the carried over trades from 2012. Doing this for 2013 means the results of an average of over 114 pips per month is well off target and was achieved against an account drawdown of more than 1000 pips. Certainly if this trader could post a majority of positive monthly results of 550 to 1200 over the next 6 to 12 months with the current strategy this would be interesting. However, so far this clearly hasn’t happened.
Please note that this review is only included on the Social Trading Guru website for educational purposes only and does not constitute investment advice. Trading on ZuluTrade and with leveraged Forex instrument should be considered high risk. Please consult an independent financial advisor if you’re not sure whether this is right for you. Also, please note that because we write a review about a ZuluTrade signal provider, this should not be considered as an endorsement of this trader and does not necessarily mean we follow them ourselves with our live accounts.