When someone new gets to number 1 of the ZuluTrade rankings we normally like to have a closer look at the. Hence for today’s review, written November 15th 2013, we take a look at tianxiahui98. This trader has been on ZuluTrade for 53 weeks, is currently 1st in the ZuluRanking and has just under $900,000 following them. Based on tianxiahui98′s ZuluTrade profile and trading history, here’s our review of this China based trader:
- overall profitable
- over 1 year ZuluTrade history
- do not trade with own money
- high historical drawdown (poor risk reward ratio)
- no clear stop levels used
- strategy description doesn’t match actual strategy
- actual strategy looks Martingale type of approach (i.e. risky)
As always we start by looking at the overall profit graph (see below). Tianxiahui98′s graph shows an overall increase, but in the first half there are 2 noticeable periods of high drawdown. In fact the maximum historical drawdown was -3,200 pips, which with an overall profit of around 14,200 pips so far works out to be 22% (of the profits). However, at the time of the actual drawdowns this amounted to about 100% and 50% respectively (i.e. very high).
When looking at the overall graph I initially had the impression though that the last 6 months were much smoother and hence the drawdown would have been more reasonable. However when you click on ’6m’ under the graph in tianxiahui98′s ZuluTrade profile you’ll still notice a large drawdown in this period of -2,250 pips, or 54% over that period. Hence it’s fair to say that historical drawdown, and risk reward ratio, have been poor whichever way you look at it.
So what’s tianxiahui98 strategy? Their description on ZuluTrade mentions they use a short-term trading style, fixed 30 pip stops and maximum 2 open ‘contracts’ (by which I assume they mean positions). You don’t have to look far down on the trading history or even profile summary to conclude that the strategy description doesn’t match their actual trading style.
Historically up to 25 concurrent trades were opened and the worst trade went as low as -663 pips before reversing and being closed out at -63.4 pips (over 1 month later!). Even at the time of writing 4 positions were open at the same time, all over -30 in loss. It actually doesn’t really look like tianxiahui98 uses stop levels at all (you can check this by looking at the difference between the lowest prices trades were at and their closing price – if they’re not similar, then trades were stopped out, but reversed before being closed). Hence pretty much any statement in the strategy description is incorrect.
Without being too scientific, it pretty much looks like tianxiahui98 targets small-ish pip gains between 10 and 30 pips. When the market goes against their original positions they tend to leave them open until (or in the hope) the market reverses. Regularly additional positions are opened in the same direction as already losing ones. When multiple trades are opened they’re not always opened in the same currency pair, though pretty much in the same direction (i.e. dollar bullish or bearish). Hence it looks like a Martingale type of approach which, as has been demonstrated by tianxiahui98 in the past, can lead to high drawdown periods.
This ZuluTrade trader also sends signals from a demo account and so far there’s been limited money made by other people following them. They do however seem to provide the occasional update.
In summary, while tianxiahui98′s results are undeniably fairly good over the past year (over 1,000 pips average per month), these results have been achieved with a fairly risky strategy and approach. It doesn’t look like any clear stop levels are used, while historical drawdown has been high. Their recent results seem to have propelled them to the number 1 spot in the ZuluTrade ranking, but I’d be very surprised if they can maintain that position for a decent period of time.