Review of Currensee Performance
Your performance when you invest with Currensee is directly linked to the Trade Leaders you follow and copy. I.e. your performance should be similar to their performance, minus the service and success fees. When you look at the Leaderboard you’ll notice that most Trade Leaders have positive 6 month and annual returns with some even hitting triple digit profits (i.e. > 100%).
So can you expect the same (or similar) profits in your account? From our experience to date we have to argue that those figures are not obtainable for the following reasons:
1) When Trade Leaders are added, Currensee imports their historical trading history on the social trading network as well. They often seem to be added after 6 months and therefore the performance of the first 6 months is not something investors could have replicated. With many Trade Leaders you’ll actually notice much higher returns in their first months of their historical performance data. Often this is because they took more risk trading on their own and changed their strategies to be more cautious when trading for others (and for success fees).
2) Unsuccessful Trade Leaders are removed from the Leaderboard by Currensee and their data is no longer available. Hence you currently only see results for successful traders but the chance is high that at some stage you’ll be following a Trade Leader which will eventually be removed after posting significant losses. These traders are normally removed after this or leave the program themselves since there’s not much chance they get success fees any time soon because they would first need to recover all the losses they made (and most investors will stop following them). We’ve not experienced Trade Leaders posting results of >5% profits in a month, though we’ve experienced some losing >30% in a month, and hence it’ll take quite a lot of small gains to recover from this.
3) The slippage we’ve experienced on Currensee can be very high. The slippage is the difference in the price of execution the Trade Leader gets in their account and the price you get in your broker account. Because of spread differences and execution time delay these prices will be different and some trades will be missed completely (e.g. when the price has moved too much).
Currensee tries to give some indication of the slippage by adding a correlation indicator for each Leader (high, medium or low). High means you can expect 90% of the performance of the Trade Leader (based on past 2 months results). Low means less than 70%.
We hold accounts with 2 different brokers (one based in Ireland and the other one their recommended US one) and our experiences average (round-trip) slippage per trade of at least 2 pips, though for some Trade Leaders 3-5 pips. So if a Trade Leader makes a 10 pip profit on a trade, this obviously impacts the performance in your account quite a bit. As example a leading Trade Leader in June 2012 reported a profit in their account of 5.8%. We experienced a profit of 3.78% and 3.7% respectively in our accounts for this Trade Leader. The maximum slippage we’ve noticed on 1 trade to date is 23 pips!
4) Fees are deducted from your account at the end of each month, which also impacts your cumulative performance if compared with the Trade Leader’s cumulative performance. I.e. the 2% Currensee maintenance fees means your gains will be 0.1666% less each month and the success fee means you’ll keep 80%. So (without slippage) if the Trade Leader makes 5% in a month, you’re left with 3.8333% (only by deducting the fees).
Hence for these reasons your expected results are different than those reported in the Leaderboard, and reducing the reported monthly % gains by 2 to 3% would give a more realistic picture. Nevertheless this still means you can potentially make some returns by choosing successful Trade Leaders and seeing this as a long term investment platform. Arguably you can also try to increase your leverage to try and get nearer to the performance reported, though this would also significantly increase your risk and make it into a casino game instead of a long term investment platform.
So far we’ve invested in a number of top performing Trade Leaders and have accumulated losses in both the accounts we manage (with 2 different brokers). Most of the losses we made were contributed to a few traders posting some very bad results. E.g. White Stone Asset Mgmt., at the time the most popular Trade Leader in terms of followers, and TK Trading. Even Joiny Jiang (JOJAR.C), their most followed Trade Leader for 3 years, hit a drawdown of 40% in October 2013 (which is very high and would have stopped out anyone protecting their accounts with Currensee’s default 30% drawdown protection level). Also, if our results would have been the same as those reported on the Currensee Leaderboard, our accounts would not be as much in negative (i.e. slippage is a serious issue).
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