One of our visitors suggested a review of FX Dominus, a ZuluTrade trader ranked 11th in the ZuluRanking on April 8th 2013. At this time of writing they also had over $1.5 million following them with live accounts. They have been trading on ZuluTrade for 61 weeks and based on FX Dominus’ historical trade history, here’s our review of this Switzerland based signal provider:
FX Dominus Pros:
- overall profitable
- based on closed trades only, 14 consecutive profitable months
FX Dominus Cons:
- strategy not clearly described
- maximum SL not clarified and unclear
- high historical drawdown
- high potential future drawdown vs potential reward
- strategy of adding to losing trades (though only up to 4 positions)
Looking at the performance graph (see below) it’s clear FX Dominus has booked an overall profit with a maximum of 4 open trades, though with a few periods of high drawdown. In fact, the pip profit was 3,249pips against an open positions drawdown of -937 pips. At the time this drawdown happened it was equal to about 50% of the profit made. Hence it’s already clear the historical drawdown (i.e. risk) is fairly high against the historical profit (i.e. reward).
Looking at the results per month, FX Dominus closed every month to date, 14 months, with a profit. However, if we include open PnL (i.e. open losing trades), 3 of those months would be losers.
The actual strategy description of FX Dominus is pretty non-descriptive. It mentions multiple currency pairs are traded, though looking at the trade history, only the GBPUSD has been traded. Hence to understand the strategy we actually have to analyse the historical trades ourselves.
While doing this (either via the ZuluTrade interface or in Excel) it’s clear FX Dominus opens a position with the target to make about 13 pips. If the market goes against the initial position up to 3 additional positions are opened. Recently the second position is regularly opened 70 pips away (though it used to be often less). The distance between the first and 4th position seems to be around 200 pips, and at the largest gap was 361 pips. Once further positions are opened, all trades are closed when either together they make the 13 pips profit, or (often in case of larger drawdown) they just get back to break-even.
FX Dominus mentions in their strategy that stop levels are applied to every trade, though at which level is not mentioned and from looking at the ZuluTrade trade history is unclear. The worst single trade drawdown was -424 pips and this trade was closed at a loss of -190 pips, though together with the other 3 open trades at the time closed at break-even in total. I.e. this trade was not stopped out because it hit a stop level, but only because the market eventually turned and their ‘trade cycle’ of 4 trades could be closed at break-even. In fact, we couldn’t really find any evidence of trades being closed because they were stopped out. FX Dominus’ strategy is pretty much a 100% winning strategy if you consider every trade cycle of 1 to 4 trades as a single trade, because they always tend to be closed at worst at break-even. It’s therefore unclear how much the maximum drawdown will be unless the maximum stops are set at the default 500 pip level which ZuluTrade traders often apply. So with a maximum of 4 open trades this would be 2000 pips at risk.
It does look like the people following FX Dominus on ZuluTrade so far have considered the potential risk in their account settings. So far the maximum actual money a follower has made is $262, which is actually a very low amount considering more than $1.6 million is following this signal provider. Hence they must have applied some very conservative settings.
In summary, while overall it’s difficult to argue with the overall positive results of FX Dominus to date, anyone considering following this signal provider on ZuluTrade should seriously consider whether the risk they take on each trade (2000 or more pips?) is worth the small reward of 13 pips. Strategies of adding to losing trades in the hope the market turns will in the long run always lead to massive drawdowns (and potential heavy losses), especially when no stops are applied.
Please note that this trader review is included here for educational purposes only. Trading on ZuluTrade and on leveraged FX instruments can be very risky. Always contact an independent financial advisor if you’re not sure whether this type of investing is right for you. The fact that we review a ZuluTrade signal provider doesn’t in any way mean we endorse this trader or that we follow them ourselves. Reviews are only included to demonstrate our way of analysing traders (and it can therefore be applied to other social trading networks as well).