money.manage Review ZuluTrade Trader April 2014
This review takes a look at money.manage, a ZuluTrade trader with 90 weeks of trading history on the network. At the time of writing (April 1st 2014) they were ranked 7th in the ZuluRanking and with just under $3 million following them were the 3rd most popular trader. Based on money.manage’s ZuluTrade profile and history, here’s our review of this Bulgaria based trader:
- overall profitable
- only 2 out of 21 losing months
- over 1.5 years trading history
- currently over 80% trader feedback rating
- decent average pips per trade returns
- some trade cycles closed in loss (i.e. seems to watch the market)
- no over-trading
- do not trade with own money
- fairly high historical drawdown
- no strategy description
- no clear stop levels or maximum number of open trades
- potentially high future drawdown (as limits not known)
This ZuluTrade trader’s performance graph (see picture below) shows an overall increase which is fairly gradual, except for a few occasions of significant drawdown. Overall, a profit of 20,685 pips were made by money.manage so far, averaging almost 1,000 pips per month. Only 2 of the 21 months ended in a loss. Average pips made per trade is 13, which is decent, and also means there’s not a massive impact from any slippage you might experience.
On the other hand money.manage achieved these results against a maximum drawdown of -4,450 pips (in October 2013). This is obviously pretty high and in the case of this ZuluTrade signal provider more than their average returns of 4 months. I.e. while the returns have been good so far, the historical risk reward ratio to achieve them has not been so good.
In terms of understanding the strategy used by money.manage, there’s no useful information in their ZuluTrade profile strategy description. Hence we look at the historical trade data to get some more insight. In terms of currency pairs traded, this trader mainly focuses on the EUR/USD pair (>80%), followed by the AUD/USD and GBP/USD. I.e. they trade the major USD pairs. When money.manage takes a trading position in a direction, they opened as many as 27 positions in that direction in the past. All these additional positions would be opened in the same pair and direction, and hence adding to the risk. There’s no information on the maximum number of open positions needed to follow this strategy, but seeing as the past maximum was 27 and ZuluTrade’s limit for sending signals from demo accounts is 30, it’s best to assume 30 is the absolute maximum.
While this is fairly Martingale type of trading behaviour, there doesn’t seem to be much of a rule on when the additional trades are opened. Often with Martingale strategies the intervals between new trades are based on price movements (e.g. every 50 pips), but that’s not really the case here. In fact at the time of the highest drawdown all 27 positions were opened within a 24 hour time-frame. These trades were left open for 2 weeks, riding the large drawdown period and all were closed out when the market had eventually turned. However, there’s no indication on how deep the drawdown could have been if the market hadn’t reversed. In fact there’s no mention of the use of stop levels and historically it’s also clear no fixed stop levels were used by money.manage.
Historically, money.manage’s winning trades ratio is 90% which also clearly indicates this is longer-term strategy and trades will be left open until the markets eventually turn. As many experienced ZuluTrade followers will know, this type of strategy can be highly risky and lead to large drawdown periods. However, one very key point worth noting here is that money.manage closed some trade cycles in a loss (e.g. 12 Nov 2013). I.e. not all trade cycles are left open until they eventually turn profitable (as is the case with pure Martingale strategies), but this trader seems to be willing to cut their losses, presumably when they feel the market direction has changed. Looking at the profile updates it also seems to suggest this ZuluTrade trader actually closely follows the markets and makes their own opinion based on current information (i.e. it’s not a pure EA/trading robot).
Nevertheless, while the current maximum drawdown has been -4,450 pips, it’s likely the level will be higher over the next 90 weeks. In fact, since there’s no indication of stop levels used and with a maximum of 30 open trades, there’s no indication of how high it may go. So unless you apply your own stop levels in ZuluTrade (which obviously may mean your results will not be the same) you need to fully trust money.manage for controlling and managing overall risk. While money.manage do seem to watch their open trade positions, the fact that they send their signals from a demo account also adds to the overall risk though.
On the other hand their average feedback score from ZuluTrade followers is currently higher than 80% (which is high for someone with such a long trading history) and at least one follower has made over $12,000 following this signal provider. Money.manage has also been in or near the ZuluRank top 10 for the past 3 months and so far this doesn’t seem to have affected their results. They also don’t seem to overtrade since they’re not in the market every-day, but seem to pick which days to take positions or not. This trader also has 2 other long term strategies on ZuluTrade, and while both are profitable these also have high historical drawdowns.
So in summary, it’s hard to argue with the fact that over the past 90 weeks, money.manage has made some good overall and fairly consistent monthly returns. However these results were achieved against a large historical drawdown. The fact that up to 30 positions may be opened and no clear stop levels are used also means the potential future drawdown can be much higher. Anyone who regularly reads our reviews and has read our ZuluTrade tips will know that this is not the type of trader or strategy we normally like ourselves. However ZuluTrade investors who are happy to take a long term view and are willing to take on considerable drawdown risk (and hence have a decent account balance to cover the drawdown without panicking) may find this to be an interesting trader. Historical returns have been good and ,importantly, money.manage seem to watch the markets and are willing to change their mind (and take a small loss) when they feel the market direction has changed. If they’d be using a live account instead of a demo to send their signals, adding some additional level of trust, it would make them even more interesting.
Please note that any ZuluTrade signal provider review are included here for educational purposes only. They do not constitute investment advice. Trading Forex can be highly risky. Never invest money you cannot afford to lose and always consult and independent financial advisor if you’re not sure whether this type of investing is right for you.