Signal Trader Review
Signal Trader Review (Our Opinion)
Please note that Signal Trader ceased operating on December 5th 2016. We’re however leaving this review online because it’s useful if you want to understand what was good and bad about their offering. It’ll also be useful to compare with other still copy trading platforms like ZuluTrade and eToro.
Signal Trader’s mirror trading network and platform was launched in 2009. It connects investors with expert forex traders, allowing them to view and automatically copy their trades. This review covers all the aspects of Signal Trader including the platform features and the traders available to follow. Just like any of other reviews, this is based on our experience with a live Signal Trader account.
Because Signal Trader isn’t a broker itself, you need to sign up with one of their partner forex brokers if you want to copy trades with real money. You can however try with a Signal Trader demo account first for 31 days.
Currently SignalTrader have a choice of 15 partner brokers worldwide (it was 7 at our initial review, so it looks like more are being added over time). However, not all of them may service your country, so depending on your location the list will be smaller. For us in the UK, we initially had a choice of 4. While not the largest choice, it certainly means you have a few options.
The sign-up procedure itself is fairly straightforward, though part of that will obviously depend on the service levels your chosen broker provides. In the final step you connect your new trading account to Signal Trader by entering the MT4 credentials your broker provides you.
It’s worth noting that these days you need a minimum of $2,000 (or equivalent) in your trading account before you can connect to Signal Trader. This actually used to be $5,000 until early 2015, so the service has become more accessible. You can connect with an account in a different currency too. For non USD investors, this is certainly an advantage over some networks and platforms where you can only use USD nominated trading accounts and hence your full investment is straight away tied to the value of the USD.
Who are the traders / trading systems you can copy
The ultimate success of any social and mirror trading platform is the quality of the forex traders you can follow and copy. Signal Trader calls them “Trading Systems” and at the time of this review there were 12. Signal Trader uses the tagline “Real Money, Real Trades, Real Time” and this is one of their differentiators in terms of the traders. All of them use their own real money account to send the signals (i.e. the traders you can copy all risk their own money). The minimum balance they need is $8,000, though some trade with a balance nearer to $100,000 (unlike with other platforms you can actually see their current and historical balance amount on Signal Trader).
All the traders also need to go through a Signal Trader evaluation process before they get accepted. They need to have exhibited positive returns (>3%) and careful risk management (<15% drawdown) over the lifetime of their account. These traders in return are paid USD 0.5 per mini-lot traded in followers’ accounts, though for profitable trades only. I.e. the commissions of the traders are tied to their success.
With regards to the type of fx traders, the word “Trading Systems” may sound to some people that these are all automated robots. While most Trade System descriptions mention that signals are taken automatically, they also mention the fact that there are professional traders continuously monitoring the systems and trade positions, intervening when needed.
Looking into more detail through the systems (easy when there are only 12) it is worth noting that most systems have current open trades longer than a week, and at time of the review, actually all of them had trades open for over a day. I.e. these are clearly not day-traders, and we can best classify them as medium to longer term traders. The ones with multiple trades open over a longer period do seem to have hedged many of their positions, meaning overall risk is managed. There’s only one very clear Martingale type strategy we noticed, but this is clearly mentioned in the strategy description (and arguably their performance has been excellent over the past year, though as regulars on this website know from reading our trader reviews, it’s not a favourite long-term trading strategy of ours). Overall though, these seem well managed systems, something you’d expect when the traders risk their own capital too.
During our first 8 months with Signal Trader we noticed that only 2 systems were removed (though it didn’t look like they blew their accounts or made heavy losses, they just did not seem to have many followers). During this period, 4 new ones were also added. In comparison with other similar networks this is a very low turnover of the systems, which is normally a good sign in terms of the performance of the systems.
Currently 2 of them have negative returns, so it’s clear Signal Trader doesn’t just start removing systems to make their overall service looks better. As always we will keep this review up to date and report back on the long term performance of their traders. We’ve dated the “Trading Systems Overview” picture above, so you can compare the systems list on February 26th 2014, with the list at the time you’re reading this review (click here to view the current list of Signal Trader trading systems).
Selecting the trading systems to copy on Signal Trader
This part of the review looks at the features available to evaluate and filter through the list of fx traders (“trading systems”). Obviously, with only a limited number of systems to look at, there’s no need for a detailed search functionality as you can pretty much view the summary of all on one screen.
Signal Traders’ overview screen (see picture in previous section) displays a summary table of all trading systems with their lifetime net P/L %, net profit amount, number of trades, win %, profit factor, total weeks trading, number of followers and a small profit chart. The trading systems are ordered by number followers by default.
When you click on any of trading system you get their detailed information (see picture on the right). This includes:
- detailed strategy description
- all current real-time open and closed trades
- historical performance indicators such as RAR, maximum drawdown, average profit per trade and average trade time
- graphs for profit, balance, monthly P/L, symbols traded and symbol P/L
In fact, all the information provided by Signal Trader is fully transparent and real-time. The choice of graphs and indicators will be enough for most investors. The only main feature we’re missing is the ability to download the historical trades in Excel format for off-line analysis.
One important point worth noting though is that the Maximum Drawdown value displayed is “calculated as per a set of negative closed trades”. Hence this value can be a bit optimistic, since it doesn’t include open trades or total account drawdown over time. However, once you join, Signal Trader sends you a table with all their recommended minimum fund requirements per trading system which are based on the system’s past trading equity drawdown and margin (and it seems this information will be available online in their next release).
In addition, since August 2014 Signal Trader now also displays the historical equity including floating P/L on the balance graph. While the time frame of this indicator only goes back to July 2014 it’s nevertheless very useful to evaluate past drawdown and liquidity requirements.
Risk and money management features
Once you’ve decided which Signal Trader trading system to copy in your forex broker account, you have to decide your “auto execution settings”. This means setting the “mirror ratio” you want to use when copying the trades (see image on the right). Setting it to x1 means every trade in your account will be executed at exactly the same size as it is executed in the account of the trader who’s trading system you copy. I.e. they trade 0. 1 lot, means 0.1 will be executed in your account, they trade 2 lots, means 2 lots executed in your account.
However, depending on the account size of the trading system, you will have a number of options to either decrease or increase this ratio. E.g. x2 will double your lot sizes, while x0.25 will reduce them. It’s worth noting a key difference between Signal Trader and some of the social mirror trading networks like eToro and ayondo. Because your trades are executed in a normal trading account, the smallest execution value is 0.01 (and not fractionally smaller like with those platforms). Hence if you set the ratio to x0.5 and the trading system executes 0.01 lot, in your account the size executed will also be 0.01 lot (i.e. that’s the minimum trade size). When the division ends in a partial lot size, Signal Trader will be round it to the nearest lot size. Hence once you start decreasing the lot sizes your results may not fully match those of the systems you copy anymore.
We don’t consider this as a disadvantage overall, it’s only a disadvantage for customers who like to follow the trading systems with small balances. Hence I guess the minimum requirement of $5,000 and the fact Signal Trader is geared to more serious investors.
In terms of risk management, there are however no risk protection tools or features. For example, you cannot automatically stop following a trading system if they lose a certain amount in your account. Hence your account risk management is completely in the hands of the forex traders you copy. Because they all risk significant amounts of their own money, you would expect them to manage risk in a consistent and professional manner. However, in our opinion, some kind of risk protection against a trader going rogue would have been useful.
As soon as the first trades get mirrored in your broker account, you can monitor your live account from the Signal Trader interface. Here you can see your open/closed trades, overall real-time performance, as well as the individual contribution by each of the trading systems you copy. However, if you would want to close some trades manually, you’d need to do this using the trading interface provided by your fx broker (in all likeliness MT4 and/or a web based solution).
Opening a Signal Trader live account is totally free of charge and there are no extra management or performance fees to pay. The only requirement is that you sign up via their website with one of their partner brokers and fund your account with at least $5,000 or equivalent in your currency. The reason for this is that Signal Trader receives an IB (Introducing Broker) fee this way.
I.e. the only cost to you is the broker spread. It is however very important to note that the spreads with their partner brokers are slightly marked up (by about 0.5 pip). Our forex broker (FxPro) is the exception and instead of marking up the spread they charge a commission of £14 per standard lot (round trip) for using Signal Trader (that’s £0.14 for a 0.01 size trade). It works out about the same as the markup. This markup/commission is basically used to by the brokers to compensate for the IB fees, which in turn are used partially by Signal Trader to pay the Trading System providers a success fee for their profitable trades.
With our broker we therefore get the normal spread which looks industry standard (average just under 2 pips for EUR/USD). Arguably, yes, I know we can get lower spreads with some discount fx brokers in the UK, though we would not be able to connect to Signal Trader with them.
When we review the costs we always look at the slippage as well. This is the difference in price between what you got in your account and the trader you copy got in their account. It’s important because high slippage against you means your results will be worse than those of the trader you copy. With an independent social/mirror trading platform like Signal Trader there are more factors which can cause slippage since the trader you copy may be trading at a different broker company than you (in all likeliness they will be). Hence they may get different spreads and in terms of trade execution, trades from different brokers and often different continents will be copied. Having looked in very close detail at the individual trades in our account we have not noticed any slippage so far, which is very impressive. If anything, for the sets of trades we investigated, the slippage was even very slightly in our favour (though arguable we did not test this for every trading system – something not in the remit of this review). Obviously, as mentioned above, our spreads are not marked up. With other brokers a small difference is therefore likely.
So overall, the cost is pretty low and it’s fair in our opinion that some of our spread (or a small commission) is used to pay the successful traders we copy.
To be honest, so far we’ve not had any problems yet with Signal Trader and never had to talk to them. Lucky, because there is no telephone support number, only e-mail and live chat. The only customer support we’ve used is e-mail, and the response has been excellent. Both in terms of the clarity of the answers as in the time to get back to us (normally within a few minutes!).
In terms of supporting documentation, there are some FAQs which are very basic. However if you get stuck with the interface, you can use the ‘live chat’. Signal Trader also supports 8 other languages.
Most investors join Signal Trader so they can automatically copy the trades from the professional forex traders on the platform. However, you can also decide to just follow a trader and receive e-mail notifications when they open or close trades, and then use this information to make your own trade decisions. However, there are no social interaction capabilities offer on the platform (i.e. no comments, ratings or forum).
Signal Trader review Pros:
- All traders send signal from real money accounts
- All trading systems go through a Signal Trader evaluation process
- All data is fully transparent, including open trades and account balance
- Demo account available
- Low cost (spread with small markup only)
- Some quality proven systems to copy
- Accounts can be opened in multiple currencies
- Very competent and responsive e-mail support
Signal Trader review Cons:
- No risk protection controls (e.g. to stop following a system when it reaches some limits)
- No possibility to download historical trades for own analysis
- High-ish initial investment required (min. $2,000)
- No interaction with traders possible
- No telephone support
In summary, Signal Trader is a well established social/mirror trading platform for more serious investors who want to invest $5,000 or more. The choice of fx trading strategies you can copy is fairly small, though they seem to be managed by professional forex traders who all risk their own money as well. So far the performance of our own live account has been positive. All the trade data on Signal Trader is real-time and fully transparent, and the indicators and graphs available to evaluate the systems are adequate. The main omission of the platform in our opinion is the lack of risk management features to control the risk per trading system in your account. Hence you need to fully trust the risk management approach of the traders you copy or regularly monitor the positions yourself. The overall cost of using Signal Trader is fairly low compared to other platforms and from our experience we didn’t notice any slippage. Support we received was very good so far, though there’s no telephone support number. A fully functioning demo account is available too which is very positive.
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Please note that this review is based on our personal experience of using Signal Trader as a “live” real money account customer. Any of our reviews are included for educational purposes only and are not investment advice. Please make sure you understand the risks since this type of (Forex) investing may not be suitable for everyone.