At the time of writing this review (August 20th 2013), Newwave was ranked 10th in the ZuluRanking and 2nd in terms of popularity with just under $6.2 million following. This trader has been on ZuluTrade for 29 weeks and reached the number 1 spot in the ZuluRanking before (first time May 27th 2013). Based on Newwave’s historical trade history and ZuluTrade profile, here’s our review of this United States based signal provider:
- every month profitable to date
- low historical drawdown
- good historical risk reward ratio
- seems to apply a reasonable risk management approach so far
- still fairly limited trading history (< 1 year)
- strategy description doesn’t fully match trading style
- actual stop levels unclear (hence total risk unclear unless own stops are applied)
- do not trade with their own money
- last two months profits have stagnated
Looking at Newwave’s overall profit graph (see image below) we notice a very nice gradual increase from the start in January 2013 until the middle of June. The past 2 months however have flattened out. Overall, all months closed in profit, though July just about broke even. Profits to date for Newwave on ZuluTrade have been just over 10,000 pips, which per month works out about 1,500 pips. This return certainly looks very healthy when compared to a maximum drawdown of 861 pips on to date. I.e. the average monthly returns of Newwave so far are more than the maximum historic drawdown, meaning a great historic risk reward ratio.
So how were these results achieved? In their ZuluTrade strategy description this trader explains they use a system based on daily pivot levels and the fibonacci grid. Newwave also mentions that their system generally tries to find entries that yield counter trend profit opportunities. This ZuluTrade trader also mentions stop levels of 200 are applied and a maximum of 5 positions will be opened simultaneously. However, looking at the actual historical results we notice that Newwave opened 6 concurrent trades on 4 occasions. In addition, on 8 occasions single trades reached the -200 pips stop level without being closed out (the worst trade reaching -400 before reversing). In fact looking through Newwave’s trade history we cannot find a single trade which was actually closed out at the 200 stop level. Without any other updates it’s clear that their strategy currently doesn’t fully match their trading style.
However, this doesn’t mean Newwave doesn’t apply stop levels since we’ve noticed other trades being closed out at their lowest levels (e.g. -45 pips away) which tends to indicate they were stopped out. Hence it looks like Newwave doesn’t leave all trades open indefinitely. However without knowing what their ultimate stop level is, it’s difficult to say how far they would go. I.e. is -400 the limit or is it higher?
In cases like this, many followers would have added their own safe stop and maximum open trades in ZuluTrade for this trader based on their strategy description. In doing so, the results would have been about 1,000 pips worse off since Newwave let some trades pass the 200 pips stop level, before closing them at break-even. This isn’t a massive difference overall and adding a 200 pip stop level would certainly have given those followers more control over the overall risk. However, it would obviously be better if the trader trades according to their strategy description on ZuluTrade or adjust their description accordingly to their actual trading style! If Newwave would trade with their own money it would add some extra level of confidence that their overall risk control (i.e. drawdown) would be kept under control … however, they don’t.
It’s worth noting though that Newwave also doesn’t necessarily opens all their simultaneous positions in the same currency pair or overall market direction (which reduces risk and exposure a little bit as well). With regards to the pairs traded, about 50% of the trades were in the major pairs (EURUSD, GBPUSD, USDJPY) though Newwave often trades more exotic pairs as well. Hence you may need to keep an eye on your slippage since some brokers charge a larger spread on those pairs.
So why were the past 2 months so flat. Without any updates or a clear strategy description it’s anyone’s guess. While Newwave’s trade volume on ZuluTrade was slightly down in June it was still fairly stable, so the reason wouldn’t be that they traded less (because they were away) or more (to try to make more commission). Another explanation might have been that like some other ZuluTrade traders who ended up ranking high before they had many followers they faltered (i.e. they got lucky in the first few months). However, in this case, Newwave was already ranking high at the end of May, meaning they already had many followers when they produced good results in early June (as proven as well by the fact that quite a few followers made over $10,000 with Newwave so far). Another reason could be that their trading system works better in volatile markets, and hence is struggling during the more quiet summer months. If this would be the case we will know when we compare the results for the next 3 months with those of the earlier months.
In summary, until now, Newwave looks overall one of the better traders on ZuluTrade. Their initial results were very good with a great risk reward ratio. However, with the results stagnating, a strategy description which doesn’t fully match the trading style and no updates the next few months will be key to see whether Newwave can regain their early promise and healthy pip returns. The fact that they don’t trade with their own is also a reason for caution, especially since the overall stop levels are unclear.
Any trader reviews are included on the social trading website for educational purposes only. Please note that this review doesn’t constitute investment advice. Never invest or trade with money that you cannot afford to lose. Always consult a financial advisor if you’re not sure whether this type of investing and trading is right for you.