ProfitSwing Review ZuluTrade Trader December 2014
This review of ZuluTrade signal provider ProfitSwing was written on December 3rd 2014. On this date ProfitSwing was ranked first in the ZuluRanking while, with almost $3 million of real money following them, they were also the second most popular trader on ZuluTrade. In total they been trading 182 weeks on this social trading network. Based on ProfitSwing’s ZuluTrade profile and trade history, here’s our review of this Russia based trader:
- overall profitable
- 3.5 year trade history
- results over time improved (last 6 months the best)
- system managed risk well historical (low open trade drawdown)
- clear stop levels used
- focuses on 1 currency pair
- no not trade for end of month commissions
- does not trade on ZuluTrade with own money
- system can endure longer non profitable periods
- maximum number of open trades unknown
- performance not consistent (i.e. long term system)
When we look at ProfitSwing’s profit graph (see below) we notice an overall increase which was pretty much achieved in 2 separate phases with a period of stagnation in between. I.e. the first year of trading saw a fairly gradual increase followed by about 2 years of stagnation (or very small growth) which in turn got followed by 6 months of steep profits. About two thirds of months were closed in profit while one third of months ended up losing. The last losing month though is 7 months ago.
Some key points to take away from this are that ProfitSwing’s system seems to work well in the most recent time period. I.e. the performance has improved and has been profitable in the market conditions of the past half year. In addition, it seems clear the trader is not too concerned about posting losing months and hence losing their ZuluTrade commissions. I.e. it doesn’t look like adjustments are made to the system to try and finish a month in profit, with the focus being overall long term performance.
In terms of strategy used, ProfitSwing is very clear that this is a fully automated EA (automated trading robot) running on a VPS. They mention the system was tested based on 10 years of historical trade data and has been running uninterrupted for the past 3.5 years. Based on what I mentioned before about the losing months I believe this to be fully true. The system only trades the EURUSD pair.
ProfitSwing also mentions tight stops of 50 to 80 pips are used on each opened position. Looking at the historical trades this is mostly correct though in the past one position went as low as -288 pips while in total 6 went to -100 or lower (however not at the same time). Overall the maximum historical open trade drawdown is -373 pips. Considering the system has traded on ZuluTarde for 3.5 years and opened up to 13 trades at the same time (though more on that later) this is quite a low number. It means ProfitSwing’s EA clearly takes into account overall open trade drawdown when managing risk (not just stop levels per trade).
However when looking at the drawdown for a system like this which closes trades in loss as well, it’s important to look at the overall account drawdown as well. Looking at the profit graph we can work out an account drawdown between 11th June 2012 (+4,367) and 1st February 2013 (+2,977) of -1,390 which at the time was about 32% of the profit until then. For most ZuluTrade followers who are looking for quick returns it’s hard to see many hanging in there over a period of 8 months with gradual losses. However in terms of the overall profit of +9,865 pips to date the historical maximum account drawdown represents only 14%. However if we look at it in terms of average monthly returns over time of 235 pips per month it equals 6 months of anticipated returns. ProfitSwing also mentions the system is allowed a maximum drawdown of 50%, it’s clear this hasn’t happened in the past, however as always that’s no guarantee it won’t happen in the future. Nevertheless it does look like the system has managed drawdown well in the past, especially open trade drawdown.
In terms of open trades we normally always have a look at the actual open trades which were opened at maximum to see of the ZuluTrade signal provider uses a Martingale type of trading system or not. The fact that the overall drawdown was fairly low especially over 3.5 years already gave a good indication that no Martingale type of trading was employed. Looking at the actual historical trades for ProfitSwing it’s also clear that sometimes hedging is used so not always all trades are opened in the same direction.
The total maximum number of trades required by the system is not mentioned by ProfitSwing. While, as mentioned before, open trades have been managed well before, it is actually still useful to know the absolute maximum required. Otherwise it difficult to calculate the maximum risk you’re taking as a ZuluTrade followers if you want to set your own maximum allowance levels for this trader.
Average pips profit per trade is 9 pips, which is not massive but very reasonable, especially over such a long time frame. Because ProfitSwing sends their signals from a 3rd party broker account, sometimes the slippage can be a bit higher. However, as reported on ZuluTrade as well, that doesn’t seem to be the case here.
Personally we’re normally a bit sceptic about pure automated trading robots, especially when they can leave multiple positions open during news events. I.e. 10 open positions during a European Central Bank rate release can cause swings of over 100 pips and hence 1,000 pips in your account. However it obviously doesn’t look like this has occurred so far with this system, with the relatively low open account drawdown, though obviously this is something to consider if you’d be following a system like this. Although as always with news releases it could move with you as well, just depends if you want to gamble or not sometimes.
In terms of followers, while ProfitSwing has made some good overall returns on ZuluTrade, their popularity has only risen again in the past few months. So far followers are clearly still cautious when following this trader since in total ProfitSwing has only made about $11,000 for their top 5 followers. No doubt the low risk settings are driven by the potential future drawdown and maximum open trades to consider. It’s also worth mentioning that ProfitSwing only sends their signals from a demo account.
Another point to note is that the system seems to work by opening different lot sizes. However with ZuluTrade, every trade is opened in the same size you specify in your account. Hence the overall performance of the system in terms of $ value in their Alpari demo account will not be the same as on ZuluTrade. However clearly the system has been profitable in terms of pure pips returns too and that what’s important in ZuluTrade and what this review is based on.
In summary, it’s rare to see a trader or system survive on any social trading network for a period of 3.5 years, let alone be in decent profit over that time. However, ProfitSwing bucks this trend. Over its lifetime on ZuluTrade this automated system had 2 very profitable periods with a long stagnated period in between. However, the longevity of the system is clearly related to the fact that it seems to manage overall risk well and while losses are taken, they never get to excessive levels. This clearly isn’t a system for most ZuluTrade followers who seem to be after instant exponential profits. However this does show that a system which manages risk well (and doesn’t employ Martingale type strategies to cover losses) can be nicely profitable over time. Periods of drawdown will be inevitable though and with ProfitSwing mentioning that drawdown could be as high as 50% it therefore could be at some stage higher than any past levels. Nevertheless, in terms of standing time this is clearly one of the best automated systems we’ve come across recently (and as we mentioned before, we’re normally not a fan of just pure automated systems). But again for those expecting short term gains, it’s impossible to predict what the next 6 months will bring.
Please note we include any ZuluTrade trader reviews here for educational purposes only and they do not constitute investment advice. The inclusion of a trader should be seen in any way as an endorsement of that trader. Forex trading can be very risky. Never invest money you cannot afford to lose and always consult an independent financial advisor if you’re not sure if this type of investing is right for your risk profile.