This trader review was written on January 22nd 2013 at which date Xiaolidao was ranked number 5 in the ZuluTrade ranking. They were also number 5 in terms of the amount of $ following them with just over $3.3 million. This Chinese based trader has been a signal provider on ZuluTrade for 64 weeks and based on Xiaolidao’s historical trade data, here’s are review:
Xiaolidao FX Pros:
- fairly gradual upwards profit graph
- only 2 losing months to date (including un-realised profit)
- averages almost 1000 pips per month
- strategy description doesn’t match the trading
- fairly high historical drawdown
- unclear how much risk to take to follow this trader
- do not trade with their own money
When you look at Xiaolidao’s profit graph you’ll notice a fairly gradual increase without too many sudden drops. The monthly performance results also look fairly consistent with profits normally between 500 and 1500 pips per month. In fact Xiaolidao has been averaging almost 1000 pips per month over 15 months, which is a very good result on ZuluTrade (click here to view Xiaolidao’s full historical performance).
The maximum drawdown to achieve this has however been almost 3000 pips which is obviously on the high side. Considering the size of the returns to date this is about 22%, which is certainly not the lowest but also not the highest among the popular ZuluTrade signal providers.
Xiaolidao describes their strategy as short term, based on some technical analysis. They suggest 2 open trades with stop losses of 50 to 100 pips. This however doesn’t seem to be very correct as even today they had 3 consecutive trades open and only as recently as the first week of January did they have some trades drawdown to 252 pips. I.e. it’s not really clear from the strategy description how many positions to allow open to protect your ZuluTrade account or what stop levels to use.
When we can have a look at Xiaolidao’s actual trading history on ZuluTrade we do notice that the trading volume has increased significantly in the past 5 months and during this period the stop levels seem to be managed slightly more closely. Before this 2 trades got closed at the 500 pip stop level (Feb 2012), which seems to be the ZuluTrade default stop level for longer term traders. Hence it looks like Xiaolidao has adjusted their strategy slightly to try and focus on lower drawdowns, though this obviously means more losing trades may be closed (i.e. because they reach the stop levels and aren’t left open). Nevertheless the average monthly returns don’t seem to be effected by this strategy change.
Overall it’s difficult to argue with Xiaolidao’s consistent returns, even considering the fairly high historical drawdown. The main issue however is that it’s unclear how many open trades to allow (2, 17, 21, ???) and what the actual stop levels will be. I.e. it’s not fully clear what risk you’ll be taking going forward to follow Xiaolidao’s current ZuluTrade strategy. The next few months will hopefully help create a clearer picture, especially now they start getting more followers.
Please note that this ZuluTrade signal provider review is included here for information purposes only. Investing in leveraged fx instruments carries a large risk. If you’re not sure whether this type of trading or investing is for you, please consult an independent investment advisor.