I’ve been thinking about the best way of sharing my trading signals in a way most convenient to myself and also effective for people following. The current blog started off as my trading diary, and it remains mainly my diary, but it is possible for dedicated traders to follow the trades manually. Over the last few months I’ve given this some thought and my conclusion is that a good trade mirror platform is one answer. The other option for me is to set up an investment fund, and I might have more to say about that later.
As part of my research into mirror trading platforms I evaluated i) Currensee, ii) Tradency, and iii) Zulutrade. I have chosen to go with Zulutrade, and I’ll give my opinions of each of these platforms below. But before that I want to express some general thoughts on mirror trading.
Even the best of the mirror platforms is not good enough, in my opinion. All of them rate a Trade Leader only by pips gained or lost and do not deal with money management at all. This is a very distorted, incomplete trading system. Generating pips is pretty easy if one can ignore risk, and I suspect many of the Trade Leaders on these mirror platforms do just that. But money management, ie % risked on each trade, is EXTREMELY IMPORTANT. It is quite possible to have -ve pips total but +ve $$ profit. And the % profit or loss one can get will be dramatically different if the order size / stop loss is varied. Ironically, mastering money management is the most difficult aspect of trading, because it involves mastering the emotions of greed, fear, anger. Therefore, the trade follower needs to be a very experienced trader and follow strict rules of risk management to be profitable. An added difficulty is that optimum money management rules are different for each trading system. My rules are quite different from what the ‘textbooks’ teach. But I am comfortable with my rules because I know my system inside-out, I know it’s win:loss ratios and I’ve tested it thoroughly over a long period, both historically and in live trading. I am confident of my rules and for my system they are a good balance between risk and high return. Another person’s money management rules would likely be quite different and lead to non-optimum results.
To compensate for this weakness in mirror platforms, I have written a separate page with my recommended rules for money management and order sizing. I have written them in the form of simple instructions that can be followed blindly. I strongly urge anybody following my system to follow these rules and not exceed the risk allowed by the system.
Now for comments on each platform.
CURRENSEE: In a word, this platform is sh#t. Their marketing is very attractive but I doubt anyone makes money on that platform. The biggest weakness is that each trade is sent first to Currensee’s own servers and often it gets filtered there. Spreads get widened, a significant delay is introduced. Some forum members say that the some trade signals are edited / manipulated by humans before being approved, or some are blocked entirely. Currensee claims this is to ensure that trade followers do not get bad signals. Currensee adds its own spread to the signals and that spread is variable, so what a Trade Leader does and what a follower gets can be quite different. Many followers claim there is almost no relation to the Trade Leaders reported performance and the results they get. I would not touch this platform.
TRADENCY: Tradency have better software and are more transparent. They work with the broker to integrate their mirror platform with the broker’s MT4 offering. They state clearly that their commission, and the commission for the Strategy provider gets added on to the spread that the follower gets. The signal is routed to the follower automatically in software without human intervention. The follower has the option of selecting completely automatic, semi-automatic (review the signal before accepting it) or completely manual trade execution. I reckon it will be okay for followers. However the broker can mess with the signal, or the trade itself. All MT4 platforms give the broker the ability to manipulate the data-feed and the trades of clients. I don’t say that all brokers do it, but a large majority do manipulate the data feed for stop hunting, etc, and I would assume that the Tradency Mirror trades are just another trade account for the broker. That is the major reason I did not choose Tradency. The other reason is that I would have to open a new broker account with MT4 and learn a new platform, which interferes with my focus on trading matters. Also, the platform does not incorporate risk management / order sizing for the strategy provider or the follower.
ZULUTRADE: This platform is the easiest to set up and has the most friendly user-interface. I like the fact that it has a non-MT4 option for the strategy provider, so I don’t have to open another brokerage account and setup another platform. In other features it is quite similar to Tradency. It is very transparent about how it gets its income and how it pays the signal providers. Zulutrade incorporates its own data feed and on the Trade Leader side the spreads already incorporate their commission. So instead of the 1-pip spread I see on my regular platform I see 3 pips on Zulutrade. I am not sure what it looks like to a follower, but I guess that the follower also sees the same prices with the same spreads. It is reasonable to expect to pay an added spread for this service, as long as it is clearly stated (which it is) and it is consistent, not manipulated by human intervention. Zulutrade appears to fulfil these conditions. However, there are 2 big shortcomings: i) there is no way for the trade leader to signal the order size for each signal. Each trade is treated as one lot . ii) only the pips are counted to the trade leader’s performance score. As I said earlier that is a very poor way to measure a trader’s performance. It is very likely that many followers get greedy and trade too large for their accounts and in the process blow up their account.
All these Mirror Trade platforms are aimed at getting the retail trader to trade more. That’s what the broker gets out of the mirror platform. On the other hand, the hardest lesson I’ve had to learn is to avoid over-trading, to be more patient. The broker, Zulutrade and the trade leader benefit by the trade followers trading more, and ultimately many trade followers will blow up due to excessive risk taking.
I do not wish that to happen. I want my followers to really make money, be consistently profitable. Therefore I have added a page to this blog specifically for my trade followers on Zulutrade, explaining the risk management methods to use with my system. Anybody following my system with the risk management rules will be profitable even with the increased spreads. Most of my profits are made on moves of 50 – 200 pips, so 2-3 pips out of that will not affect the profitability by much.
PRIVATE INVESTMENT TRUST: I have explored the possibility of setting up a unit trust here in Melbourne, Australia. I am able to do that under some strict Australian legal rules – I can’t raise no more than $2 million, and I cannot have more than 20 investors, and must have a properly setup, registered trust. I am in the process of setting up such a trust; I should have it ready to go in another 2 weeks. I already have 2-3 local Melbourne investors ready to invest in it, and if any of my readers are interested in joining this trust fund, or to know more, please contact me by email to zenfxt at gmail.com.