ZuluTrade, is the worlds largest broker independent social trading network and is support by over 60 different brokerages. This means that those who open an account with ZuluTrade have a huge range of different brokerages to pick between, today we are going to outline the factors a trader needs to consider when picking a brokerage to use with ZuluTrade. In my opinion there are five main factors to consider when picking a ZuluTrade brokerage.
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On our TheFXView Exclusive Zulutrade guide we shall:
1. Explain what is Zulutrade and how it works
2. Can you make money with Zulutrade? an experiment and review
3. List our top broker choices
4. ZuluTrade Strategy Further explain about commissions and fees & compare relevant brokers
5. Zulutrade+ Web Platform Review
What is ZuluTrade?
ZuluTrade is the biggest broker independent social trading network, which means that the platform supports a number of different Forex brokerages. I believe there are around 65 different brokerages that offer ZuluTrade support meaning that your spoilt for choice when picking a brokerage to use with the platform. On the platform you will find a wide range of different signal providers, after having found a single provider you like you can follow them. Following a signal provider means that you will copy the positions opened by the trader(s) you follow, thus automating your trading. Of course you can set your own trading size and risk profile which will on occasion lead to your account not copying one of the traders you follow. The idea is to follow successful traders and hopefully make significant profits, though of course significant risk is still involved.
How does it work?
Being broker independent you might ask ‘What’s in it for ZuluTrade?’. Well the answer is that brokerages that partner with ZuluTrade share revenue with the ZuluTrade network meaning that ZuluTrade gets a cut and remains broker independent. However, they do have their own brokerage AAAFx which is a good option for those wishing to use the platform. The other question you might ask ‘Is why would successful traders share their trades with other traders? Well the commission that ZuluTrade receives from the partnered brokerages is then shared with the signal providers, meaning that the best signal providers receive a significant side income if they gain a large following of traders.
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Social trading is one of the buzz words floating around the FX industry at the moment, with almost every brokerage clamoring to attract new traders by promoting the social side of trading. Many however question whether social trading is not just a gimmick aimed at attracting people to deposit money with brokerages. This view seems somewhat understandable as it appears that Social trading products are much more attractive to individuals who have less technical knowledge of Forex trading. A number of social trading networks have popped up over the last couple of years and currently the three biggest social trading networks are ZuluTrade, eToro and Tradeo. A couple of months ago, I decided to investigate the world’s biggest social trading network ZuluTrade in a bid to determine whether one could in fact make good returns from engaging in social trading.
The Experiment and Zulutrade Review
To determine whether social trading is a viable trading option, I began an experiment using a ZuluTrade demo account. ZuluTrade demo accounts use the feed of AAAFx the official brokerage owned by ZuluTrade’s parent company. So in theory an experiment using a ZuluTrade demo account should accurately model performance provided a trader chooses to deposit with AAAFx and not one of the numerous other brokerages supported by ZuluTrade. I opted for a demo account balance of £5,000 as this seems to be the upper limit most retail investors will have available to them.
The next step was to pick the signal providers, ZuluTrade provides its users with ample statistics and information regarding the various signal providers active on the site. The only gripe with ZuluTrade in this regards is that the ZuluTrade ranking system doesn’t do a particularly great job of placing the very best traders at the top of the rankings. However, if one is willing to trawl through the ample information offered regarding the various signal providers it appears possible to pick out a number of good signal providers. This makes operating a ZuluTrade account more akin to being a fund manager than a trader as practically all the tough decision making regarding opening and closing positions is taken out of your hands.
I proceeded to pick the four traders who appeared the most promisng according to my analysis. After having done this I ran a back test and according to ZuluTrade UK if I had placed £5,000 with these four traders back in 2010 by now in 2013 my account would have grown to a very impressive £10,000. Such a return far exceeds what you would expect to get from many alternative investments.
I set my self the following rules for the experiment:
- After picking the Signal Providers, I would not change my choices.
- After setting up the initial risk settings, I would not alter the settings throughout the experiment.
- I would not manually close any of the signal providers positions, even if the positions were heavily in the red.
I implemented these rules to determine whether one could make a good return with minimal management of their account. It is often claimed that ZuluTrade allows inexperienced individuals to make significant returns provided they pick the right signal providers, and I wanted to put this claim fully to the test.
- After 14 days, the £5,000 account was up by £250. A very impressive 5% return.
- After 21 days, the £5,000 account was up by £458. A very impressive 9.16% return.
- At the end of the month, the account was up by £480. For a total return of 9.6%.
Analysis of the results – My UK Client Review of Zulutrade
On the face of it, these results appear exceedingly impressive, achieving a near 10% in a month is not something to scoff at. So it does appear at least possible to make some pretty good returns from simply following the correct signal providers on ZuluTrade. However, it is not really quite as simply as it would appear and I have a number of concerns regarding whether such results could be repeated.
My Strategy Concerns
- In the particular month I run my experiment. Two of the signal providers chosen by me put in astonishing performances and were among the best performing signal provided that month. It appears that I may have been very lucky in my experiment.
- The other two signal providers performed significantly worth. One contributed a mere £18 of profit by the months end, while the other signal provider had made a small but significant loss. This shows that while you can make money from ZuluTrade there is certainly a high degree of risk involved.
- I spent a rather long time picking my Signal providers and despite this fact. I only managed to pick two Signal Providers who provided me with strong performances. It seems likely that unless someone is willing to considerable research in deciding which Signal Providers to pick, ZuluTrade might not be for you.
It is certainly possible to make decent returns from ZuluTrade. However, using the ZuluTrade platform also involves significant risks and could lead to some incurring significant losses. As with all forms of trading, social trading involves significant risk. I would suggest that those who are interested in trying out social trading at ZuluTrade first open a demo account. If users are significantly impressed by the platform and it’s signal providers during the demo period, they should cautiously consider opening a real money account. While remembering not to risk money they can’t afford to lose.
ZuluTrade Strategy: The Five Factors To Consider When Picking a Brokerage
Spreads are one of the costs of trading and the different brokerages who support ZuluTrade offer a wide range of spreads. Even a difference of 1 pip in spreads can be very substantial over the course of the year. When comparing ECN brokerages make sure to include commissions as this can significantly increase a traders transaction costs.
Use the above charts, to help compare slippage
Many traders complain of significant levels of slippage when using the ZuluTrade platform, this is due to the fact that the platform has to communicate with the brokerage who then places the trade. Depending on the latency between a brokerage and ZuluTrade slippage can be quite significant, working out which brokerage suffers from the least slippage is more difficult. There is no easy way to compare slippage on the platform, though each trader has a slippage tab where you can see the average rates of slippage experienced by the traders followers broken down by brokerage. If you are considering a particular brokerage it would be useful to look at some of these charts and see how that particular brokerage performs.
Many brokerages who support the ZuluTrade platform charge their users a commission to help support the costs of integration with the platform. Again commission varies significantly from broker to broker with some brokerages charging quite significant amounts of commission. These commissions can really eat into your profits which means choosing a brokerage with low spreads and a low rate of commission can be vital to ZuluTrade success. Thankfully when picking a brokerage ZuluTrade clear displays the amount of comission charged via a sliding tab allowing for a direct comparison between brokerages. Below we have created a table displaying the 10 brokerages charging the lowest rates of commission.
Here at the Fx View, we always recommend doing business with regulated brokerages as this gives you a certain level of protection and often insurance against brokerage collapse etc. While the majority of the brokerages on ZuluTrade are regulated either in the European Union or the US there are a number of unregulated brokerages which are supported by the ZuluTrade platform. While a number of traders have reported success with these unregulated brokerages, I would still recommend that traders pick a regulated brokerage whenever possible. Those reading this in the US will be limited to the five US regulated brokerages who offer ZuluTrade support, as non US regulated brokerages are unable to accept US clients.
Just as you would with any other product or service, make sure you check out a brokerages reputation before depositing. You can do this by searching out honest and unbiased reviews of the brokerage online, as well as asking around in trading communities and elsewhere. There are a number of high caliber brokerages available to those who want to use the ZuluTrade brokerage, so traders would be well served getting the opinions of others regarding which brokerage would suit there needs the best.
By taking the above factors in consideration when picking a brokerage to use ZuluTrade with, customers will maximize their chances of success.
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Does ZuluTrade work?
Many people are interested in whether such social trading networks actually work. Well the answer to this question really depends on the choices you make work out. If you make well thought out choices and these performers continue to perform well then there is a good chance you will make some quite significant returns using the ZuluTrade platform. However, there is tendency for some signal providers performances to turn sour and thus lead to their followers losing money. I do believe it is possible to make some impressive returns with the ZuluTrade platform if your choices are made in a considered and thoughtful manner. In my experiment I managed to make a 9.6% return in the space of the month. Though as with all forms of financial trading their are significant risks involved.
How much expertise do you need for ZuluTrade?
Many are attracted to social trading networks as they see it as a way to make money from trading without having to have in-depth knowledge regarding the subject. However, your going to need to know a little bit about what makes a good Forex system and what proper risk management involves in order to make proper decisions regarding which signal providers to follow and which signal providers to ignore. ZuluTrade does provide a ranking of the signal providers on their platform, however it often said that this ranking system isn’t particularly useful with it ranking some overly risking strategies towards the top of the list. This means that is strongly recommended that you do you own research before placing your hard earned cash with any highly rated signal provider.
ZuluTrade is not a guaranteed get rich scheme nor should it be viewed as a quick way to get rich from Forex. What ZuluTrade is, however is the biggest broker independent social trading network, which features a number of highly successful traders who you can follow. In conclusion I would say that ZuluTrade has great potential for those interested in making money from Forex trading, however as with all forms of trading their are significant risks which individuals should be aware of before they risk their hard earned cash.
Why do brokers charge commission?
ZuluTrade charges brokerages which use the service 1 pip on each trade placed via the network. The network then uses this to pay both signal providers and affiliates; with signal providers receiving 0.4 pips for each live trade placed by a follower. If the user has been referred to the network by an affiliate the affiliate will also receive 0.4 pips for each live trade placed via the network. Meaning that ZuluTrade take between 0.2-0.6 pips per trade placed using their social trading network.
Brokerages are able to decide how much commission they can charge to the end user with some brokerages choosing not to pass on the full amount to their end users. By doing so these brokerages are ultimately sacrificing some of the mark-up they are make on their spreads, but this trade off can be worth it as the ZuluTrade service can bring significant volume to the brokerage.
You will also find some brokerages charging more than 1 pip commission for use of ZuluTrade services. In addition to paying commission to ZuluTrade, brokerages face a number of other costs when offering ZuluTrade to customers. For instance brokerages will have to implement certain technological solutions to allow ZuluTrade to interface with the servers etc. In addition brokerages that operate using a market maker model may want to charge extra commission in order to make it easier to profitably make a market. These reasons are why the commission charged varies massively broker to broker.
AAAFX is the only brokerage supported by ZuluTrade which doesn’t charge the end user commission for using the ZuluTrade service, due to the fact that AAAFx is a subsidiary of ZuluTrade. The fact that AAAFx is a subsidiary of ZuluTrade means they do not need to charge any commission as they are not charged for using ZuluTrade. In addition to not charging commission, AAAFx are the only brokerage whose systems are fully integrated with the service meaning users experience some of the lowest rates of slippage with AAAFx.
List of Brokers Available Via ZuluTrade
|Broker||Commission (in pips)|
|Chase Trade FX||1|
Importance of Commission
Commission is one of the factors that traders should consider when picking a brokerage to use in conjunction with ZuluTrade. The amount of commission ranges quite significantly with some brokerages charging up to 3.2 pips commission per trade. With some of ZuluTrade’s top signal providers making an average of 10 pips per trade, 3.2 pips of commission can really eat into your profits or make your losses significantly worse. If you experience significant slippage you may lose several pips per trade in commission and slippage which can often be the difference between turning a profit and making a loss. Commission is just one of the factors you should consider when picking a ZuluTrade brokerage and it is important to take other factors into account including spreads, regulation and slippage. It is also important to remember that all forms of trading involve significant amounts of risk and it is important to seek independent advice if you are unsure whether social trading is for you.
ZuluTrade one of the early pioneers of social trading has announced the launch of it’s new web based trading platform, which will support the all new ZuluScripts language allowing signal providers to share their trading signals via the web based platform. At the time of writing the product was still in beta and has only been offered to those who provide signals, however the trading platform is set to be rolled out to all clients using the ZuluTrade network.
The new platform’s ZuluScript feature will allow for traders to create scripts which can carry out trades should the scripts parameters have been met. According to those with development experience, ZuluScripts and the ZuluTrade+ platform are compatible with code from other third party platforms. This should allow for users of the ZuluTrade+ platform to run Expert Advisors (EA’s) programmed for the popular MetaTrader 4 & 5 platform. According to press from ZuluTrade, the code behind ZuluScripts is a super set of the “C” language code, which would allow the scripting language to be at least somewhat compatible with code used by other trading platforms.
With the new ZuluTrade+ platform being web based, the use of a VPS service is not necessary should one want to run their trading script 24/7, with it being possible to simply save all the settings onto ZuluTrade’s servers. This is likely to be very popular with traders who won’t be required to keep their machines running non-stop or alternatively shell out for VPS services.
ZuluTrade has released a creation guide to help clients of the company create, compile and use their own ZuluScripts trading robots. Which aims to ease individuals into the new scripting language and help them making any necessary adjustments to robots they had using on other platforms. The ZuluTrade+ platform is currently in beta, but will be released to all users of the ZuluTrade platform
A Solution to the MetaQuotes Dispute?
ZuluTrade and other social trading networks made the news in 2013 when they came under fire from MetaQuotes the developer of MetaTrader 4 & 5. MetaQuotes stated that they believed that these third party products were in breach of the firms licence agreements. In recent months a number of brokerages who previously offered ZuluTrade services to their clients withdrew the product, with brokerages such as HotForex and Alpari RU discontinuing their ZuluTrade accounts.
Some have speculated that these brokerages were worried about potential action from MetaQuotes and sought to distance themselves from ZuluTrade in order to maintain healthy relationships with MetaQuotes who provide the MetaTrader 4 & 5 platforms which are so popular among their client base.
The new ZuluTrade+ platform could potentially resolve such issues allowing brokerages to partner and work with the social trading network without having to potentially breach their licensing agreement with software providers. It remains to been seen whether the brokerages which withdraw their support for ZuluTrade will return to the platform or will just continue on regardless.
ZuluTrade Binary Options Review
Launched in 2008, ZuluTrade has become one of the largest social trading networks in terms of active traders. ZuluTrade until has focused solely on Spot FX with over 30,000 signal providers sharing their positions with users of the social trading network. In May 2014, ZuluTrade announced that it would be partnering with SpotOption to offer Binary Option copy trading, this would make ZuluTrade the first established social trading network to branch off into the Binary Options world. Non-exchanged traded Binary Options as offered by SpotOption powered Binary Option brokerages have received a lot of criticism due to many seeing them more akin to gambling. Despite this the instrument has gained a degree of popularity and this is reflected by ZuluTrade’s move into the Binary Option sphere.
How Does It Work?
ZuluTrade for Binary Options, works in a very similar fashion to the more established Spot FX product. ZuluTrade allows for individuals to sign up as Signal Providers, these Signal Providers are then paid commission based on the number of live followers they gain. Traders are able to provide Signals from a demo account or one of the supported SpotOption powered Binary Option brokerages. At the time of writing the vast majority of the top rated signal providers, where using demo accounts provided by ZuluTrade. For those providing signals from a demo account, there is the possibility to earn commission without risky any capital themselves. ZuluTrade has received a fair amount of criticism in the past for allowing those using demo accounts the ability to provide signals.
As with Forex signal providers, ZuluTrade uses a proprietary algorithm to rank signal providers. The signal providers that ZuluTrade deem to offer the best signals are placed at the top of the pile, and generally tend to gain the largest followings. The ZuluTrade algorithm has also received criticism in the past for not picking out the best signal providers. Again it appears that many of the top Binary Signal providers have made huge returns but may have taken significant risks in the process or have witnessed large swings in account equity.
Does It Work?
ZuluTrade for Binary Options is a relatively new product, only being fully launched by the company in late 2014. This means that at the time of writing the majority of the signal providers on the service had only been active for a few weeks. Some of this Signal Providers had posted huge returns during this time frame, but during our extensive search of the signal providers using the platform we were unable to find any traders offering signals from a real money account. This is something which may put many traders off, as real account performance can often vary significantly in comparison to the kind of performance experienced when using a demo account.
In addition, we were unable to find any signal providers who had managed to attract live followers, despite the fact that many of the top providers had accrued several hundred demo account followers. This seems to suggest that many using the platform are sceptical regarding putting real money into Binary Options copy trading, until they get feedback from other users. This is perfectly understandable considering the fact that ZuluTrade are pioneers in this regard, being the first to launch fully fledged Binary Options social trading.
There is also an additional concern that may weigh on the mind of many traders. It has been suggested that copy trading is infeasible in conjunction with Binary Options. This is because for a Binary Options provider to remain profitable a majority of traders must lose, with a traders loss being equal to a brokerages profit. If a large number of traders place the same winning positions with a particular Binary broker, this presents a risk management problem which appears to have no easy solution. This might explain why only a small fraction of the 200 Binary Option brokers powered by SpotOption have made the decision to link up with ZuluTrade.
Conclusion For ZuluTrade Binary Options Review
ZuluTrade have made a bold move to expand their product offering and cater for Binary Option traders. There seems to be a significant demand for such a product considering the number of people who have signed up to provide signals and try the product out with demo accounts. Whether the product really takes of remains to be seen and there is really insufficient evidence to state whether Binary Options copy trading is something which is worth serious consideration.
Final Words From Us
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