Once you have decided to get serious with social trading and settle on ZuluTrade as the platform you prefer, what next? Every traveller knows that when you decide to embark on a new journey, it is important to get as much information as you can about the journey. Social trading is not as different. In this journey, there are several pitfalls and potential trap that every investor should be aware of. We will reveal all of them here. On the other hand, there are also many shortcuts and wonderful tricks that will make your journey relatively a breeze and a success. On Social Trading Secrets, we have sent scouts to check out the terrain ahead and their reports will help you make consistent profits to your account.
Here are some tips and tricks with ZuluTrade that will ensure that you are profitable from the first month onward.
It is important that you read these tips first, before you even decide on which broker you want to use. Why? Because observing the principles we reveal here, will make the difference between a winning, profitable account and a losing account. We recommend that you examine them carefully and then decide on how you want to approach social trading.
Define your Investment goals
First before you even begin to invest, it is important that you define your investment goals clearly. Ask yourself these questions and write down the answers if you are serious about making money on social trading:
“What do I want to Achieve?”
Unless you can come up with concrete answers to this question, being profitable in social trading will be very hard. You need to have a very clear goal so that you can know when it is being met. Your goals can be in terms of return in investment and risk exposure factors.
“How much am I willing to risk?”
You need to know how much capital you are willing to put on the line otherwise, you may find that you put too little or too much in your account. You should also realize that you may not take seeing your account going below a certain percentage. Variations in your account size for both should be anticipated as you start investing. As a rule of thumb, do not trade with money that you cannot afford to lose. Answering that question will determine how much your initial deposit will be. It will also determine the risk management features you will put in place.
“What sort of signals provider do I want?”
Now that you know your goals and risk tolerance, it is time to decide on the signal providers. Notice that we are creating the criteria for selecting signal providers before you even see the actual traders. The trick is that when you already know beforehand what type of signal providers you are looking for; it will be much easier to find them. You will be much more objective in your selection.
Define your preferences according to performance criterias such as return on investment, maximum draw down, average pips per trade and aggressiveness. Obviously, selecting your signal providers is one of the most important parts of social trading. Please see the ZuluTrade social trader’s tips for more on this topic.
“How will I monitor and control my account?”
Once you know what traders you will be looking for and how their performance out to look like, the nest important step is to know how you will be keeping up with your account. The big kept secret of social trading is following up and management of performance. This is an area where we have to excel in. Remember social trading is about investing in people. It is not enough to select a signal provider and forgetting about everything. We need to dedicate about three hour a week to check on how well your account is doing. We found that the weekend is a good time because the markets are closed and there will probably be no open trades in your account.
Come up with a personal plan
Once you have clearly defined your goals. It is time for you to come up with a plan to meet them. You can be as flexible or as rigid as you want, as long as you have a plan that will help you get to your investment goals.
Your plan should be about the things that you can do for yourself. For instance, you could plan to check on the progress of newer signal providers that you may not be following at the time. You can also plan to have a pool of signal providers whose trading style you are familiar with and that you could potentially add them to your account if and when the need arises. This would come in handy should any of your providers fail you. Hence you would be able to replace them quickly without having to reinvest too much time on finding new signal providers.
When selecting brokers
When you go to the brokers selection page, you will notice that there are 42 brokers available for you to choose from. The number of options available to you to sort and select the most suitable one is quite useful however; they are not comprehensive enough for you to make an informed decision. We also noted that if you have no idea of how all the brokers work, in reality you will be making a decision with only a fraction of the information you have. Here are some tips for you to make the most out of the process.
- Do your own research on the broker you want to choose. Use the brokers selection tools as an initial guideline only. The same rules apply when selecting a broker on ZuluTrade as when selecting broker for personal trading: Stay informed. The main question you should ask is whether you would deal with that broker if ZuluTrade was out of the picture? As a rule of thumb, only enter into a contract with a broker that you are confident with their services. Remember, your primary contract is with your broker not with ZuluTrade.
- Open a demo account first and Select your favorite signal providers. After you are certain that you want to work with them, check out how much slippage your broker has experiences with. Slippage can eat all your profits or even run you into a net loss. Take a look at the two examples below:
Notice that the signal providers are using different brokers. If your broker was any one on the bar graphs; how would you like his slippage to be like? Check out their average pips per trade and the slippage of each broker. If you were following any of these signal providers, wouldn’t you rather be trading using DUKASCOPY? We would also completely stay away from NORDFX.
This is where most un-informed investors get it wrong. First eagle is the top ranked signal provider on ZuluTrade, yet he only has a 57% trader rating. This means that only about 57% of his followers reported to have made money from the signals! To see how this is possible, look at the average pips of First Eagle, there are only 9 pips per trade. This obviously shows that the trader predominantly utilizes some scalping strategies. If you were to choose NORDFX as your broker, you would lose about 4 pips of those 9 pips on every winning trade and on top of that, you will be losing 4 pips more for every losing trade! Now add on top of these losses, the commission you will be paying for every trade (for NORDFX it is 2 pips). For winning trades, you would expect only 3 pips (assuming that there is no slippage when trade closes). For losing trades, it will lose 6 more pips on each trade.
First eagle is clearly a popular signal provider for many investors BUT if you choose a broker with a huge slippage, you will most likely wipe out your account in the long run. In this case, when choosing brokers, we would automatically choose DUKASCOPY or FX OPEN ECN. No matter who our broker is, we would also stay away from first eagle even if he is the top ranked trader by ZuluTrade!
- Check out Funding options available and withdrawal policy and charges from the broker you want to choose. Are they accommodating to your needs? Always remember that your primary contract even in social trading is with your broker. You should be comfortable with every aspect of your broker.
- An important point we noticed is that overall, AAAFx seem to be a much better broker when dealing with ZuluTrade. Therefore, we think that it is a good idea to consider the merits of AAAFx seriously:-
- No commission,
- Full integration with ZuluTrade and
- A full refund policy
Of course, some of the top quality ECNs technically match these advantages and out do them in some cases. For instance, you will notice that AAAFX seem to have a constant 1 pip slippage. This significantly reduces any advantage you may derive from paying ‘no commission’ because the effect of slippage and commission to your bottom line is the same; they just take your pips away.
Now looking at DUKASCOPY as in the example above, you would pay the same 1 pip per trade with little or no slippage. DUKASCOPY’s client’s deposits are protected by the Swiss government up to 100,000 CHF (about 111,000 USD) and they also enjoy guaranteed liquidity of up to 50 million.
When setting up your account
When you log into your account for the first time, the account set up wizard will show up. If you are not familiar with ZuluTrade yet, we would recommend that you do not use the wizard at all. We found that using the wizard can easily lead you to make unintended or at the least uninformed configurations to your account. However, you can consider enabling ZuluGuard if you want to take a more cautious approach. If you do use the wizard, we recommend that you uncheck the??? option for opening all the present trades that the trader has opened. This is because for those trades, you would have missed their entries. If you enter too late on a trade, they may result in a loss especially if your signals provider is targeting smaller pips or is just about to close them. You will still pay commission on these trades even when they result in losses.
When you are taken to your dashboard, get familiar with the platform and do not take any trades yourself unless you FULLY understand the platform. In a live account, please understand that every trade you take; you commit your funds. Therefore, unless you are already familiar with the ZuluTrade platform and have a good reason to take trade, do not take any trades yet.
Open a demo account to practice using the platform, even if you do not intend to be trading for yourself. A demo account will help you better understand how ZuluTrade works without risking your cash. Ensure you are fully capable of adding, managing and removing signal providers from your portfolio. This will not be too hard and on ZuluTrade, it is quite intuitive. For information on how to do this, check out the full ZuluTrade review page.
Now when it comes to the risk-meter and ZuluGuard? We found that they could be useful for an investor who is not too much into the details of what is actually going on in their accounts, but still want to have some level of risk control. The risk-meter gives you a rough way to adjust the risks you take on and you do not have to think about it too much. Just slide the percentage to a number that feels good to you. We also noticed that the top performing followers in terms of return on investments, had a very high risk-meter setting.