ZuluTrade Review 2019 – Social Trading with great strategy pool
ZuluTrade is a platform for Social Trading. Users can automatically mirror the trades of other users on their own trading account. The originators of trade signals are remunerated in return for the turnover of their followers. The trading is carried out completely off-exchange. Users of ZuluTrade open accounts for connected brokers who pay an IB commission to ZuluTrade based on which the remuneration of the signal providers is financed. The Greek company behind ZuluTrade is called Triple A Experts SA.
Advantages and disadvantages
- transparency through billing via mostly external brokers
- no additional costs for followers because the authors' remuneration results from the spreads
- several brokers to choose from, including FXCM
- detailed tools for finding strategies
- “Automator” for the development of own strategies
- strategies are based on trading FX and binary options
ZuluTrade test of our editorial department
1. Trading conditions: signal providers' remuneration results from spreads
- minimum deposit: US-$ 300 – 2,000 depending on the broker
- spreads €/US-$: depends on the chosen broker
- not necessarily the best spreads a broker has to offer are available
- remuneration of ZuluTrade and signal providers from the broker's commissions
ZuluTrade is not an independent broker, but merely forwards trading signals to the accounts of its users, which are managed by other brokers. Among these brokers there is also a platform associated with ZuluTrade. Thus, ZuluTrade is not an introducing broker in the narrow sense, but legally comparable to an asset manager provided with a power of attorney limited to the account and able to place orders with brokers on behalf of the customer. Introducing brokers usually take customer orders via their own front-end and forward them to the main broker for execution.
Accordingly, the trading conditions that apply are determined by the brokers with whom ZuluTrade users have accounts. There are no cooperations with higher or lower spreads and commissions specifically for ZuluTrade users. It is, however, quite possible that ZuluTrade can not be connected to all the types of accounts of a broker and that therefore types of accounts with particularly narrow spreads can not be used.
ZuluTrade receives a commission from the brokers whose trade signals are executed by its users. This is based on the generated trade turnover. The commission is used to finance ZuluTrade's profit contribution and remunerate the signal providers. Suppliers of trading signals can offer their strategies on the platform and receive a portion of the commissions paid for the sales of their followers. Up to US-$ 5 per standard lot can be generated – a plus in the ZuluTrade test for suppliers of trading signals with the intent to sell.
In general, the FX trading costs consist of spreads and commissions. Whether a broker levies commissions depends mainly on the market model: market makers and STP brokers with a markup model generally operate without commissions and hide their margins in the spreads. For 1.0 pips spread when trading 1.0 standard lots in euro or dollar, it will cost you US-$ 10.
There are no explicit transaction costs for binary options. Costs incur when option contracts are evaluated or the premiums are disbursed. For example, in the case of simple over/sub options, the likelihood for both call and put options to happen amounts to 50 percent, in total 100 percent. However, in the case of a profit, the broker only pays out about 70 to 80 per cent of the option premiums received as one of two contracts expires worthless. This difference of 20 to 30 percent corresponds to the margin of the binary options broker.
Mark: 2.0Visit Broker at: www.zulutrade.com
2. Underlyings and trading stations offered: Forex and binary options
ZuluTrade's Social Trading offer consists of trading currency pairs (FX trading) and binary options. There are strategies for all relevant FX currency pairs and all common types of digital options.
The fact that other underlyings (for example futures, commodities, shares, bonds, interest rates etc.) are not part of the deal is a major flaw in the ZuluTrade evaluation. Strategies related to these asset classes can only be executed with binary options, which are not among the most effective instruments because of the particular characteristics of this market.
Providing strategies for shares, indices and commodities is on top the wish list. A major part of successful strategies is based on these markets. This applies to both long-term and short-term trading approaches. By excluding a substantial portion of the potential underlying assets, a relevant portion of the high-value trading signals is denied to users of the platform.
3. Order functions of the trading platform: automatic ordering
For those who enter Social Trading through ZuluTrade, the sequence of an order is briefly outlined. The originator of a trade strategy issues an order on the basis of a discretionary or mechanical trading system. This is also automatically executed on all accounts of the followers.
The execution is usually carried out as a simple market order. ZuluTrade redirects the orders from its own servers to the brokers' servers where the followers keep their accounts. Orders are executed at the best possible prices the broker has to offer at the time concerned. This means that follower A with an account at broker X can get a slightly different rate than follower B with broker Y.
Followers can use their trading capital for different strategies and thereby build up a portfolio. It is possible to assign specific position sizes and a specific maximum risk to each trading strategy. Moreover, it is possible to carry out own transactions through the trading platform of the account-keeping broker apart from the execution of the Social Trading signals. It is also possible to intervene in positions initiated through Social Trading, for example by adding up, closing prematurely, and so on.
4. Analysis functions of the trading platform: many key figures available for searching top strategies
The search and filter functions of a Social Trading platform are essential for the potential success of the followers. They can only compile a successful portfolio if they specifically search for strategies based on individual profiles. The key figure offer of the platform is therefore a plus in the ZuluTrade test report.
Users can search and sort by many different key figures including the updated return on investment, the average profit per position, the hit rate, the maximum DD in percent pips, the number of maximum open positions, the average trading time, the number of traded weeks, the number of followers, the best and the worst trade, and so on.
The two key aspects of a trading strategy are trade ratio and payoff ratio. The trade ratio indicates the amount of profitable transactions compared to loss-making transactions. This is the hit rate. The payoff ratio gives the ratio of the results in profitable trades to the losses of deficit trades. If the trade ratio and the payoff ratio are multiplied, the result is called profit factor.
There is a conflict of goals between these two variables. A very high hit rate is typically associated with a lower average profit per transaction. The only variable that can be reliably influenced by the authors of trading strategies is the average loss per position. This can be controlled by means of a corresponding strategy to limit the loss (for example, the hedging of each position with a tight stop loss). All other variables are subject to market developments and can only be understood as documentation of the past with possibly valid indications of possible future developments.
Mark: 2.5Visit Broker at: www.zulutrade.com
5. Regulation, deposit guarantee, and risk limitation: dependent on the broker chosen
Trading accounts are opened directly at brokers, funds are deposited there. As for the deposit guarantee, the standards of the account-keeping broker apply. Among the eligible brokers are FXCM, AAAFx, Swissquote, AvaTrade, Fidelis Capital Markets, Pepperstone, and IC Markets. AAAFx, based in Greece, is directly affiliated with Triple A Experts S.A.
The choice between different brokers with different profiles is a good thing in the ZuluTrade test. In particular FXCM is one of the better brokerage houses on the European market. Customer deposits are kept in segregated customer accounts at renowned banks and are reported separately from business assets. The protection of the British FSCS applies up to GBP 50,000 per customer. FXCM is under the jurisdiction of the British Financial Supervisory Authority (FCA).
The broker partially excludes losses beyond the account balance. As a result of the “franc shocks”, the terms of business stipulate that the broker would compensate for negative account balances of up to € 50,000 and that account holders would only be held liable for amounts above. The framework conditions of other brokers will not be discussed separately in this test. It should be noted that FXCM is among the best options selectable in the application process.
If ZuluTrade signals are used to trade binary options, a broker specialized in these contracts must be selected. The selection includes BullBinary, CBS Invest, AAA , and Option10. Users should ensure that a binary options broker is subject to serious regulation (minimum requirement: overseeing by the Cypriot CySEC) prior to depositing money in a trade account and that the customer deposits are held at banks with a strong deposit guarantee.
6. Automated trading: create own trading strategies with “Automator”
The trading strategies are implemented automatically. With the “Automator”, ZuluTrade provides its users an optimisation tool for the meta-level. Users can set conditions under which the implementation of strategies over their own account is changed.
For example, it can be determined that profits are to be paid out as soon as the accumulated credit of an account exceeds € 1,000. It may also be stipulated that the signals from a provider are no longer to be implemented if the total profit falls below a fixed amount. The automator is based on the definition of “if-then” conditions and does not require any programming knowledge or an overly thorough understanding of the trade. For beginners who make their first experience with a Social Trading broker such as ZuluTrade, the tool is helpful to manage accounts.
7. Account opening and minimum deposit: minimum deposit of US-$ 300 – 2,000
Opening an account is a four-step-procedure. First step, a broker is selected. It is first necessary to specify whether binary options or currency pairs are meant to be traded. If currencies are traded, new customers can choose the maximum amount of spreads or commissions of a broker. The lower this limit, the fewer brokers are available. Leverage and minimum deposit settings can be applied via a filter tool. Targeting preferred trading platforms, regulatory authorities, and trading functions is possible as well.
Second step, a self-explanatory registration form for ZuluTrade has to be filled out. This is followed by the account opening form of the broker. In both cases, risk assessments must be submitted. Last step, the broker is instructed to implement the signals transmitted by ZuluTrade. After the opening of the account, the commercial account of the broker must be funded. Depending on the chosen broker, deposits can be made by bank transfer, credit card, Neteller, Paypal, or Sofortüberweisung.de.
It is possible to open a demo account which offers the same trading signals as live accounts. A demo account with authentic trading signals is an essential quality criterion for Social Trading platforms and thus a trust-building aspect in the ZuluTrade evaluation. Just like live accounts, demo accounts can either be kept in euro or dollar.
The account opening for originators of trade signals requires a different procedure. It is required to determine – among other factors -, which platform or which programming language is used to transmit trade signals. Options are MetaTrader, Soloscripts, and ACt FX.
Mark: 2.5Visit Broker at: www.zulutrade.com
8. The broker among competitors: the mediation principle is the most important factor
Important quality features for social Trading platforms are ownership structure and reach. In terms of reach, ZuluTrade fulfils the essential requirements: signal providers can reach a significant number of followers with a well placed strategy and thus yield good revenues.
The company background cannot compare with that of the biggest competitors eToro and Ayondo. The owner of ZuluTrade is the Triple A Experts SA based in the Greek city of Piraeus. The company is less closely interconnected in the European financial sector than for example Commerzbank (via CommerzVentures, co-owner of eToro) or Donau Capital Wertpapier AG (Ayondo). The background of the company is therefore a weak point in the ZuluTrade test report because of the strong owners of the competitors.
9. Additional services and new customer offers: observe the trades of others using the TradeWall
Social Trading is by definition also a playground for beginners who so far have no experience in active trading. Many members of this target group have gained experience on ZuluTrade and have gradually expanded their knowledge. An extensive webinar offer would be helpful – which the platform fails to provide. There is almost no relevant offer in the field of knowledge transfer.
New customer offers are relevant both in FX and binary options trading. Many brokers try to attract new customers through deposit modes and introductory credits or other incentives. It is, in principle, possible to take advantage of such incentives when opening an account at ZuluTrade. However, this must be clarified for each individual case and prior to the opening of the account. If a broker grants a new customer premium only in case the customer opens the account himself, the account should be opened separately from the Social Trading platform. Linking the account later on is usually possible without problems.
10. Customer service and internet presence: some standards, but not enough
Customer service is available in English and in English only. Email, telephone and live chat are the channels to contact the broker.
The internet presence of the company fulfils the essential requirements, but leaves a lot to be desired – among which a central subpage providing all relevant documents and conditions for download.
A program for winning friends as customers does not exist. Such programs offer existing customers bonuses for successfully turning friends or acquaintances into customers. If you like to convince someone to open an account at ZuluTrade by giving them a report of your experiences, you should definitely point out the risks associated with CFD trading.
Conclusion and final ZuluTrade assessment
The platform offers a large number of successful trading strategies and enables followers to enter trading without prior knowledge. A follower decides where to keep the account – within the scope of the available cooperations. The FX trading system offers – among others – the British broker FXCM. There are no additional costs for the use of Social Trading signals. Authors of trading strategies can earn up to US-$ 5 per standard lot of their followers. The Greek location of the platform is a pardonable weak point since the accounts can be managed outside of Greece. The lack of underlyings outside the foreign exchange market weighs heavier. Anyone who wants to test Social Trading in an uncomplicated manner and with moderate investments should not regret making experiences with ZuluTrade.
Our ZuluTrade experience as a test score: 2.8Visit Broker at: www.zulutrade.com