By connecting retail traders with some of the best traders in over 192 countries, ZuluTrade evolved into one of the largest community for automated trading in the world. Its recent ZuluTrade traders combos feature is a mind-blowing way to diversify a portfolio account, helping retail traders survive in the currency market’s complexity.
With over $1 billion in live accounts current transaction volume, ZuluTrade leads similar platforms and rivals big brokerage houses. From profit-sharing accounts to auto-trade cryptos, social charts and the ZuluGuard service, Zulu makes it easy for the retail trader to access successful trading strategies around the world.
In this post we will explain:
- What ZuluTrade Traders’ Combos is with an easy explanation
- How it works
- A step-by-step guide to use it
- The Pros and Cons you have to understand before start using it
ZuluTrade Traders’ Combos – Presentation
The new ZuluTrade traders combos feature gives access to even easier, faster and safer auto-trading. The traders combos option offered by Zulu combines the monitored performance of individual traders to ensure maximum profitability.
The entire process uses a sort of AI (Artificial Intelligence) system to identify and combine profitable strategies into combos. In the end, various tiers result depending on every trader’s risk appetite.
It is known that the biggest problem for retail traders comes from handling the risk. Money management or risk management is a priority for platforms like Zulu and the ZuluTrade traders combos feature offers a good compromise.
We have always talked about the importance, in copy trading, of being able to analyze traders and build a portfolio with professionalism, especially with regard to money management. This tool tries to automate these steps by allowing the investor to start from a good starting point. Even choosing the most aggressive combos, the actual risk in a portfolio follows more money management rules than any single risk management system in a classic retail trading account.
ZuluTrade Traders’ Combos – A New Way to Diversify Your Portfolio
Not all traders on the Zulu community are eligible for becoming combos. To become one, a trader needs a winning percentage ratio above 30%.
Moreover, a long-term positive ROI (Return on Investment) and more than fifty executed trades. Finally, the trader must be followed by real investors part of the Zulu community and have a stable trading activity of at least fifteen weeks.
This way, Zulu tries to select traders with high potential from the occasional winners. For instance, a trader with a strategy that constantly wins over 30% of the time in the last fifteen weeks stands better chances to do at least the same in the following period and outperform others.
Through various extensive tests, Zulu concluded that traders combos have an overall performance much higher than in the case of a traders’ portfolio set up manually by individual investors.
As always, there’s a trick in anything. While traders combos bring together profitable trading strategies that have the potential to increase a portfolio’s performance, the catch is that traders still need to make a selection.
The selection process isn’t so easy as many would expect and often leads to the impression that it could be optimized. However, the ZuluTrade traders combos serve its purpose of easily copying multiple traders per combo with just a single click.
Moreover, the beauty of it is that it syncs the combos in the portfolio to match the trader’s risk appetite.
How the Traders’ Combos Feature Works
There’s a Trading Community Desk that makes sure to monitor all the traders combos strategies dynamically. This way, when and if a strategy fails to meet the criteria anymore, it is downgraded instantly. On the contrary, if other trading strategies prove to be successful and meet the rules mentioned earlier, they’ll be listed as ZuluTrade traders combos, and retail traders can add them to their portfolio.
Filtering through all the trading strategies isn’t an easy task. The fluctuation is high, with many trading strategies failing and have to be removed, while others fit the criteria and the Trading Community Desk add them.
Note this point carefully. Failing strategies are removed, so you will hardly ever see them inside a combo, and it will seem to you that every combo has always been made up of infallible traders. But that’s not true. Even with Traders Combo there may be losses and traders may even fail completely. This is why money management is always important, that is the ability to set up the portfolio so that someone’s failure does not cause everyone to fail.
Nevertheless, the evaluation process is mandatory to filter the best strategies and conditions quite draconic. For instance, every traders combo and a potential strategy to become one is monitored for unnecessary exposure to high risk.
Moreover, the profits generated in the investors’ accounts play an important role in the decision-making process. Or, the ratio between open and close trades tells much about the underlying strategy.
Even the social aspect plays a role. By continually updating investors, traders combos earn more points and fit the criteria easily.
Other things like the account’s lifetime, maximum open trades, the average number of pips, the stability of the trading strategy, etc., come to complete the conditions needed to become traders combos.
Traders’ Combos Explained – Step by Step Guide
After opening an account with the Zulu community or log in to an existing one, traders go to “Set Up Your Traders Portfolio” option.
First, the trader needs to allocate the funds to be invested with the ZuluTrade traders combos option. By inserting the amount in the designated space, the trader automatically sees the percentage invested.
Second, traders set the risk. From low to moderate or aggressive, there’s an option for all types of traders.
Finally, the third step implies choosing the traders combos that fit the criteria. The platform automatically lists combos, showing the annual simulated ROI (pay attention, annualized roi, not actual) and the overall trading conditions like the balance and lot per trade to reach this performance.
The funds to invest will automatically be spread over the strategies chosen. A trader can pick more than one combo, but the funds obviously can not exceed the current available account balance.
Namely, they refer to the free cash in the Zulu account, not the one already blocked in other trades/transactions.
If there’s no other trader to follow in the portfolio, then all the funds may be used to the traders combos option. If not, from the total funds deduct the sum of the overall ZuluGuard amount used. The result is the amount ready to be invested in a ZuluTrade Traders Combos strategy.
For more details on this, you can read here.
How to Set the Risk When Using ZuluTrade Traders Combos
The risk appetite deals with how to how much to risk on the portfolio. Aggressive traders may choose a higher percentage, while conservative ones a shallow one.
The key to setting the right risk appetite sits with the NME (Necessary Minimum Equity). A negative correlation between the NME and the risk appetite exist. Hence, the higher the NME, the lower the risk appetite, and the other way around: the lower the NME, the higher the risk appetite.
In a way, it acts like the free margin in a regular trading account. The more free margin exist, the lower the risk in the trading account. On the other hand, lower free margin levels increase the risk of receiving a margin call eventually. Hence, the trader has a bigger risk appetite and a more aggressive attitude towards trading.
The NME’s Role in the Traders Combos Feature
But the NME, apparently, is more than that. It refers to the minimum amount in a trader’s account to receive all the trades based on a trading volume of one micro lot and 100:1 leverage.
By NME timeframe, the ZuluTrade Traders Combos refer to four periods:
- three months
- six months
- twelve months
- overall traders combos NME.
Naturally, the more conservative is the last one. Using this approach, the risk appetite becomes conservative because the trading history is long enough to have survived different market conditions. On the other hand, the lower extreme is, the riskier option as the strategy didn’t stand the test of time yet and the performance may just be random.
The yearly traders combo NME corresponds to a moderate risk approach, while the 6-month and 3-month options are the riskier ones.
The NME is the core of the ZuluTrade Traders Combo feature. Depending on the amount available to invest, the system chooses what traders combos to display.
For instance, depending on the amount to invest, the system first scans all traders in the combo and lock the yearly NME. Remember, this is the less aggressive option.
Next, it’ll sum the NME’s together for each combo. Finally, a comparison between the investment funds and the NME ends the process.
The combos will be displayed and available to pick only if the funds exceed the NME of the traders combo. If not, they won’t appear in the possible selection.
To sum up, the ZuluTrade Traders Combos comes to complement the offering of the ZuluTrade platform, by offering retail traders a great way to diversify their investment.
As it is always with diversification, the key is how to pick the right approach to fit a trader’s risk profile. Overdiversifying a trading account leads to one position hedging the other. In the end, the trading account’s performance goes no-where.
By using the NME and its inversed correlation with the risk appetite, the traders combos displayed for selection fit the most the investor’s profile. It is a simple but effective (but not infallible) way to bring together an algorithmic system to pick from the best investor profiles.
In the end, an investor may pick from multiple traders combos with the condition that the available funds exceed the total NME of the combos combined.
This rule allows for excellent risk protection, but also provides room for the account to grow respecting strict money management rules.
With the Trading Community Desk active and continuously monitoring all the traders combos (active and potential ones), the chances are that the retail trader has a more accessible good starting point.
The one thing to keep in mind is that selecting the right traders combos comes at the end of a due-diligence process. Investors need to hand-pick from the available options the one that fits the risk appetite, protect the account and, at the same time, let it the necessary time to grow (maybe exploiting compound interests).