Watchlist of Signals
On everyday basis, FX SUMO team evaluates not only our own signal's performance, but also other trading signals and their performance metrics. Out of all social platforms that give the opportunity to copy forex trading signals, MQL5 has the most precise and meaningful data, thus, we will focus on this particular platform. Before presenting our Watchlist of the signals with the highest potential, FX SUMO has to set the ground rules of what is going to be analyzed before making the end-decision of particular signals:
Signal creation time
Signal creation time is as close as possible to the account creation time - offline stats are easy to be manipulated, especially drawdown %.
Luck factor and Volatility tests
This is especially important for strategies without active usage of SLs. Drawdown/Deposit load ratio should be as high as possible - for 500:1 leverage accounts we hope to see the ratio between 2.5-3.0. Anything below this ratio means that past drawdown is not indicative of future results. For 100:1 leverage accounts, the ratio should be adjusted ~5x lower, targeting 0.5-0.6.
Diversification among asset classes
We would love to see at least 3-4 different currency pairs (or asset classes) to be traded. This would ensure 2 things:
- Signal will be less-dependent on crazy outbreaks in one or another asset class;
- Signal's underlying strategy(-ies) are less likely to be over-optimized.
- have average profit for major FX pairs below 3 pips;
- have average profit for exotic FX pairs below 7 pips;
- have average trade open for less than 3-5 mins;
- have most of positions opened/closed in the hour after midnight (00-01), which typically is the roll-over hour for brokers.
Time-tested floating losses
We are looking for signals that have gone through multiple-hundreds pip floating losses. Without these situations and their deeper analysis, an investor will never have realistic vision of what will happen when the trades get really stuck. And based on our experience and all what we have seen, we can tell You one thing – eventually, EVERY SIGNAL out there WILL deal with these situations. It’s just a matter of whether these trades are in the original sample of historic trades, on which You base Your decision to invest, or not.
Usage of underlying EA(s)
Looking for this, not must-have, but close to that. The more manual decisions there are, the more likely is the probability that problems will emerge. Don't trust in anyone, especially, when stakes grow higher and higher amounts of sub-funds (and fees) are at stake.
We don't really care about this one.
If first 9 points fill out, equity won't be a deal-breaker. Obviously, one would love to see that the signal author puts his money where his mouth is, but still - not a deal-breaker.
6 months AND 500+ closed positions.
This is our middle-way to acknowledge that the signal has taken enough of trading decisions within longer period of time, showing it can deal with different market conditions.
One should look for average monthly growth/DD ratio above 1, that's it. There are people spreading nonsense that higher efficiency is sustainable, not in the long-term, really. Some of the most popular ETFs, for example, have average yearly Calmar ratio of 2-2.5 (ttps://www.forbes.com/sites/perrykaufman/2016/08/15/uncovering-the-best-tradeable-bond-fund/#36c4975960ae ), so what are we really expecting here? Stay away from wannabe pro retails showing off crazy efficiency for a few months, they will inevitably blow it up. When You enter any career, You should always look what the top-guys are doing and should try to mimic their success, that's it. Don't try to research new bicycle, You won't, and You will drag others down with You.
Potential of over-optimization
If there is an EA, however, it's only 1 pair - beware. Rational investor should always ask for back-tests and all the available information. Over-optimization risks are at stake. Actually, one should ask for different back-tests, also settings that the author has chosen not to use. If there are only "1 correct" settings and those are implemented on only 1 currency pair, run away from it, and fast.
After establishing standards of what is being analyzed, we can start talking about particular signals.
Please note, that this is not an investment advise and You, as a potential/existing investor, do have the final decision, based on Your available funds and risk apatite. On top of this, we have not reached out to any of these signals' authors and we have no benefit of them having new investors; here we analyze signals' past performance and look for POTENTIAL CANDIDATES that deserve our attention. Finally, we cannot guarantee that these particular signals will stick to their trading style going forward - if something were to change in the future and signal's risk profile were to change, investor's negative vibes should be targeted towards signal's author, NOT US. Unless a potential investor IN THIS POINT IN TIME can find better signal(s) with better track record, there is no room for any negativity towards us. This analysis is not an investment advice, however, it is focused on helping investors, not signal providers, keep that in mind!
If You don't agree with EVERYTHING stated above, just don't scroll down; for everyone else - let the games begin!
Watchlist for October, 2020
Whatever the critics say, this signal remains a must-see material for any long-term investor out there. One can question recent efficiency, but that's pretty much it. Survivability and risk management remain this one's strong suit. The signal has gone through all sort of crazy market conditions - while critics state how bad it is, there is actually almost no other signal to compare its performance with that has gone through the same history and marked conditions. Guess, where did they all go, mhm?
Efficient trading, stable history, what's there not to like? - there are not many signals out there that can have comparable history to BW, this one stands out among those and shows the characteristics of a very stable investment opportunity. 1 current subscriber (at least, on MQL5 platform) is an absolute joke, highly underrated signal from our perspective.
Firmum Fiduciam Motus
Out of the 3 T1 signals, this one is by far the most conservative one. Stability over efficiency remains the motto here, and we are definitely not against it. Before joining this one, though, potential investor should calculate whether his capital will be enough to make back subscription fee + cost of VPS, as the signal is not targeting high (or even moderate) growth % month after month. Be aware, that there might be even months when the signal is in negative.
As we started talking about stability over efficiency, we have this signal right here. One could argue that this could be even too extreme of a case, but we definitely won't pick on this guy for choosing this particular style. From investors' perspective, this is the signal that can be used to diversify Your other investments - it definitely won't be a cash cow for You...
When we first started our blog, this was one of the first picks we had. Since then the signal has been a major success, yet... it has no followers. It is beyond us why people are avoiding this one and not giving it a chance, but hey - investors' irrationality is something that can remain present for far lengthier time then we have power to argue against that.
Kaka Itrading TOP (new inclusion)
This signal pops-up in our radar again and again. Overall, a very solid investment choice with super-high trading activity. One could ask for historically lower deposit loads (the main reason why this one is placed on T2 rather than T1), however, in the last 6 months the signal hasn't surpassed 6% mark on deposit load, which should be comforting for potential subscribers.
North East West (new inclusion)
Although this signal is rather solid one, its among the most over-hyped signals on MQL5, especially, considering there are better alternatives out there. While "believers" can talk all day long about generally low level of drawdown and high trading efficiency (to both of these we agree), there are also glaring risks underneath this one and its money management. Yes, initial positions are very small compared to account balance, however, averaging happens through adding new positions in style, which is even more aggressive than standard martingale, crazy. On top of this, historical deposit load figures indicate that this one hasn't been really tested through positions that would go hundreds of pips against initial entries. And yes, we are rather negative here, but its all relative in context - while some overhype this one and want it to be the only T1 signal out there, we have to provide some sense on why that's simply not the case here. Its not T1 signal, definitely not the best out there, yet, still a very solid investment opportunity for those of You who are looking to diversify their portfolio, especially, with instruments that are not being traded by many.
Recent loss-taking by the author caused a bunch of negative reviews. To be honest, we don't get this - the author showed some sort of risk awareness and capital preservation, and for that receives such a hate? - nonsense. Besides recent shenanigans, history remains impressive and the signal keeps going, good job!
Orions (new inclusion)
Young and solid trading signal, which has performed reasonably well throughout all the recent volatility in the markets. What amazes us the most has been the capability to strictly follow defined money management and hold deposit load to very low levels in times of higher drawdown. Currently, this one is simply missing history and the amount of decisions to be placed any higher, but there is definitely a ton of potential with this one and a clear place in our watchlist to observe going forward.
Hal Adullukom Ala Tijara
Interesting signal with quite stable history. Recently, it did have problems in terms of DD, but those were solved in somewhat reasonable manner. "Somewhat" - deposit load did spike to 56% (for 1:500 leverage, it would be ~12%), which is very high for that experienced DD level. One can argue that the signal was lucky and DD levels of 30-40% could have been experienced with that level of deposit load (assuming, no new positions would have been opened). Out of all the signals on this watchlist, this one is the most questionable one, thus, although potential is there, we feel uneasy about this one going forward.
If You think that there might be a signal that we are missing here and which deserves our attention, You are more than welcome to share Your take on our Telegram discussion group https://t.me/FXSumoDiscussionGroup
-FX SUMO Team