Forex $ocial Traders


Live Followers Profit: 3 Situations When It Can Be Misleading

profit-lossIt has not been a long time since Zulutrade introduced their new Live Followers Profit statistical indicator. It is a cool thing to know how much money followers made by following a particular forex signal provider. However, there are situations where this new indicator can provide you with misleading informations.  Let me show you these situations:

Situation #1: Different lot sizes

Imagine this example: There are 10 followers. Each of them copy a signal provider with 1 microlot. Signal provider earns 100 pips on EUR/USD pair. That means $10 profit for every follower. Live Followers Profit indicator shows $100 profit. Little bit later, new follower starts to copy this signal provider and he sets his lot size to 1 standard lot. Signal provider executes another trade which brings -50 pips loss.  10 followers has -$5 loss each ( sum -$50).  New signal provider with 1 standard lot size suffers -$500 loss.  Now Live Followers Profit indicator shows -$550 ($100 – $50 – $500).

For every new potential follower who visits Zulutrade, the signal provider can look not very good as Live Followers Profit indicator shows negative balance. But the reality is that 10 followers are 50 pips in profit and one copier is 50 pips in loss.

This was first situation when you can be mislead by this new indicator.

Situation #2: Unpatient and scared followers

Negative balance of Live Followers Profit indicator can also be caused by unpatient and scared followers. Let me explain this situation. Imagine that a forex signal provider has been doing really well lately and made 10 winning trades at a row. That attracts many new followers. But suddenly this trader suffers 10 losing trades in a row.

What do you think will happen? From my observations, many of those followers lose their nerves, become scared and stop following the trader.  Of course losess from those 10 losing trades goes to Live Followers Profit statistics.  The signal provider continues to trade and sooner or later he recovers from previous losess and also earn additional profit. His equity charts looks great again which attracts many new followers. But losing trades are inevitable in every forex trading strategy and so a new drawdown happens.

What do you think will happen this time? For sure there will be some unpatient and scared followers who unfollow our trader again. Therefore Live Followers Profit stats will display their losess. This situation can happen again and again many times. And the end result? Altough the signal provider is profitable overall, his Live Followers Profit indicator will display negative balance.
Situation #3: New Signal Provider

There is another situation when Live Followers Profit can show negative balance. It very often happens when there is a new signal provider in top Zulu ranking. Once he or she appears there new followers start to roll in. If he/she makes couple of losing trades, even though he is profitable long term, temporarily there is negative balance in his Live Followers Profit balance.

Those were 3 common situations when even good and profitable signal providers can show negative Live Followers Profit balance. Note that that can cause negative balance of couple thousands dollars. But beware of signal providers whose Live Followers Profit indicator show minus couple of hundreds thousands dollars. That can be a real warning sign.

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