Forex $ocial Traders
 

           

Ooops…We´ve Lost $817,265…So We Can Start To Trade Normally Again

Right from the beginning I have to apologize for being a little bit sarcastic, but I simply cannot resist to publish this.

Imagine this hypothetical scenario:

You are a signal provider and couple of thousands of followers have invested their money to copy your trades. Everything goes well, you are more than 7,000 pips in profit and your followers love you.
Suddenly, you experience a HUGE drawdown, your 29 open trades goes so deep that they not only wipe all of your current profit, but you even go next 20,000 pips into negative territory!

During this wild roller coaster ride, hundreds if not thousands of your followers receive margin call and their open trades are closed.  They lose many thousands of dollars.

Market turns and your open trade losses recover and you publish following statement to your followers:

swissrunner-statusupdate

???????  What a joke !!!! (this is + article title was my little sarcastic part I warned you about before)

Back to reality…..it is sad that the hypothetical scenario already happened.  Signal provider SwissRunner did exactly same as I described above. His trading strategy was build around one expectation…that Swiss National Bank will protect 1.2000 floor on EUR/CHF pair. That was actually happening for many years. SwissRunner also used martingale system, which worked very well for him while 1.2000 barrier held.

But at the beginning of this year, SNB stopped protecting 1.2000 level and EUR/CHF pair felt down couple of hundreds pips in an hour.  SwissRunner had BUY positions, so he started opening new BUY positions up to 29 and suddenly his drawdown was 28,180 pips!

swissrunner-chartfeb15

As you can see on the screenshot above, the trader was finally able to recover and even increase his profit, but many followers were not able to do so as they were trading live accounts with real money and not some demo accounts.
They were simply not prepared for that huge drawdown.  Would you expect that from a trader who´s max. drawdown to that time was 2,000 pips?

I am not sure anybody was prepared for that.

Little Example:

Follower´s balance $1,000
Follower´s lot size: 1 microlot
(set based on previous max. DD of 2,000 pips…follower thought he would risk $200 thus max 20% of his balance)
28,000 pips drawdown = -$2,800
Result: Margin Call, Account Lost

On the screenshot below you can see consequences of the event for his investors.

swissrunner-lost

Check Live Followers Profit amount: -$817,265

I believe that now you can understand my sarcasm related to the status update mentioned above. What a self confidence this signal provider must have to post this to his followers? :)

Tip: To avoid situation like this, visit our series of articles called Zulutrade Follower Academy and learn how to become a profitable follower on Zulutrade.

5 comments to Ooops…We´ve Lost $817,265…So We Can Start To Trade Normally Again

  • Dave

    Well i still have faith in swissrunner. what happend was a black swan. but i always have stop loss. and limited positions (max 4). so things like that are no problem for ppl with good MM

    • guru

      Hello Dave,

      yes, no problem for ppl with good MM. But if you need to make so big adjustments (SL, open positions), IMHO, why to follow him at the first place?
      In that case you could be trading yourself.

      You are a loyal follower, that is nice. Just I am not sure whether SwissRunner cares about his followers money.

  • Dave

    i think it is important to always have stop loss, no mather who do you follow.
    Cheers :)

  • Dave

    not in my live account