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 September, 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?
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!
Efficient trading, stable history, what's there not to like?
Firmum Fiduciam Motus
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.
Hal Adullukom Ala Tijara
Interesting signal with quite stable history. The way of how trades are performed gives us an indication that there might be only 1 underlying EA running on both EURUSD and GBPUSD currency pairs, thus, the question of lack of diversification and over-optimization is not out of the picture. On the other hand, signal has vast experience, which might sway our negative feeling towards this one. Out of all previously mentioned signals, this one is the most questionable one, but hey - there is potential with this one, so lets have it here. At least, for the August...:)
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