ZuluTrade Fees: The Truth Unveiled
Do you know ZuluTrade? May or may not, but ZuluTrade is still one of the biggest auto-trading networks in the forex world. Today, we will unveil the truth about ZuluTrade fees, which have not been understood clearly by many beginner traders.
Brief Introduction of ZuluTrade
ZuluTrade provides a unique platform that allows you as followers to copy trading signals from signal providers at zero fees. Sound fantastic, right? You will follow the best signal providers, and then see your equity grow day by day without having to pay ZuluTrade a penny? However, that is not true, at least in term of the so-called “free service” advertised by ZuluTrade.
There are internal ZuluTrade fees, sadly not only one but two. First, you have to pay a 1-pip markup that is added to your normal spread as an agreement to use ZuluTrade service. To illustrate, if your normal EUR/USD spread is 1.5 pips, after using ZuluTrade service your EUR/USD spread will equal 2.5 pips. Second, you have to incur trading slippage, which results from latency of order execution between ZuluTrade platform and your forex broker. Slippage varies broker by broker, ranging from 0 pip to 4+ pips. To summarize, ZuluTrade fees are given by the following formula:ZuluTrade fees (per trade) = markup + slippage
where markup equals 1 pip, and slippage depends on brokers.
Now we will make the calculation of ZuluTrade fees clearer with an example. Let’s study for333, who has been one of the best signal providers on ZuluTrade (up to the time of writing). Markup is 1 pip, easy! For slippage, let’s choose a popular broker, say FXCM UK. Based on the slippage stats of for333, FXCM UK slippage is approximately 1 pip. Adding markup and slippage together, we find that ZuluTrade fees for FXCM UK accounts are 2 pips per trade.
This theoretical estimation coincides with our real experiences. Some of our clients linked their FXCM UK accounts to ZuluTrade, and the results of their automated trades were frequently worse than ones of the signal providers they followed by roughly 2 pips. For example, the signal provider cut his loss at 50 pips but our client suffered a total loss of 52 pips.
Let’s return to the case of for333 and study it on a bigger scale: monthly return. Through a simple analysis, we find that for333 makes an average of 40 trades per month. Because the ZuluTrade fees for FXCM UK accounts are 2 pips per trade, you will suffer a total cost of 80 pips per month. Average monthly return of for333 is reported to be 200 pips, but your net monthly earning is just equal to 200 – 80 = 120 pips, or 60% of for333’s performance.
Using ZuluTrade auto-trading service is not free at all. Instead, you do suffer a lot from internal ZuluTrade fees, which involve 2 parts: markup and slippage. Please do careful analyses in choosing brokers and signal providers in order to minimize your ZuluTrade fees.
NOTE: The used phrase “ZuluTrade fees” covers all the costs you incur when using ZuluTrade service. Not all of these fees are charged by ZuluTrade itself. In fact, ZuluTrade only charges you the markup fee, while slippage is caused by inevitable latency of order execution between ZuluTrade platform and your forex broker.
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