June 2016: TOP 10 Trading Signals Viewed by Analyst of NordFX

We continue posting ratings of MQL5 trading signals, which you can easily subscribe to using the tab ‘Signals’ at the bottom of terminals МТ4 and МТ5. As a reminder, this service is a very effective substitute of your own trading - manually or with the help of the advisors. The main difficulty here is choosing those strategies worth to be subscribed to. Currently around five thousand strategies are presented on ‘the display window’, and selecting the ones, resulting in a sustainable profit, rather than in a one-time deposit loss, is quite challenging.

As usual, John Gordon – expert in investment security and leading analyst at broker company NordFX, analyzing mistakes, often made by investors, subscribing to any given signal, is acting as our consultant in respect of this service.

Following the results of June preferences of the subscribers/investors are as follows:

“For starters”, offers John Gordon, “let’s give some general statistics. So, as compared to the previous month, Top 10 is renewed by 60%. The previous providers left in the top list are:

• MenjadiTrader PAMM 144842 –still ranks No. I;
• ­Lemar Investment Group – the signal moved ahead one step – from VII to VI place;
• Small to BIG Money – conversely, dropped one place and currently holds IV position;
• and signal Q2FX, which switched from VIII place to V.

As to the other signals, which were among previous May TOP-10, the situation is as follows:

• Fusion Project moved down from the sixth to the thirty-third place in the rating of popularity among the subscribers;
• ­CB06143 changed its name to TRIPLEX 003 TYPE AA, and giving up its positions, currently holds the twenty-fourth place instead of the tenth;
• Green Line Signals, was not even in TOP-10, but in TOP-3 during several months, currently it didn’t just drop out of the leaders’ team, but lost almost all its subscribers, showing a drawdown of 97% from the deposit;
• Pound Aussie Real appeared on the 36^th place versus the previous 2^nd;
• Asia Balance – ranks No.37 (previously – No.9);
• signal MAXI showed the greatest drop in the rating, it moved down from the 6^th place to the 57^th.”

“It should be noted that our forecasts as to the reliability of a given signal”, continues analyst of NordFX, “mostly pan out. And those signals, positively recommended by us, usually can easily stand and tick along even the sharpest fluctuations of cross rates, even the ones seen during Brexit. However, unfortunately, quite often investors choose absolutely other signals, being guided only by the profit figures and paying no attention to our calls for being cautious, which leads to quite poor results. For an example, I'd like to cite what we told about Green Line Signals three months ago, in March:

“Consider”, I wrote previously, “the signal is just 12 weeks old, its maximum drawdown is 53%, and such close calls happened twice over three months. On the signal provider’s website, the figure is an even more alarming 63%. Time will tell whether I’m right or wrong urging to be extremely cautious with this signal.”

“Time proved I was right, and instead of previous growth of 700% June figures showed loss of 65% with the maximum drawdown of 96%!”

"Generally, while selecting signals for subscription,” John Gordon says, "I urge to analyze other signals of the same author as well. We may take signal Pound Aussie, being among TOP-10 in May, as an example. Apart from this signal, its author offers to subscribe to two more signals: Mix Demo and London Hawk. Needless to say, that the first signal, operating on a demo account, shows a very impressive deposit growth – 1200% in little over a year. But a drawdown is also impressive – 81%, which is a cause for serious concerns. And if the account, which you use for a subscription, also includes a bonus from your broker, with such a drawdown it almost 100% likely to be zeroed.

The second signal – London Hawk – is operating on the real account, it is only 7 weeks old, it shows growth of 24%, but herewith the maximum drawdown has already tested the mark above 53%. The obvious conclusions spring to mind. And more than 80% of investors have already come to such conclusions, having cancelled the subscription to Pound Aussie Real.

Or, for example, another signal which just amazes with its profitability – Panen Profit, plus 9113% in just under a year! And the maximum drawdown for such a growth is quite acceptable – 50% from the deposit. It's an excellent result but for several ‘buts’.

The first one is what I call "reverse martingale" – trade tactics where first the author of a signal gains ‘pace’ of the deposit with a high risk, and then sharply slows down. With such a scheme, only those investors signed to the signal at the very beginning of its lifespan get the main profit. And here example of Panen Profit is very illustrative: September of 2015 – plus 290%, October – plus 238%, November – 8%, and further from 9 to 27% per month.

As a whole and with such figures the subscription can turn out to be quite profitable, but there is the second ‘but’, which is that the drawdown of 50% appeared not when the growth was approaching to 300%, but during the months with a rather gradual increase of the deposit of 20–25%.

Of course, a degree of admissible risk is determined by the investor himself and nobody else. I'm just trying to help with accurate assessment of a balance between this risk and profitability.

Let's assume that you had been signed to Panen Profit since 6/1/2016. For this month the deposit growth made around 25%, and the drawdown – 50%. Subscription cost – 30 USD/per month. So that you could leave in a month with zero result, your initial deposit should make 120 USD. The risk of loss makes 50% from 120 USD, that is 60 dollars, plus 30 dollars paid for the subscription, total 90 USD. But if your deposit makes, let's say, 1200 USD instead of 120, it will be a different and more attractive scenario," - John Gordon from NordFX sums up. "Specifics and a great advantage of the service 'Signals' is in the fixed cost of subscription, regardless of the size of the investor's deposit. Thus, with deposit growing higher, not only absolute, monetary profit is increasing, but also relative profit, expressed as percentage from the initial capital, the risk is, correspondingly, decreasing, which is good news for any investor".