Similar to eToro, Zulutrade, which opened for business in 2007, is one of the growing number of Forex brokers that offer a social trading platform through which traders can traffic in currency or binary options. Why the sudden interest in social trading? One only has to look at the exponential growth of social networks in general (Facebook, Twitter, Snapchat, Instagram) to see that it was only a matter of time before someone figured out how to adapt the idea to currency trading. Humans seem to have an insatiable desire to communicate with others who have the same interests and the Internet is the perfect conduit. Let’s take a closer look at Zulutrade.
How Zulutrade Works
The mechanism behind Zulutrade is straightforward. The company uses an algorithm to rank its participating traders by quality and quantity of trades taken. These are called signal providers. Other traders can choose to follow a signal provider and either manually or automatically copy their trades. As an incentive to provide signals to other traders, Zulutrade pays these providers a fee that adds up to be about $4 per lot for any trade taken in a live account. Voila! Ladies and gentlemen, meet social trading.
Trading Platform: Zulutrade created proprietary software that is also used by around 70 other Forex brokers. While some traders are reluctant to venture out of the MetaTrader ecosystem, users seem generally pleased with the robustness of features and ease-of-use with the Zulutrade system. Remember, you can always try it out with a demo account before risking real money. Comes in 28 languages and allows trading of stocks, indices, and commodities in addition to currency and binary options.
Accounts: There is a single type of live account offered, which requires a $500 deposit to start trading. The demo account allows newbies to trade under live conditions with fake money while they develop strategies and learn the trading ropes.
Education: The most popular Forex brokers understand the value of offering tutorials in order to help new and seasoned traders increase their skills and chances to be successful in trading Forex. Zulutrade offers free participation in an active broker’s forum as well as several startup trading guides accessible as animated videos.
Free Signals: As anyone who has studied Forex for any length of time knows, it can be quite expensive to follow the signals of proven traders. Zulutrade has developed a method that allows you to copy successful Forex traders at no cost.
Hands Off Trading: A frequent difficulty with trying to trade currencies is the round-the-clock nature of the market. Zulutrade allows you to put your account on automatic. Trades will be executed without your intervention according to which signal providers you choose to follow.
Knowledge-Less Trading: While it’s almost always a good idea to know more rather than less when it comes to trading the markets, you theoretically could make extra money without having a darn bit of knowledge and/or insight into any financial market. It’s the ultimate side-hustle without the hustle.
Depending upon your perspective, the following might or might not be a big, waving, red flag. We don’t automatically assume that a complaint filed against a broker by the National Futures Association (NFA) means you should avoid that company like the plague, but it is worth knowing that Zulutrade and its CEO were the recipient of an action claiming the following in April 2016:
- Failure to maintain minimum net capital
- Failure to implement an Anti-Money Laundering program
- Failure to provide adequate supervision over employees, agents, and operations
We should reiterate that the amounts of money in question were small, though the overall charges are serious enough to theoretically result in temporary suspension or expulsion from the NFA. Zulutrade members or those interested in becoming one should do further research before committing money.
The Bottom Line
Zulutrade is a popular, easy-to-use social trading platform that seems to be poised to get even better – except for that pesky NFA complaint. Only time will tell how it ultimately plays out and what sort of effect it has on the company. Staying a member in good standing with the NFA is a pretty big deal. Here’s to hoping this otherwise solid Forex broker shows everything it did was aboveboard.