Asirikuy and Signal Services: My Opinon on Third Party Signal Selling Using Asirikuy Systems

When people get into Asirikuy and start to look into ways to profit from our automated trading systems beyond their own capital it becomes evident to them that one way to do this is to sell signals to third parties via services like zulutrade. Certainly this seems to make sense in the first place as you can sell signals from sound systems to third parties which benefit from their execution without having to go through all the learning process themselves. However there are many things you should know about this pratice which make it a very less than ideal vehicle, the many problems it has and what I believe you should do if you intend to follow this route. On today’s post I will talk about Asirikuy and giving signals to third parties and my opinion on this matter.

Let me first be absolutely clear about the fact that I strongly believe that compensation that is not tied to performance is unethical. Services like Zulutrade reward you for volume traded and NOT for the profit your “customers” have made, therefore making the incentive not to generate profit for customers but to make customers trade more. I therefore believe that ANY sort of signal sharing which involves compensation that is not strictly and only related to performance is unethical as the manager is making money even if his or her clients lose money. The only ethical compensation for a money manager should be a percentage of profits made NOT any comissions on traded volumes as it represents an evident conflict of interests.

Now does this mean that I am against Asirikuy members selling Asirikuy system signals on third party services? Well there is nothing illegal about this (as long as Asirikuy contents are NOT shared) so the fact is that despite of my agreement or disagreement if an Asirikuy member wants to do this they will just do it (even if it was illegal there is no possible way in which we could realistically enforce this). However they should be aware of several problems this type of signal sharing has beyond the above noted ethical objection.

I see several problems with this form of signal sharing which makes the correct execution of the strategies extremely hard. First of all most of these signal services will allow the end-user to adjust their lot size to whatever value they which. Asirikuy systems rely very heavily on appropiate ATR adjusted money management to be successful and if a user modifies the lot size to a fixed value or to an adaptation different from that used by the system chances are the system will change from a profitable to a totally unprofitable one (see my Nov.2009 Currency Trader Magazine article to learn more about the strong effect of ATR money management on profitability). Some of these services will also pose no minimal capital requirement and will round lot sizes to the minimum if the intended calculation falls below this value, this can cause a HUGE risk increase for the signal receiver relative to the manager’s account which he or she is simply not aware of.

The second problem relates with the inconsistency in execution. The signal seller cannot ensure the user is correctly executing the strategy and they cannot guarantee that the user will have the psychological strength to remain within draw down periods. Even if lot sizes – which can rarely be executed properly – are executed as intended the user will still probably face problems related with both psychology and trade copying issues. If entries and/or exits are missed the user doesn’t know how to manage this issues which poses a huge problem for the guarantee of an overall reproduction of the manager’s accounts.

Another issue here relates to the non-disclosure of the usage of Asirikuy systems, if you’re an Asirikuy member and you intend to do this then you should disclose that you’re using Asirikuy systems and give users a full explanation of intended risk and profit targets and statistical characteristics of the setup you intend to trade. I believe that if you’re using these systems the end-user should be aware of this fact and should know exactly what the probable long term draw downs and WC scenarios should be. Not allowing users access to this information is – in my opinion – an unethical use of Asirikuy systems.

Long story short, I believe that this mode of execution is not in line with proper account management since you cannot guarantee many aspects of proper system execution and therefore the most probable thing is that most of the users who use your signals will lose money or reach results that are very different from yours. If you intend to do this then please make sure you disclose your usage of Asirikuy systems and also make sure you ONLY use services which allow adequate lot size escalation (so NO Zulutrade) and make SURE that the minimum lot size problem is not present – or be VERY EMPHATIC on minimal capital requirements – as otherwise users who join your account may face grave problems in the future due to unwanted risk escalation. Always WARN users that they need to have at least X capital and that messing with SL, closes or lot size values will – WITH CERTAINTY – lead to unprofitable long term results as these constitue random alternations of a mechanical strategy which damange its statistical characteristics.

In the end – as I have said before – I believe that the only good way to manage accounts – guaranteeing execution and benefiting only from user profits – is either through your direct handling of the user’s accounts through an LPOA or through the use of an investment vehicle like a PAMM account (which is our objective with the AIP). If you would like to learn more about Asirikuy and how you too can learn and understand our trading systems please consider joining Asirikuy.com, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach towards automated trading in general . I hope you enjoyed this article ! :o)

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One Response to “Asirikuy and Signal Services: My Opinon on Third Party Signal Selling Using Asirikuy Systems”

  1. emc says:

    Hola Daniel, como andas?

    I have just receive an e-mail from FXDD regarding their partneship with Currensee. I have found really interesting their concept, since the money manager will just receive compensation based on perfomance and will just be able to be become a trader using a live account.

    See more info below:

    http://forexmagnates.com/currensee-and-fxdd-working-together/

    PS: Felicitaciones por el blog, empezé a leer tus comentarios esta semana y espero en la proxima hacer parte del Asirikuy.com :-)

    Saludos,
    emc

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