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I’ve visited a few sites that claim they don’t charge any money and only increase the spread by a mere 1 pip, which doesn’t even make a difference at the end of the day. Zulutrade is an example of such a site and I though I’d take the time to try and explain to people how much is 1 pip.

I took one of the leading signal providers on Zulutrade. The photos shows one of their top 20 strategies there. I looked at the summary of that strategy.

As you can see, this strategy made 296 pips and has executed 141 trades. This means that if you pay 1 pip for every trade, you would have made only 155 pips on this strategy (296 minus the 141 pips that would have paid for per trade). That is about 50% of the reported performance. So in this specific example, 1 pip equates to 50% of the gain you could have made. I would say that’s pretty expensive, not to mention the same 144 pips would have been paid if the strategy had lost you money.

The big problem of charging traders with a spread increase is that you are not only defining a pricing structure that is not properly defined, but you are also creating a motivation of the signal provider to trade more often as opposed to incentivize them for successful (and profitable) trading.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.