If it is not a secret, was your real trading successful?
It is a secret, of course. They say every true trader must "wash out" at least one deposit. I am an exception. I have never lost any real deposits. So far. No super-profits either, though. My trading is stable now. I am satisfied.

Your Expert Advisor is very peculiar. It would be interesting for many, in my opinion, to know more about its principles.
The peculiarity of my Expert Advisor consists in the fact that it does not use ANY technical indicators. I think it is the only one of the kind in the Championship. Its operation principles are described in my submission in details.

The Turtles principle - expansion of the current range - is used on small timeframes. Many people suppose this to have no prospects at all and even to be impossible. So I decided to check whether it is true or not, under conditions close to real ones. I wanted to test smaller intervals, but was frightened of the amount of orders. So this is a compromise between my curiosity and the server software feasibility.

Have you used WCR_N1 in the real trading?
No, I haven't. I decided to test the possibility to use the above principle, not on historical data as usual, but in the real-time mode, with all real life's delays and failures. The only thing unforeseen is disconnections at very important moments. But this is offset by pending orders that are placed on the server and do not depend on connection. That is that.

Why do you use pending orders?
Unfortunately, the most emotional, the highest points in my practice happened exactly when the movement had been estimated, the nearest marks had been visible, but there had been no possibility to place orders due to no connection to the dealing center. To exclude (or, at least, minimize) such situations, even if the dealing center cannot provide automated trading, but supports enough pending orders of different types, one can plot beautiful pictures and shadow out future events. This is what I was doing before I started using MetaTrader.

The most of today dealing centers allow placing of OCO-orders and even hedged orders. Thus, very complicated strategies can be implemented using pending orders on slow intervals (starting from 4-hour timeframes). The advantage of automated trading is, in my opinion, the sensitivity to all occurring events. I mean the events that cannot be processed by a human due to inertia of human thinking and the necessity to make some preliminary analyses. Of course, this needs good connection and a powerful server. And the power of the dealing center's server must be the higher the more powerful the clients' servers are and the better the automated trading opportunities are developed.

But even now, with not really good connection and not really good servers, orders, according to the MetaTrader conditions, are often executed before the corresponding price is shown in the chart. This means that a human will ALWAYS lose out to a pending order.

Placing orders for a short interval of 15 minutes is very interesting. Why did you use this specific interval?
It is the "ginger", which I would not like to reveal. I wrote about the short interval before. Actually, I would like to test how the principle of short intervals works. This can be realized with automated systems on larger intervals - just by placing orders for a day, for example. If the method is profitable, it is not really difficult to place orders once a day and gain the profits, is it? But if we are talking about short intervals, this means an absolutely other timetable, not to mention the necessity to watch the terminal all day. So, I was mostly interested in intervals starting from one hour and smaller.

Well, I could also place orders for the intervals of 5 minutes or even of one minute. But there are limitations for the order expiration in the most of the dealing centers. This means I would have to enable a module that would cancel orders at pre-defined intervals. I would not say that I do not have such a module, but it would significantly increase the server load. I am not alone here, so the sanctions may be applied…

You wrote that the largest volume of 5 lots was determined by the Championship Rules. Would you use larger volumes in the real trading?
In the real trading, the position volume is determined by the amount of the account deposit and by the stability level of the strategy. The position absolute volume in lots does not mean anything for me. Tell me what percent of the deposit it is and what the maximum drawdown is considered, then I will tell you whether I would trade with these volumes in real or not.

As far as I am concerned, the position volume can be various if I am sure that the dealing center I am trading with will not shut down together with my money invested. The most important thing is that this volume is possible with my deposit. All reasoning about risk levels and irrationality of the volumes concerns positions that are closed by margin call at the first rollback (not even turn) of the current trend.

Personally, what deposit percent would you risk?
30% at most, if the countermotion is up to 300 pips. I sometimes test some more risky versions, but for the real trading this is the limit.

You have only one losing position. How would you explain this? What were the Expert's test results?
The results were as follows: one losing position for 10 to 15 profitable ones (as tested on the GBP from the beginning of year 2006). This means, according to statistics, there will be one more losing trade soon. I do not believe in miracles.

Can you tell us what the largest drawdown of WCR_N1 is?
When tested on GBP during 10 months of this year with the parameters then used in the Championship, the maximal drawdown is 19399.45 (41.09%). This is for the net profit of 50766.16, i.e., 2 times and a half larger. I should repeat that this is with limitations and parameters of the Championship version. If the limitations for the maximal amount of lots per order would not exist, these values would be a bit higher.

One may call your Expert Advisor rather risky - Stop Loss is 230 points, Take Profit is 35 points. Why did you choose this specific ratio?
I also use trailing stop, though it is almost indistinguishable since it is only enabled when the profit is 30 pips. On some closed positions, one can notice that Stop Loss was moved to the open point. This means that the initial stop loss is placed to abandon the position if the trend turns adversely. Then the trailing stop and closing by trailing should be used. But testing showed that the largest profits can be gained with a fixed profit. So this ratio is a reasonable compromise between the risk aimed at maximizing the profits and the possibility to go on competing if the opening was unsuccessful. The ratio is what it is. This is how the GBP conducts on the Forex this year.

Some Participants use only one kind of stop orders. Do you think it is necessary to use both Stop Loss and Take Profit for stable and profitable trading? I think stop orders are absolutely necessary since nobody can predict the market behavior by 100 percent. By the way, we have a shining example of how it works when one tries to trade without stop losses. It is more complicated with TP. There are currencies that conduct in a very technical way. This means one can predict rather precisely where they will stop or turn. For such currencies, a fixed TP near this level would be helpful. For all other currencies, trailing stop would be more secure. The profit is smaller, but a part of it is always guaranteed. In this case, it is unnecessary to place a TP.

I have already mentioned connection disruptions above. All programs and trailing stops work on the client terminal. In the case of a connection disruption, they all are absolutely helpless. If there is a probability of such problems, in my opinion, it is better to place both stop orders. There can be more than two of them as you know.

The Championship Rules are being heavily discussed now. What is your opinion about this issue? I think that the organizers of the Championship have given equal rights to everybody, as well as even chances to win for the programs that meet these Rules. Every Participant could decide for him or herself whether to participate in the Championship under these conditions or not. Attempts of proposing to Organizers to correct or change Rules just because somebody thinks they are unfair or not related to the real trading, are for me demonstration of disregard towards Organizers and other Participants of the Championship. To my opinion, if you suppose the rules to be unacceptable, just organize your own championship with its own rules and possibility to change them. Then we will see how many people will want to participate in it and how it will be related to the real trading.

However, I cannot say that I am absolutely content with how the Championship is organized. For example, I suspected that something was wrong with the hardware or with the system as recently as on Friday evening. My position had been closed, but the Expert did not place new orders for some reason. I wrote to Organizers about it, but they decided this was my Expert's problem. If they had examined the equipment on Saturday, the server could have been repaired or replaced before Monday and we would not lose a day (Monday and a half of Tuesday, then the server finally recovered). But this is not so important.

To my opinion, the Championship has provided much information for both Organizers and Participants. This is why it is very helpful and should be held regularly. Its Rules can be changed, but it is very important that they are known in advance and equal for everybody.

By the way, Valeri, what did you personally get by the Championship? What are your personal conclusions?
First of all, this is a good opportunity for me to compare and estimate possibilities of the automated trading that does not depend on the human factor. As to me, I did not have it before. So the results can be rather unexpected.

Second, it is a really nice think tank where new ideas and implementation methods thereof can be exchanged. This is not to mention the opportunity to compare the success of different Expert Advisors at "unlike" behavior of the market, as well as their stability without human intervention.

Third, to my mind, all failures in other competitions could be externalized to human weak sides: tiredness, etc. Well, these are people who participate in the competition. The people can be ill or change their opinions of whether to go on participating. As to this Championship, I think an objective evaluation of your participation in form of an Expert Advisor and at a pre-defined interval is practically guaranteed.

And, finally, the last but not the least. It is an opportunity to check my own ideas and assumptions under conditions that a free of the developer's psychological impact at testing and of his or her desire to "improve" the results up to the full escape from reality. This is my opinion.

Do you think Zonker's Expert Advisor can win?
As I consider myself to belong to the "old school" and remember what the principle of "buy and hold" means for securities, I think it is very possible, yes. It was even in the testers on MetaStock a requirement to compare your tester to such a conduct.

Zonker, on the basis of the information available, estimate the market behavior model for the period of the Championship, selected the mainstream and implemented very intelligently and humorously this specific idea - buying with the maximal deposit followed by buying more with the profit gained, and holding the position up to the pre-defined profit level. After that, I suppose the Expert will not open positions AT ALL. The strategy is as genial as simple and, if it works, he will win, no doubt. The others will not just have enough time to gain such a profit gradually and with all necessary precautions.

But there is also a reverse of the coin: the Expert is very risky, if the market turns unexpectedly, it will soon be moved from leaders to outsiders. The probability to lose the entire deposit if the events go unfavorably is here higher than at sashken's Expert, in my opinion. As they say, "sink or swim". It is a very risky game, on the brink.

What, in your opinion, is the pledge of the Expert's stability?
The most stable Experts are those having logical processing of the most frequently occurring errors. By the way, the Championship has given a very nice statistics on such errors: both for refuses to open a position and for Experts' start.

Unfortunately, traders pay not very much attention to this: either they do not have time for this or they just do not mind consumption of the server resources in the dealing center. This is why some positions are not opened or they are opened at a wrong level. So, I suppose that the higher the standard of the Experts' programming culture is, the more stable they are.

Would you consider your Expert Advisor to be stable?
I developed it as super-stable based on my own experiences. This is why, when it had stopped working, I started to suspect the system problems to occur. The main reason to refuse opening my positions (except for technical problems) is the currency pair price change exactly at the moment of the order sending. Of course, this can be processed by setting the slippage or resending of the order at a new price. In this present Expert realization, I solve this problem by placing pending orders as you know.

There are less than 3 weeks left to the end of the competition. What Expert Advisor will win in the Championship, in your opinion: a stable one or that aimed, first of all, at profit making?
As you know this depends on only Forex behavior. If the euro trend continues, Zonker will win. If the market is flat with just little movements in both directions, stable Experts with gradual increasing of profits will win. But if the market is "jumpy", with unpredictable hops in both directions by more than 100 pips, my Expert will win.

Thank you, Valeri, for your interesting interview. We wish you all the best at the Championship and in the real trading.

Created: 2006.12.06  Author: MetaQuotes

To add comments, please, log in or register