Drazen Ziskovic from Croatia uses an Expert Advisor based on two main principles. The first principle is time. The second principle considers patterns, price volatility and many other things. Drazen uses a non-standard money-management method. "My lot size calculation is simple, based on leverage – AccountBalance()*Leverage/100K".
Drazen, your Expert Advisor is now stably advancing. Let’s speak about it. You write in your EA description that the first condition for opening a trade is time. What time is meant?
Well, my EA is based on two main principles. The first principle is time. Time principle means fixed trade duration and a trade direction dependent on the current active session. The second principle is based on chart patterns, price volatility, oversold/overbought market conditions, etc.
Your approach of checking the market 6 times a day is quite interesting. Could you tell us what this method results in?
It results in good correlation between forward and backward testing results, and it plays an important role in reducing the maximal drawdown.
What was the maximal drawdown at testing?
The maximal drawdown was around 240 pips I think. It’s over the period from 01.01.2001 to 06.01.2007.
What method to manage the trade size do you use?
Concerning lot size calculation and money-management, my method is a little different from the standard money-management methods, in which you risk a certain percentage of your account balance in every trade. My lot size calculation is simple, based on leverage – AccountBalance()*Leverage/100K. For the Automated Trading Championship 2007 I use an aggressive money-management. So the leverage value is 35.
It is floating in your contesting EA. Do you use this method in your real trading?
Yes, sometimes I do. But I am a discretionary trader, so I also change my money-management methods according to market conditions.
You use an aggressive money-management strategy in the Championship. What about real trading?
This is too aggressive for the real trading. My leverage in real trading does not exceed 1:15. But it was different at the beginning of my trading career. When I started trading currency, it was an extremely daunting task for me, because I had no experience in this filed and I was aware of the fact that 95% of traders lost money in the Forex market. Like every other beginner, I went through characteristic learning cycle in my trading journey.
At the beginning, I took lots of trades and lots of risks with no proper money-management at all. When I started trading, only two weeks passed before my entire account was wiped out. Over the next two and a half years of trading this happened eight times more. During this time I constantly changed trading methods never sticking to one long enough to actually see if it does work. Fortunately, that time has passed and today my trading style is completely different.
Money management is one of the most important criteria for successful trading. What is an effective money-management technique, in your opinion?
Well...setting the maximum amount of capital that you’re pleased to lose on any one trade is definitely the first step towards effective money-management. There’s no doubt that weak money-management can be your worst enemy when trading. According to the statistics, the majority of traders lose money.
On the other hand, if you trade with the system where all your trades have equal risk and profit opportunities, all your trades have a 50/50 chance of winning. So, theoretically every trader starts with the 50% chance (little less because of the spread) of wining, but still 95% of traders lose money. This is because of weak money management.
Some of your positions are not closed by stop orders. What closing mechanisms do you use?
I use fixed StopLoss and TakeProfit levels. For high volatility sessions (European and U.S.) StopLoss is placed at the level of 31, 34, 40 and 46 points and TP at the level of 61, 99, 150, 160 points. For the low volatility periods (prior to and the Asian session) SL is placed at the level of 49 and 54 points and TP at the level of 20 and 42 points. These are the distances that give the best results according to the long-term backward test (from 2001).
If StopLoss or TakeProfit orders are not activated, trade duration is always fixed regardless of market conditions. Trade opened at 8:00 or 11:00 (GMT) will be closed at 12:55. Trade opened at 13:00 or 15:00 will be closed at 22:55(20:55 at Friday). And finally, trade opened at 23:00 will be closed at 02:55 and trade opened at 03:00 will be closed at 7:55. We have 24 hour cycle – Short/Long trade exited – Long/Short trade opened. So, my closing mechanisms are based on time.
Tell us, please, how your Expert Advisor decides about whether to open a Buy or a Sell position.
Beside the market conditions, trade direction depends also on the current active session. Prior to and during the European session - Sell EURUSD, prior to and during the U.S. session - Buy EURUSD, prior to the Asian session – Sell EURUSD and during the Asian session Buy EURUSD. Second principle for trade opening is based, like I said before, on chart patterns, price volatility, oversold/overbought market conditions... But this is a secret so I can’t tell you further.
How would you estimate the risk level of your EA?
It is a high risk level. I, like many other participants, decided to maximize risk in order to have better chance of winning.
Why did you decide not to use indicators?
When I was writing my first Expert Advisors, I used indicators built in MetaTrader, but I was not satisfied with the results. In the Expert Advisor that I enclosed to ATC 2007, I used a completely different approach without any indicator.
Does the EA trade with the trend or against it?
It does not matter, if the trend is on or not, because my Expert Advisor is time based and is designed for all market conditions.
What were the test results with CircleFx_v2.0?
Total net profit was 193K, drawdown 14%, Profit Factor 1.84 and total trades - 879.
In general, do you use any analytical tools? Which ones are your favorite and which ones do you consider to be the most effective?
I use candlestick charting technique, Fibonacci tool and all sorts of high–probability chart formation like Head and shoulders, Symmetrical triangles, Rectangles etc. I am also studying fundamental information. None of these tools I consider to be the super effective, but they are good supplements for my discretionary trading approach.
Stavros Lambouris is the CEO International for HYCM, a provider of online FX and CFD trading services to retail and institutional investors...
Alexander Smirnov, the Head of the Department of Control and Auditing in Larson&Holz IT Ltd, and Georgiy Pavlov...
"We don't need no regulation. We don't need no Fed control," opined Jamie Dimon, not too long ago…hah…this kind of reminds me about the opening lines to Pink Floyd’s classic album, Brick in the Wall...
Just over a year ago, in fact in January last year – Bob Diamond, the American citizen CEO Barclays Bank, and the UK’s highest paid banker said, in London “It was time to stop bashing the bankers,” during a grilling session in front of a UK Select Committee of MP’s...
Author, analyst and trader Jack Schwager discusses what separates great traders...
This options trader and philosopher bets against the crowd. He explains why traders continue to underestimate the role of randomness in the markets and how betting on the possibility of rare events provides an edge...
Martin Pring has performed extensive pattern and indicator analysis over the years...
Interview with FXCM's February 2011 King of the Micro contest winner: Mr. Tommaso Battista from Italy with an amazing 693.44% gain on his micro trading account...
|7||Fort Financial Services||73%|