Interview on Automated Trading Championship 2010 from 08.10.2010.
Berron, when did you start to develop Expert Advisors?
Well in 2004 I started playing around with manual trading (I say playing because that’s all it really was back then). It wasn’t until about 4 years ago, some months before Automated Trading Championship 2006, that I discovered MQL4. When I was trading manually I studied many forums and technical indicators but traded only demo accounts. Then I opened a micro account around 2006 with $300, took it down to $150, built it back up with a self developed EA to around $1600, and then blew it all thinking I was some sort of expert!
Was it a lesson for you?
Most definitely, it was an important lesson. A lot of literature you read will talk about the psychology of trading (especially greed and fear) and you won't really understand it and how you personally react to the emotions of trading until you have your own real money in the market place. I look upon it as I paid $300 for some valuable education. That’s not a bad price.
Was this loss a result of your EA activity or your manual trading?
90% that was from my EA activity and not having the time to monitor the EA closely enough. Mainly though I was watching my balance/equity diminish but saying to myself, “The market will bounce back in my favour, just be patient". It never bounced back, so I ran up some impressive losing positions and then I was margin called. I suppose if I had a better money management system and deployed better stop loss levels in the EA, this would have saved me from losing my account. But at the time I didn’t understand money management as much as I do now.
What money management system is implemented in your contesting Expert Advisor?
I think risk almost goes out the window in this competition especially
if you want to be on the front page. I learnt that from previous ATC. In
ATC2006 I had a profitable EA but it was too conservative so it went
unnoticed. For the ATC2010 the money management is aggressive. The EA
will soon have positions as big as the maximum permitted 15 lots. The EA
uses a simple calculation based on the free margin to deduce a lot size
What currency pairs do you usually trade and why did you choose the pair you did for the contest?
GBP/USD, EUR/USD, EUR/GBP usually. There was no real reason for going with EUR/USD for ATC2010. I studied the average daily range of a few currency pairs and from what I learnt plus the fact that the EUR/USD has the smallest spread compared to other currencies I decided to go with it for the competition. I only started developing the EA 2 weeks before the deadline (I was happy for the deadline extension) so the decision on what currency pair to use was made with a little haste. I did think it would be heavily used by other competitors in the ATC2010 too, so thought I'd jump on the bandwagon. With more development time I would have backtested the EA against other currency pairs, which is a lot easier to do with MetaTrader 5.
You’ve got a very good result for a 2-week EA. What would you have changed in your EA if you had had more time?
I'd definitely code in another strategy for other market conditions, experiment with other indicators/filters and possible make use of dynamic Stoploss/Takeprofit levels. At the moment the EA is set up to do well in trending market conditions (which fortunately the EURUSD is doing now). It employs some elementary rules such as let profits run and cut losses short. I think that was important for the new trading rules enforced by MetaTrader 5. However, if you have multiple strategies they could potentially contradict and with MetaTrader 5 you would have to chose a direction to take in the market where as with MetaTrader 4 you could simply hedge and have trades opened in opposite directions. So although due to these new rules it wouldn’t be as easy as in MT4 to add second and third strategies into an EA, I would have spent some time looking at this. In short, I would have spent time looking at the best way to have multiple strategies programmed into one EA for MetaTrader 5.
What do you think about your success on ATC? Is it down to luck or the result of your EA coding?
I've been very fortunate up until now. My EA will have more losing trades then winning trades so the fact the EA is off to a flying start is somewhat lucky yes. However, I do believe my EA will make a good profit which comes down to a good strategy and good coding. But it is very early days in the competition. Whether the EA is good enough to win is yet to be seen. Of course I'm hopeful. My EA is set up to trade well during trending markets where it will catch large swings. But by my own admission it is weak in other market conditions. So whether it comes out on the leader board in December will come down to how the EURUSD behaves in the next few weeks/months. I think the leader board will constantly change over the weeks and even some EAs currently showing a negative balance may get to feature on it. And the fact that there are very few competitors gives all involved more chance to win.
Do you think using multiple strategies in an EA is good?
Well I think it is important for an EA to be able to trade during all market conditions, and I'd say there are two main types of market: a trending market or a ranging market. For instance a Moving Average cross EA is great when the market is trending but you'll potentially see a lot of profit wiped out when the market has more of a flat/ranging period. If your EA can determine what the market condition is and employ a new strategy (e.g. MA cross EA goes against the trend when a market is ranging) or revised Stoploss/Takeprofit levels, it will pay dividends. Having an EA that can trade all market conditions means you will be able to use it for a long period of time. As opposed to having a one dimensional EA that may be great for a few months followed by a period of dismal performance that could lead to it ultimately being unprofitable.
What would you recommend using to determine whether it’s trend or flat?
That’s the Million dollar question! Or better yet 'how to determine when the market condition is about to change’? No one can predict the future (that I know of anyway) but there's an amazing amount of technical indicators out there and historic information. I think between indicators, understanding the fundamentals and historic behaviour of a currency pair and paying attention to price, you can get a picture of what the currency is doing or likely to do. But if determining and forecasting market state could be done with 100% accuracy, everyone and their dog would have great EAs.
What technical analysis tools do you use in your development?
I'm a fan of the ADX and Parabolic SAR and Pivot Points. I generally include these indicators in my development as I've had success with them in the past. This is not an exclusive list of indicators I use. I have a host of custom indicators I've collected from talented developers (mainly for MetaTrader 4) that I also employ in my development work.
On the other hand, I haven’t had much luck using the Ichimoku KinKo Hyo indicator. I think the idea of it is great. I've just never had any success with it. I'm probably just using it wrong. If I develop an EA that has a poor performance, I tend not to blame the indicators involved, rather the combination of indicators and my interpretation of an indicator’s signals.
Was it hard for you to move to MQL5?
It wasn't as swift as I would have liked it to be. Understanding MQL4 helped but there is a lot to learn and understand with MQL5. I read articles for about a week before I started coding my own EA. The resources/articles provided on the forum are good for guidance, but the user manual doesn't contain as many examples for functions as I would have liked to have seen. I think the reason there is a relatively low number of entries this year is attributed to the difficulties developers faced in using MQL5. Having exposure to Object Orientated design will benefit developers.
Did you study any other developments to create your own trading strategy?
For the actual idea/theory of the EA no. But in order to learn MQL5 I used the resources and examples available on the MQL5 community website. “Step-By-Step Guide to writing an Expert Advisor in MQL5 for Beginners” and “Writing an Expert Advisor Using the MQL5 Object-Oriented Programming Approach” were two articles I used a lot. Plus downloading indicators/EAs and studying the code in them helped.
Did you have any other language programming skills before you learnt MQL4 and MQL5?
Very little. I have a Mathematics with Computer Science degree. But the Computer Science element only made up a 3rd of the course and there were only a couple basic modules in coding (Java). So my program skills were by no means great. But the fact that I had previously had exposure to source code meant I didn't take one look and run when I discovered MQL4. I think a lot people mistakenly think programming is beyond them. I would suggest they give it a try before completely dismissing the idea of them writing an EA/Indicator.
Berron, thank you for the interview. Good luck to you!
Translated from Russian by MetaQuotes Software Corp.
Original article: https://www.mql5.com/ru/articles/530