Interview with Li Fang (ATC 2011)

Interview on Automated Trading Championship 2011 from 16.12.2011.

On the seventh week of the Championship, Li Fang's Expert Advisor (lf8749) set a new record - it earned over $100,000 in 10 trades. This successful series helped the Expert Advisor to stay at the very top of the Automated Trading Championship 2011 rating for two weeks. In this interview we tried to find out the secret of Li Fang's success.

Tell us please about yourself and your experience in trading.

Considering education, I have a bachelor’s degree in environmental engineering, but I like to study theoretical physics, especially quantum mechanics. I started trading in FOREX in 2007, it started from an advertisement - one of the broker’s clients in 11 days has increased his account 30 times: from 50000 to 1500000 (in CNY).

But when I started the first month of trading, but also to my account from $500 to do the $3500, but soon I lost them and also felt from the enormous risk of FOREX margin trading.

Can quantum mechanics be applied to financial markets?

No, I do not think the principles of quantum mechanics can be used directly on the exchange. But it can draw on research methods. Single elementary particle in quantum mechanics cannot describe the law of motion, which makes me feel that in FOREX market research does not make sense.

However, the movement of a group of elementary particles exists. As foreign exchange trading, the price will always comply with the final location of the golden rule. For example, as the price of foreign exchange movements in the moment do not care, but focus on the overall market's direction of motion.

You have participated in ATC 2010, but this time the result much more impressive. Tell us please about your Expert Advisor.

I used the Fibonacci rule to determine the trading signals, the take profit and stop loss, the parameters optimized on historical data from January to August 2011. The reason of bad results of last year's championship because there was a programming error.

Last year I found my programming error in the game after the start of this year to prepare. This strategy can achieve good results; in fact, I started thinking about FOREX trading on this idea for a long time, but this year I found the better implementation. Of course, fortune is also important.

To find the Fibonacci levels, you use the local High/Lows?

Originally, I planned to use neural networks to determine the best lowest and highest points, but because lack of time I used the local High and Lows.

Could you please tell us about trading signals?

If the market returns to the Fibonacci levels, I think it’s time to sell, if it is a breakthrough the Fibonacci levels, I think it’s time to buy.

Fig. 1. Signal to buy

Fig. 2. Signal to sell

How many parameters in your Expert Advisor?

My EA has 3 parameters: Take Profit, Stop Loss and another one used for determine the local High/Lows.

What do you think about Strategy Tester in MetaTrader 5?

I have not used other optimization tools, so hard to say good or bad. The only thing - it running slow, other are pretty good.

What about money management?

I am not good in this field, I used orders with a fixed percentage margin.

What do you think about the multi-currency Expert Advisors?

Sometimes the market is only USD and non-USD, this time, multi-currency Expert Advisor is not necessarily good. In other times, multi-currency EA may work with relatively low risk.

The benefit of the multi-currency EA is that the volume can be more than a single currency EA, this is also very important to the ATC’s final.

What is the weak point of your Expert Advisor?

For example, back and forth in time near the Fibonacci levels and the prices upward, this time the highs and lows is not accurate enough. My Expert Advisor most efficient in strong trend.

The stop loss and take profit prices also depend on Fibonacci?

No, it is optimized using historical data obtained. But the optimal results are somewhat correlated with Fibonacci rules.

Are you satisfied the work of your Expert Advisor?

Satisfied, but as I just said a few weaknesses, also needs to be improved, and I have to improve, at least  for the substantial upward market conditions, instability can be avoided.

Do you have hobby, what do you like besides trading?

Nothing special hobbies, sleeping, watching movies. Also I like trekking, but it need money and time, not often I have the opportunity - in addition to trading, I also need to negotiate my environmental business; I do not have much free time.

Do you think this Championship has been useful for you?

In addition to test my strategy, at Championship we can learn useful things from the other participants. For example, the strategies of y999 and Tim. I used a strategy much like Tim, and this time I saw the EA achieved good results. I think I will re-consider the strategy.

The ATC 2011 will finish after two weeks, how do you think, who will win?

This really hard to say, there never been a way to predict the market, and each EA has a weakness, so the results cannot be predicted, but I think TIM probably will be at the top three in the final, I also have a chance.

If you win, what you would like to do with the money?

Not planned, but celebrate with friends is certainly needed, of course, some of money will be used for trading at FOREX with my own EA.

Thank you for the interview, good luck!