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Wednesday, 04 December 2013 14:03

Interview with Damiano Petruzzella Featured

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This is an interview with Damiano Petruzzella, CEO and Founder of STARS ICF.

This interview was published on a Cyprus newspaper in the section concerning "Forex Experts" on 3 July 2013.

 

Q. How did you get started with Forex trading and what led you to become an Expert in your field?

A. I started trading in 1990, focusing on Italian and US stocks market. In 2007 I discovered the forex market and decided to study further and understanding how this market really works. I was very captived from this, because I realized that it is as close as it can get to the perfect market. So in 2008 I started manually trading this market and started developing EA.

Q. What is so good about Forex Robots and why did you decide to specialize in them?

A. I’m a IT advisor and have more than 20 years of experience as a Computer professional. So I find it quite natural to start thinking about how to automate my strategies. The more I study about strategies and forex robots the more I believe that if you can’t automate your strategy you don’t have a real proof of the characteristic and profitability of it.
Why your strategy is so good ? Does it really work? In which market conditions ? With what parameters ? What are the best pairs to use? What is the profit factor?
These are just some question that can easily be answered, when you have an automated strategy and utilize a Robot.

Q. Do all Robots that claim to be auto-traders actually really work and are they really profitable?

A. Absolutely not. I never use commercial EAs because I don’t believe that someone could sell or give out for free his profitable EA. I have tested hundreds of commercial and free EA’s in the past and never found something that really works. If you want to be profitable you must write your own strategy and build your own robot by outsourcing it to an expert.

Q. What are the 3 things that someone should know in order to successfully trade with EAs.

A.
1) Never use a black-box EA. You must always know what your EA does and why it does it.
2) Found the best setting for your robot according to the pair and time frame you want to trade.
3) Test your strategy in different market conditions and on different pairs and time frames. A strategy that really works must always be profitable. If it works only on one pair and not on others one, maybe there is something wrong.

Q. What characteristics should one look out for when choosing the Best Forex Robot?

A. You must understand what to expect from a strategy. Profict factor, drawdown, average profit, % of winning trades, are only some performance characteristics you should look for. Personally I stay away from grid and martingaling EA’s. The risk control is one of the most important characteristics.

Q. Where to look for the best Forex Robots on the market and which sources can they trust?

A. As I said I don’t believe in commercial and free EA’s. So trust only in yourself for finding a good strategy. Then find a good professional programmer that can help you write the code for building your strategy into a robot.

Q. Can we depend only on backtesting or should we request to see live tests of a Robot?

A. Backtesting is absolutely a necessary step, however also live testing is absolutely essential. I trade a live strategy only after a period of live demo testing that has performed well during the backtesting. If it does not pass this step there is something wrong.

Q. How much can we trust these results and what should we lookout for when interpreting them?

It is not a simple question to answer. It depends on your type of strategy. For example if you are trading a fast scalping strategy maybe it could perform well in backtesting and also in demo testing, but not in a real live environment. So this is a reason why I usually stay away from that kind of strategy.

Q. What is your opinion about Robots showing you proof of successful live trades that are not from the current period? For example a few months old.

There is always the risk of over optimization. A working robot must be robust and must prove itself to be profitable on the long run on different market conditions. For example if you have a trend follower strategy it could work good in a period of time in which the market is trending. But what happens if the market is ranging? You must have the proof that the strategy will not lose all of the profits gaines in the trending period.

Q. Top Forex Traders in the world can achieve a 30-50% accuracy. What do you have to say about Forex Robots that claim to have 90% accuracy? Is this even possible or is it just a marketing trick?

A. The % of accuracy depends of the strategy type. Typically a 90% accuracy strategy have tight TP and big SL. A 30-50% accuracy strategy have big TP and small SL. You must also look for other statistics and not only % accuracy to judge a strategy.

Q. What do you have to say about numerous Robots that claim unrealistic looking profits and have very small drawdowns?

A. Most of them are scam or simply do not work in a real market environment. There are some people that buy these products because they are attracted by these unrealistic profits and this is the reason why they are selling.

Q. What is the best way to test a Robot and figure out if it is for real?

A. The first step to follow is an accurate backtesting. Then a period of forward testing on real account. Only if it performs the same way as backtesting then I start a real account to test it using low risk. If performance remains as expected then I start to increase the risk level. The times of each step depends on the number of trades the strategy does. You have to test at least 100-200 trades for each step.

Q. Is there a certain time period that EAs can perform better and generate profits? (a few months, a couple of years?)

A. It depends from the strategy type and the number of trades for unit of time. I’ll try to explain better: if you are trading a trend follower strategy you must expect profit from a period of trending market and no or small losses in a period of ranging market. So you must wait until all the market type has coming.
The number of trades for unit of time is also a big factor to look for. If your strategy generates 500 trades per month and after the first month of trades it has not performed good then it is not working.

Q. Do Forex Robots need to be optimized on a continual basis to take into account changing market conditions? (Change EA settings, Risk Settings? etc and how can this be done?)

A. I think it doesn’t. When a robot is well optimized for working on a pair, then it is characterized for working in all market condition. If it is not, then the strategy is not working or the EA is over- optimized. The only exception to this rule is if you want to win a championship and want your EA to perform the best it can, but only for a short period of time.

Q. What are the pitfalls when choosing a Robot and how can one avoid them?

Never buy a black-box ! Test it the way I have told you. I personally do not believe in code written from other people. I always look inside the code and I want to understand the way it works.

Q. If you had one secret to give about Forex Robots what would that be?

A. The secret is to keep the things simple. The simpler the logic of the EA is, the simpler the way it works and the more chances it will have to work in the real environment.

Q. Some people might think that it all sounds too good to be true. Is there a catch?

A. When a robot seems too good to be true, most of the time it is a scam. Believe in me because I have tested hundreds of them. 18. Why would someone sell a Robot for 100 or even 1000 dollars if it could generate as much as it claims and not use it himself or sell it for a couple of millions? This is a really a smart question ! And also the answer is inside the question. If somebody have a Robot that could generate big profits, he won’t sell it. I’m really sure of that !

Q. In Forex professional Traders often suggest to keep things simple. When referring to Robots does the same not apply as well? The simpler the better?

Yes it is. A robot is simply a way to automate a manual trading strategy so it must respect the same rules of manual trading.

Q. Why should someone interested in trading with a Robot not choose from the countless free robots available and should they pay sometimes quite large amounts to get a Forex Robot?

A. Because a well written and profitable robot requires a lot of effort and work. So you must pay for it. Nobody works for free. The best way is to pay a professional programmer.

Q. Is it true as they say that 90% of the Robots will not make you money but only 5-10% can actually be successful?

A. Yes I think it is less than 1-2 %. I have seen a lot of strategies that seem to work on paper but when implemented on an automated robot they often perform poorly.

Q. Would you encourage beginner’s to pursue the ideal robot or perhaps better invest their time and money in acquiring the proper education and mindset and learn to trade themselves?

A. I can suggest staying away from every type of robot until you have well understood how they work. The forex market is not so easy. It is definitely not a heaven for beginners! You must invest a lot of time and money in acquiring the proper education and mindset to became a successful trader. Only then, can you start to look around for an automated strategy.

Q. Where can people find more information about your Ebook / EA etc?

I’m a professional MQL programmer with many years of experience. You can find information about me on my web site STARS ICF : www.mql.altervista.org

 

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