Leonid Velichkovski is using the same determination, curiosity, and artistic talent that made him a rock star in Russia in the early 90s to become a successful trader today. As part of the synth pop band Technologia, he released several albums, toured throughout Russia, and shot dozens of videos. Leonid played keyboards and was one of the two songwriters in the group. After several demanding years of touring and producing new material, the band slowly broke up.

About three years ago, Leonid got interested in trading. “I took trading classes with a very well known company. After that, I’ve been taking private lessons with Mr. A. Safin who was the author of a number of known trading systems. These systems are very effective and profitable. Mr. Safin taught me about financial markets and Forex. This got me very interested and excited about trading.”

“I had started trading real accounts several months after I took classes,” according to Leonid. Obviously, at the beginning I’ve been trading demo-accounts. After I gained a confidence in myself I turned to trade real money. But what I was taught in classes were ‘manual’ trading systems. In other words, you analyze the market using regular technical indicators and go through a complex process to make a decision about opening a position. In order to get an advanced understanding of what neural nets (NNs) are I took a class “Neural net applications in financial markets” taught at Moscow State University by NeuroProject (NeuroProject, Ltd is an authorized dealer of Ward Systems software in Russia). The class is led by Sergei Dolenko. Later I privately consulted with him.

“In order to get good understanding of neural nets I started with NeuroShell 2 and only then switched to NeuroShell Trader”, said Leonid. “NeuroShell 2 had helped me to understand how neural networks worked in general, the different types of nets and the nuances of training a network. NeuroShell 2 helped me a lot and I am glad that I started with it. After I switched to the Trader, it was much easier for me to understand how neural networks and the genetic optimizer work. I also learned a lot from technical support provided by Ward Systems. I even traveled to the United States for consulting from Steve Ward and Andrei Deviatov, who gave me a great deal of attention and assistance. On the other hand, even if you do not go to trading classes and just read the help file, ask questions through tech support and follow the rules, then you can also learn how to trade with NeuroShell. If you manage to understand and find a common language with the program, the NeuroShell Trader will do wonders for you!”

Leonid (right) during his visit to Ward Systems Group.

“There is a myth that you must be a neural net guru or a mathematician-programmer geek in order to use NeuroShell,” said Leonid. “As it turns out – not at all. Trading is mostly an art, just like song writing is an art. They have a lot in common – one needs to find non-trivial solutions. This is even truer when you use neural networks. Inputs in the neural net are just like notes in the song. In music, if you take a correct chord, a collection of notes, you’ll get a good sound. If you take random notes without thinking, it will not sound right. The same is true with neural networks. If you feed correct inputs to the net – it works well. If you take a random set of inputs – the net does not work. “

“If a song is long and boring – you don’t want to listen to it, continued Leonid. “If a song is too short then it passes through you and you don’t even notice it. This is similar to neural net training. If you make the training period too short, the net will not learn anything. If the training period is too long the net will over-learn. Very similar,” according to Leonid. He noted that building a good trading system is like writing a good song. “They both bring money.”

Leonid trades FOREX, a market which he describes as complex and with frequent rule changes. “FOREX is very interesting and causes you to make non-standard decisions. Only neural nets allow you to accurately predict the currency pair GBPJPY using two separate pairs, GBPUSD and USDJPY. The neural net finds rules very well. May be that’s because the GBPJPY pair movement is represented by the GBPUSD and USDJPY pairs.” He’s also going to try stock trading in the near future.

Leonid currently uses intraday bars that range from 1 minute to 1 hour. “But my current trading is inter-day; that is a position cannot be closed the same day it is entered, only the next day or the day after that. I don’t like using daily bars because trades are infrequent and therefore not very dynamic. You need to wait for a long time and I don’t like that. My normal trading pattern is to make 2-4 trades a week on 1-hour bars. In the future, I’d like to try 1 minute and 5 minute bars and do a true intraday trading.”

“I am a big fan of NeuroShell add-ons, I own all of them. I also like newer indicators such as Causal Singular Spectrum Analysis (CSSA) from NOXA, a very promising, high quality add-on. It is, so to speak, the 21st century add-on – no one has made anything even close to it. I also like NOXA’s Entropy Indicators – they are very good for building predictions. I like add-ons from Meyers Analytics and Bowfort. Bowfort has Bowfort Adaptive Indicators – they are all adaptive and work well on small time-frames. One needs to note Meyers Analytics’ “The Nth Order Fixed Memory Polynomial System” – it works well on FOREX markets. Recently Dennis (Meyers) has released a new add-on “The Adaptive N Cycle Goertzel-DFT System”. I’m studying it at the moment. I think it is very promising.”

“Obviously, I am not a “trading wizard”, I keep learning. But I am very satisfied with how NeuroShell trades my systems. The most important thing is to understand and feel NeuroShell. Each trading system requires an individual approach. A trader must feel it and trust it. Even most savvy traders make mistakes, and so do I. But making mistakes happens to me less and less often now. It is just that you need get used to the program and get a feel for it."

"As I said before, trading classes taught me about ‘manual' trading. This implies that the trader must posses high endurance, colossal patience, constant attention, and steel nerves in order to make timely and correct decisions about entering the market. This is not very simple. In the end, I understood that ‘manual’ trading is not for me. On the Internet, I ran across the so called ‘intellectual’ trading – the NeuroShell Trader. A trader gives up his right to make decisions to NeuroShell – thus liberating himself from such a nervous and difficult action. And by saving his nerve cells (which we all know do not regenerate), the trader prolongs his life which is not so unimportant in our difficult times!”

“My favorite tool in NeuroShell is the prediction capability. It works very well when you select the correct inputs. I also like using the Neural Indicators add-on as a part of trading strategies. Neural indicators do not predict anything, they just follow the market. They are especially good for straight pairs (currency to dollar). And the most important thing is the genetic optimizer in NeuroShell, which finds correct solutions much faster than a regular optimizer.”

Leonid says judging the success of a model is a very delicate and complex issue. “Each trading system has its own criterion of success, and there are more than one. First, look for a gradual rise with no significant bumps or drops in the system equity curve. Second, look for precise market entry signals, even if they are slightly premature. Third, have a small number of inputs to a prediction. And, most importantly, do not over-train and over-optimize!”