Low Risk, High Reward Trading Experiment

Thursday September 14 16:30 ET

The current price of GBP/JPY is 221.80.
Following our last GBP/JPY trade shorting this cross pair with a conservative target of 220.10, the price of this pair fell 274 pips further past our target to a low of 217.36, for a total downtrend size of 645 pips over 8 days, averaging about 80 pips per day.

GBP/JPY subsequently rose 472 pips over 5 days (over 90 pips per day) to a recent high of 222.08. It is now in a corrective downwards wave, which will probably be complex, and which could continue down to 221.45 or lower, which would be a possible entry point for a rise to a predicted target of 222.70 or higher (best guess for the reversal point is 223.00), depending on how clear the situation is at the time of the possible entry opportunity.

When GBP/JPY finishes with this larger uptrend at 222.70 or higher, it will present a good low risk : high reward trading opportunity down to 218.44 or lower, which offers a profit of about 450 pips.

Friday September 15 at 4:15 ET

Trade Signal #170 Sell USD/CHF at 1.2560

Stop is 1.2582

Target is 1.2300

Risk is 25 pips

Reward is 257 pips

Reward : Risk Ratio is 10.3 to 1

For research purposes only.

Friday September 15 at 4:15 ET

Trade Signal #171 Buy GBP/USD at 1.8835

Stop is 1.8813

Target is 1.8976

Risk is 25 pips

Reward is 136 pips

Reward : Risk Ratio is 5.4 to 1

For research purposes only.

Friday September 15 at 4:30 ET

Trade Signal #172 Buy EUR/USD at 1.2701

Stop is 1.2676

Target is 1.2760

Risk is 28 pips

Reward is 57 pips

Reward : Risk Ratio is 2.0 to 1

For research purposes only.

Friday September 15 at 4:45 ET

Trade Signal #173 Sell GBP/CHF at 2.3673

Stop is 2.3711

Target #1 is 2.3210

Risk is 53 pips

Reward is 448 pips

Reward : Risk Ratio is 8.5 to 1

For research purposes only.
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Friday September 15 at 5:00 ET

Trade Signal #174 Sell USD/CAD at 1.1200

Stop is 1.1222

Target #1 is 1.1115

Target #2 is 1.1088

Target #2 is 1.1015

Risk is 26 pips

Reward is 81 / 108 / 181 pips

Reward : Risk Ratio is 3.1 / 4.2 / 7.0 to 1

For research purposes only.
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Friday September 15 at 5:30 ET

GBP/JPY recently fell to 221.15, which would have been an excellent entry price for several reasons for a long trade with a target of 222.90 or higher (up to 223.70).

Trade Signal #175 Buy GBP/JPY at 221.15

Stop is 220.84

Target is 222.90

Risk is 40 pips

Reward is 166 pips

Reward: Risk Ratio is 4.1 to 1

For research purposes only.

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Previous comments:

Update on GBP/JPY on Thursday September 14 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Thursday September 14 16:30 ET

The current price of GBP/JPY is 221.80.

Following our last GBP/JPY trade shorting this cross pair with a conservative target of 220.10, the price of this pair fell 274 pips further past our target to a low of 217.36, for a total downtrend size of 645 pips over 8 days, averaging about 80 pips per day.

GBP/JPY subsequently rose 472 pips over 5 days (over 90 pips per day) to a recent high of 222.08. It is now in a corrective downwards wave, which will probably be complex, and which could continue down to 221.45 or lower, which would be a possible entry point for a rise to a predicted target of 222.70 or higher (best guess for the reversal point is 223.00), depending on how clear the situation is at the time of the possible entry opportunity.

When GBP/JPY finishes with this larger uptrend at 222.70 or higher, it will present a good low risk : high reward trading opportunity down to 218.44 or lower, which offers a profit of about 450 pips.

Friday September 15 at 5:45 ET

Since the long AUD/USD trade was entered yesterday at .7514 this pair went directly up to .7568 which was the top of Wave 1 of a five wave set, then descended in a complex corrective Wave 2 pattern to the current price of .7514 - a round trip from the bottom of a component Wave 4 to the top of a component Wave 5, then down to the bottom of the larger second corrective wave. This is another excellent entry point for what should be a strong Wave 3 upwards towards the first major bounce point at .7600 on the way up to .7700 and higher.
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Previous trade signal:

Thursday September 14 1:45 ET

Between September 5 and September 13 AUD/USD fell 3.1% or 238 pips from .7721 to .7483. It then rose 61 pips in a first upwards wave, then retraced 34 pips in a corrective wave. It should now proceed up towards its target of .7723 or higher, to complete the upwards trend which commenced June 28, 2006.

Trade Signal #168 buy AUD/USD at .7514
Stop is .7489
Target is .7723
Risk is 29 pips
Reward is 204 pips
Reward : Risk Ratio is 7.0 to 1

For research purposes only.

Friday September 15 at 6:00 ET

GBP/USD recently dropped to 1.8810, passing our stop by 3 pips. The stop on this trade was placed too close, considering that it is GBP/USD - the big mover. Considering the adjustment factor as well, the correct stop should now be 1.8798, 15 pips lower than the initial figure. We should still be in this trade.
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Friday September 15 at 4:15 ET

Trade Signal #171 Buy GBP/USD at 1.8835
Stop is 1.8813
Target is 1.8976
Risk is 25 pips
Reward is 136 pips
Reward : Risk Ratio is 5.4 to 1

For research purposes only.

Friday September 15 at 6:15 ET

For safety the stop on Trade Signal #170 Sell USD/CHF should be raised to 1.2603.

Note: USD/CHF just rose to 1.2578, which is the price our model projects as the most likely reversal point. Obviously, if we had been more carefull we would have placed the stop more than 4 pips above this point.
_____________________________________

Previous trade signal:

Friday September 15 at 4:15 ET
Trade Signal #170 Sell USD/CHF at 1.2560
Stop is 1.2582
Target is 1.2300
Risk is 25 pips
Reward is 257 pips
Reward : Risk Ratio is 10.3 to 1

For research purposes only.

Friday September 15 at 6:15 ET

Adjust entry point for Trade Signal #174 Sell USD/CAD to 1.1195

____________________________________________________

Previous trade signal:

Friday September 15 at 5:00 ET
Trade Signal #174 Sell USD/CAD at 1.1200
Stop is 1.1222
Target #1 is 1.1115
Target #2 is 1.1088
Target #2 is 1.1015
Risk is 26 pips
Reward is 81 / 108 / 181 pips
Reward : Risk Ratio is 3.1 / 4.2 / 7.0 to 1

For research purposes only.

Friday September 15 at 7:30 ET
We thought that EUR/USD might manage with its original stop, but no, it descended to 1.2674, 2 pips below this value. The stop adjustment procedure would have reduced the stop to 1.2667, however, so the trade scraped by. For safety the stop should be reduced to 1.2655. Our analytical model indicates that 1.2665 is a probable reversal point.
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Friday September 15 at 4:30 ET
Trade Signal #172 Buy EUR/USD at 1.2701
Stop is 1.2676
Target is 1.2760
Risk is 28 pips
Reward is 57 pips
Reward : Risk Ratio is 2.0 to 1

For research purposes only.

Friday September 15 at 8:00 ET

GBP/USD has recently dropped to 1.8799, only one pip above our previous stop. The stop on TS#171 - Buy GBP/USD at 1.8835 should be adjusted again to 1.8786, based on the current information. We are not chasing this trade, but responding to the Elliott Wave pattern and other information as it unfolds.
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Previous trade signals:

Adjust stop Trade Signal #171 Buy GBP/USD at 1.8835 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Friday September 15 at 6:00 ET

GBP/USD recently dropped to 1.8810, passing our stop by 3 pips. The stop on this trade was placed too close, considering that it is GBP/USD - the big mover. Considering the adjustment factor as well, the correct stop should now be 1.8798, 15 pips lower than the initial figure. We should still be in this trade.
_______________________________________

Friday September 15 at 4:15 ET

Trade Signal #171 Buy GBP/USD at 1.8835
Stop is 1.8813
Target is 1.8976
Risk is 25 pips
Reward is 136 pips
Reward : Risk Ratio is 5.4 to 1

For research purposes only.

Friday September 15 at 8:00 ET

According to our analysis, USD/CHF is in the last (fifth) minor upwards wave, and should reverse its upwards direction at or about 1.2600 - 1.2610. Therefore adjust stop to 1.2616 from the current stop of 1.2603.

According to our predictive model, 1.2578 and 1.2585 were likely reversal points, and if the price proceeded past those values, then 1.2597 is the next likely reversal point. After that comes 1.2606, which is actually a high probability reversal point. We have learnt that an overshoot factor of about 10 pips must also be factored in.

After studying this situation in greater depth, we should have waited longer and risked missing out on the trade, or placed the stop above 1.2610 from the start.
_____________________________________________

Previous trade signals:

Friday September 15 at 6:15 ET

For safety the stop on Trade Signal #170 Sell USD/CHF should be raised to 1.2603.

Note: USD/CHF just rose to 1.2578, which is the price our model projects as the most likely reversal point. Obviously, if we had been more carefull we would have placed the stop more than 4 pips above this point.
_____________________________________

Friday September 15 at 4:15 ET
Trade Signal #170 Sell USD/CHF at 1.2560
Stop is 1.2582
Target is 1.2300
Risk is 25 pips
Reward is 257 pips
Reward : Risk Ratio is 10.3 to 1

For research purposes only.

Friday September 15 at 9:00 ET

We did a carefull analysis yesterday, and concluded the following information: "If GBP/USD falls as low as 1.8815, then we should take a long position and trade it up to a target of 1.8955 to 1.9000, keeping in mind that the current downwards corrective wave could be a complex wave.".

The above says that we should not be surprised if GBP/USD descends to 1.8815, which would be a good time to go long. We forgot this and got wrapped up in the minutae of the Elliott Wave analysis, and didn't take advantage of the orientation our other analytical model provided. As a consequence of this mistake, we entered our long trade at the bottom of the first component wave, and had to endure the next two impulse waves instead of recognising the first five wave structure as a component wave of a larger downwards five wave structure.

Not only that, but there was a potent announcement that we failed to heed, which added a dose of virulent volatility to the market at the exact wrong time from our perspective:

<table class="tborder" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1">9:45am</td> <td class="alt1" align="center">USD</td> <td class="alt1">Consumer Sentiment (p)</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">84.4</td> <td class="alt1" align="center">84.0</td> <td class="alt1" align="center">82.0</td></tr></thead> </table>

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Quote:

"Thursday September 14 13:00 ET

GBP/USD rose 315 pips since September 11, from 1.8603 to an interim high somewhat higher than expected (the top of our expected range was 1.8900), to a recent high of 1.8918 so far, hitting our stop at 1.8891. The current expected top is 1.8955. We advise exiting any short GBP/USD positions at the current price of 1.8880 or lower, and re-enter at or above 1.8940. If GBP/USD falls as low as 1.8815, then we should take a long position and trade it up to a target of 1.8955 to 1.9000, keeping in mind that the current downwards corrective wave could be a complex wave.

We should watch how the next movements play themselves out before commiting ourselves to a trade concept, because it is very possible for GBP/USD to go down to 1.8815 before reversing and later up to 1.9030 and even higher before reversing again."

Friday September 15 at 10:30 ET

In accordance with the following quoted analysis we did yesterday, and considering a clear Elliott Wave completion pattern just formed, we therefore find that our system gives us a buy at 117.30 for USD/JPY.

Trade Signal #175 Buy USD/JPY at 117.30

Stop is 117.06

Target is 118.40

Risk is 26 pips

Reward is 136 pips

Reward : Risk Ratio is 5.2 to 1

For research purposes only.

_______________________________________________________

Previous analysis:

Thursday September 14 14:00 ET

Although our trading model identified the point of 118.13 as a likely trend reversal point on USD/JPY, we only noticed this after the fact. We hoped for a rise to close to this level, to achieve a mediocre trade opportunity by trading down the "c" wave of this corrective trend. Careful inspection indicates that the top of the "c" wave occured at 1:20 ET on September 13 when USD/JPY rose to 118.00. This would have offered a fair low risk: high reward trade opportunity. However, we missed this opportunity.

Since then USD/JPY has fallen 70 pips to an interim low of 117.31. Our predicted low for this corrective trend is between 117.00 and 117.20, which will present a good opportunity to trade up the next impulse wave towards a target at about 118.40.

Yesterday September 14 at 13:30 ET we expressed this opinion about EUR/USD:

"Exit Trade Signal #170 Sell EUR/USD at 1.2720 <hr style="color: rgb(209, 209, 225);" size="1"><!-- / icon and title --><!-- message --> So far EUR/USD has risen to 1.2750, which could be the ultimate high as predicted yesterday, but according to the latest information there is likely to be another step up. The trade signal #170 shorting EUR/USD entered at 1.2720 appears to be somewhat at risk (the stop at 1.2773 is somewhat vulnerable). Based on the latest information, we advise exiting this trade at the current price of 1.2730 (or lower) for a small loss, and re-enter at about 1.2755 to 1.2765, with a stop above 1.2800, or else simply raise the stop to 1.2802"
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The day before, on Wednesday September 13, we expressed this opinion, based on analysis using our two models:

"Wednesday September 13 11:00 ET

EUR/USD may or may not have fulfilled our system criteria for shorting it when it met the price of 1.2734 at 8:30 ET yesterday morning, following our last prediction. At first we thought it had fulfilled our entry criteria, but upon more careful study, we believe that it may rise one more time to about 1.2750 as previously expected. It very nearly completed our criteria on the Elliott Wave pattern, but seems to have been short one step. On the one hour chart it looks fine, but on the one minute chart it seems to have "rounded off a corner". However, we believe that on some occassions the trend can reverse with one less than a complete set on a one minute perspective.

On our second model we had achieved a potential reversal point, but not a strong potential. A rise to 1.2750 would be much preferable. So we will wait and see, and learn from the next move. A short trade with a stop at about 1.2766 is likely to succeed. The entry point is still in question, but if it rises again to 1.2750, as it well could, then we would have an excellent trade opportunity.

Target is 1.2580"

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After studying the pattern for 24 hours and discussing EUR/USD with some of my colleagues, I believe that I miscounted the waves when it rose to 1.2750 as expected, but I did not recognise the completed five wave set on the one minute chart. Everything else was perfect, except for that concern, for a short at 1.2750. Now I believe that EUR/USD not only met our expected target, but fulfilled a complete 5 wave pattern when it reached 1.2750 yesterday, and did not leave off one minor wave as I thought might be possible. The trade we entered earlier shorting EUR/USD at 1.2720 with a stop quite a bit higher, though premature in consideration of the fact that our expected target had a strong likelihood of being met, nevertheless had merit because the stop was in a safe place up at 1.2773.

A simple error in mis-counting the Elliott Waves on the one minute chart gave rise to two errors - doubting a perfectly calculated if slightly prematurely entered trade shorting EUR/USD, and all the difficulty this morning trying to go long on EUR/USD and GBP/USD (and short on USD/CHF) while they were happily galavanting down on an impulsive journey towards a far off target, in the expectation that they had to rise again to a new high to finish their Elliott Wave five part journey.

itme,

Your thread is fascinating. (I also have enjoyed reading your other thread...$7.00 to $7 trillion in 10 days...LOL)

Is it possible for you to give a quick and simple summary of your 170 trades to date.

An example format would be:

Trade number / Currency pair / Pips won or lost

As stated above, I have found both of your threads interesting.

Good luck and good trading



Jacko

Thanks for the question, Jacko, but it is very problematic.

First of all, you have apparently missed the entire point of the thread, which is that measuring performance in pips is illogical. Performance of a trading system should be based on reward : risk ratio, win : loss ratio, frequency of trade opportunities, and distribution of losses.

Secondly, you have missed the other point of the thread, which is that the trades presented are generated for the sole purpose of experimenting and evolving a system that can perform well. They are not the record of a singular, fixed trading system. Furthermore, most of the trade signals were, due to lack of familiarity, haste, fatigue, carelessness, etc., and various other causes of operator error, grossly non-compliant with basic elements of the analytical models which we are in the process of learning and familiarizing ourselves with.

To measure the performance of this thread would thus be like measuring the performance of a scientist in the laboratory who is performing experiments to find out about things of which he or she has only rudimentary knowledge, or to measure the performance of a golfer on the driving range while he or she is being coached and his or her swing is being adjusted. The results would be highly misleading, if they were used as an indication of the potential of the scientist or the golfer when doing their best after they had finished their research, training and practise.

Hi Hitme,


Please include charts explaining how your advanced Elliott Waveshave been derived.

Thank you.


4X