Low Risk, High Reward Trading Experiment

Wednesday September 20 at 4:30 ET

A second entry opportunity has just occurred:

Trade Signal #178B Sell GBP/USD at 1.8830<o></o>

<o></o>Stop is 1.8866<o></o>

<o></o>Target #1 is 1.8700

Risk is 39 pips

Reward is 127 pips

Reward : Risk Ratio is 3.2 to 1<o></o>

For research purposes only.

did your position GU get stopped out at 8873?

Yes, Kenari05. Our trade shorting GBP/USD was not strictly system compliant, because it was an attempt to enter a trade mid-trend with a major announcement impending. When we correctly enter a trend at the top or bottom, then there is no problem with announcement spikes. In this case we took a chance by entering the trade at a retracement top because we mis-counted the waves the day before and therefore missed the real top, and we were unlucky, as the U.S. PPI and housing data were poor, causing GBP/USD to spike up 96 pips, which triggered our stop. If we had been trading the news we would have profited from this news release, not been stopped out.

Here is a link to our trade analysis and our full commentary:

" Trade Signal #178A Sell GBP/USD at 1.8812 identified the top of the GBP/USD Wave 2 retracement with 1 pip accuracy. The price then fell to 1.8786, bounced up, and then down, and then a major announcement happened. This morning’s 8:30 ET data releases (see below) were disappointing for the USD, causing GBP/USD to spike up 96 pips to 1.8886, hitting our stop which was placed at 1.8843. (The spike on EUR/USD was not large enough to cause our stop to be hit on our short EUR/USD trade.)...."

http://www.forexfactory.com/forexfor...USD#post102610

do you think there will be a reversal at 148.17?

and yeh thank you for the great work u're doing

Thanks
Ahmed

Wednesday September 20 at 6:15 ET

You are most welcome. It is a pleasure to practise and learn. If it assists others, so much the better.
EUR/JPY has just retraced up to 148.88. This looks like a Wave 4 retracement. The lowest point reached was 148.25, which is a possible reversal point from the perspective of our system.

EUR/JPY will probably head down now towards 148.17, and possibly lower. Then it will reverse and do an upwards Wave.

thanks so much for your good effort...i like elliot waves but it really needs much of my time to study...i am glad you share your research...

its even better if you could catagorize any trade that you call for.... for example, low risk, medium risk, and high risk...so that people would know...especially during major news...the spike is too much i think...

Wednesday September 20 at 6:30 ET

Our last Trade Signal #175 as quoted below buying USD/JPY Friday September 15 at 10:30 ET had an obvious error in the targetting. We typed a target of 118.40, which is incorrect. The correct target according to our system is 118.18. The highest point reached was 118.28. So our system was successful in this trade, even though I made some kind of error - either in calculating the target or in typing.

When the price then fell 130 pips to 116.97, then it had completed a complex downwards corrective wave as it hit a 7 day trendline. This would have been the correct time to buy USD/JPY with a target at 118.50.

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Previous trade signal:

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.

I caution people not to trade our signals. We are improving, but we are still making frequent errors, and we are not able to give sufficient time to this task to optimise quality of signals. Also, my trading partner has been unavailable, which means that the work is only from one source, and confirmation from a second party is unavailable. We are generating too many signals to optimise quality. The purpose is to practise alot and to assess the attempts as we go - to see which trades worked and which didn't, and what the mistakes were when the trade didn't work - system failure or operator error.

If you are not able to assess the trade concepts independently employing another type of analysis, then you should not trade these signals. If I gave you ratings of reliability for each trade, and the performance of this trading sequence, then I would only encourage beginner traders to blindly trade these signals, which is not what I would want to happen.

If you like the concept of low risk, high reward trading, then study Elliott Wave Theory and other types of systems that permit these kinds of trades. Any system that gives one low risk, high reward trading opportunities has potential. Candlestick analysis, fibonacci analysis, and various types of pattern analysis may be helpful. We are using Elliott Wave, fibonacci methods, and a new kind of pattern analysis that is not explained quite the way we do it in any book that we know of, but since nothing is really new under the sun, aspects of it appear in dozens of books going back many, many years. The key is being able to identify threshold boundaries where a high likelihood of reversal leading to a large move is likely or possible.

Wednesday September 20 at 6:55 ET

New type of trading experiment. The concept here is to limit risk and maximise gain by entering with pinpoint precision at the bottom of a corrective wave. Since we missed what we think is the bottom of the USD/JPY trade at 116.97, we will try another technique:

Trade Signal #182 Buy USD/JPY at 117.29

Stop is 117.22

When price reaches 117.35, then move stop up to entry price ( 117.29 ).

Target is 118.50

Risk is 10 pips

Reward is 118 pips

Reward : Risk ratio is 11.8 to 1

For research purposes only.

Note: the price has declined to 117.23 so far, only 1 pip above our stop. I think we squeaked by this time, but this experience has reminded me that it is much easier to perform precision entries on EUR/USD compared to most other currencies, and that if I do try this again, then I should be extremely conservative about where I place the entry price and stop.
_____________________________________________

Previous trade signal:

USD/JPY update - trade up was a success for our system <hr style="color: rgb(209, 209, 225);" size="1"> Wednesday September 20 at 6:30 ET

Our last Trade Signal #175 as quoted below buying USD/JPY Friday September 15 at 10:30 ET had an obvious error in the targetting. We typed a target of 118.40, which is incorrect. The correct target according to our system is 118.18. The highest point reached was 118.28. So our system was successful in this trade, even though I made some kind of error - either in calculating the target or in typing.

When the price then fell 130 pips to 116.97, then it had completed a complex downwards corrective wave as it hit a 7 day trendline. This would have been the correct time to buy USD/JPY with a target at 118.50.

__________________________________________________

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.

how about your GU? stopped out again?

Wednesday September 20 at 15:30 ET

Volatility and directional bias from the FOMC rate comments at 2:15 ET caused the existing upwards trend on GBP/USD and EUR/USD to get a spiky boost, which may or may not be over yet. Our short trade on GBP/USD met our stop in the process.

<table class="tborder" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1">2:15pm</td> <td class="alt1" align="center">USD</td> <td class="alt1">Interest Rate Statement</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">5.25%</td> <td class="alt1" align="center">5.25%</td> <td class="alt1" align="center">5.25%</td> <td class="alt1" id="collapsecal_eventanalysis_2615" style="" align="center">
</td></tr></thead> </table>

FOMC: FED LEAVES RATES UNCHANGED AT 5.25%; INFLATION RISKS REMAIN

- core inflation readings have been elevated
- additional firming depends on the data
- decision was 10-1 with Lacker as lone dissenter again, preferring a 25bps increase
- inflation expectations are contained
- housing market is cooling
- economic growth moderation appears to be continuing
- reduced impetus from energy prices

We shorted GBP/USD at a lower level at 1.8830, based on a pattern that appeared to be complete. It subsequently rose to another step, and met an even more probable reversal point at 1.8923, which would have been a good place to enter a short trade.

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Previous trade signals:

2nd chance to enter Trade Signal #178B Sell GBP/USD at 1.8830 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Wednesday September 20 at 4:30 ET

A second entry opportunity has just occurred:
Trade Signal #178B Sell GBP/USD at 1.8830<o></o>
<o></o>Stop is 1.8866<o></o>
Target #1 is 1.8700
Risk is 39 pips
Reward is 127 pips
Reward : Risk Ratio is 3.2 to 1<o></o>

For research purposes only.

EUR/JPY update 15:30 ET September 20

In our last update we thought that EUR/JPY had completed its complex corrective upwards wave. However, it only completed wave "a" of an "abc" complex wave pattern. That pattern was completed almost for sure when the price rose to 149.24. The future should be primary downwards from here towards our targets.

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Previous update:

EUR/JPY update 6:00 ET September 20 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Wednesday September 20 at 6:15 ET

You are most welcome. It is a pleasure to practise and learn. If it assists others, so much the better.
EUR/JPY has just retraced up to 148.88. This looks like a Wave 4 retracement. The lowest point reached was 148.25, which is a possible reversal point from the perspective of our system.

EUR/JPY will probably head down now towards 148.17, and possibly lower. Then it will reverse and do an upwards Wave.

Dear Sister Curare,

I have spent hundreds of hours in dozens of posts over several months explaining what I am doing and why on this forum. To answer your question, please read these statements of mine. They are all true. You don't have to believe me. Assess my actions. They are consistent with my words.

itme

Wednesday September 20 at 16:30 ET

Since the last update on AUD/USD where we advised exiting our buy position at about .7525 for a small profit, this pair has risen to form an "abc" corrective wave pattern, topping out at .7543. This would have been a good place to enter a short position targeting 1.7400
________________________________________

Previous update and trade signal:

Wednesday September 20 at 3:00 ET

Exit Trade Signal #168 Buy AUD/USD at market price (which is approx. .7525)

Further study and contemplation of AUD/USD has lead us to conclude that the most likely Elliott Wave interpretation is different than the one that underlay our Trade Signal #168 Buy AUD/USD at .7514.

We had thought at the time that we were entering a buy position at the start of Wave 3 of a 5 wave upwards wave pattern. However, we now believe we entered the buy trade at the bottom of "Wave 4" and the start of "Wave 5" of an "a" upwards corrective wave. What followed was a rise of 53 pips up to the top of the "a" at .7567, then a decline to the bottom of "b" at a price of .7503, then a rise to .7573 which was the top of "c" , slightly higher than wave "a", and then a decline back down to .7504.

The price is generally expected now to decline further, so we advise exit of this trade at the market price of approximately .7525.

Wednesday September 20 at 16:30 ET

Since our last update on GBP/CHF this pair fell and rose a second time, forming a complex "abc" corrective wave as should have been expected. The recent high is 2.3629. Based on the latest information, the stop on the re-entry trade Trade Signal #173A Re-Entry Opportunity Sell GBP/CHF at 2.3600 should be raised to 2.3657
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Previous trade signals:

Re-Entry Opportunity Sell GBP/CHF at 2.3600 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message --> Tuesday September 19 at 4:45 ET

Since entering this trade at 2.3673 GBP/CHF descended 188 pips to 2.3485, then bounced up 115 pips in a corrective wave to 2.3600

Re-Entry Opportunity Sell GBP/CHF at 2.3600
Stop is 2.3636
Target #1 is 2.3210
Risk is 51 pips
Reward is 375 pips
Reward : Risk Ratio is 7.4 to 1

__________________________________________________ _________

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.

Wednesday September 20 at 17:00 ET

While we have been stopped out on our recent GBP/USD short trade, we are still holding our EUR/USD short trade from Monday September 18 at 2:00 ET . For those not already short EUR/USD, we expect this pair to rise to 1.2700 to 1.2710, which will afford a good re-entry opportunity for a trade down to 1.2555

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Previous comments and trade signal:

EUR/USD Update Monday September 18 17:00 ET

Last week we predicted a turnaround or reversal of the EUR/USD uptrend at 1.2750, which is what happened. However, due to problems counting the Elliott Wave on the one minute chart with a new system we have been learning, we doubted this conclusion. EUR/USD then descended 120 pips from the top of the swing wave at 1.2750 in a five wave set to 1.2630. On the upwards corrective wave my partner and I predicted a reversal point of about 1.2700, which is why I posted a prediction trade yesterday as quoted below. Now EUR/USD has risen to 1.2708. While I watched this I would have recommended in real time shorting this pair at this price ( 1.2708 ), with a stop at 1.2733 .

This shows the difference between a prediction trade and a pattern recognition trade. It is possible to enter at a more precise level and thus reduce the risk and increase the reward when the detailed pattern leading up to the entry opportunity has already been formed.

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Prediction trade signal:

Monday September 18 at 2:00 ET

Trade Signal #176 Sell EUR/USD at 126.97
Stop is 127.32
Target is 125.55
Risk is 37 pips
Reward is 141 pips
Reward : Risk Ratio is 3.8 to 1

For research purposes only.

Wednesday September 20 at 17:30 ET

Since our last GBP/JPY update on Thursday September 14, this huge moving cross pair descended to 220.20, and then rose recently to 221.93.

Based on the latest technical information we are still on target for a rise to a short entry opportunity at about 222.70, likely tomorrow September 21 at 15:00 ET

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Previous update:

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.

Wednesday September 20 at 20:30 ET

It is easier to identify the approximate top of a corrective Wave 2 than the top of a trend which is at the top (or bottom) of Wave 5. GBP/USD peaked out at 1.8924 this morning in the strong trend that the FOMC announcement volatility helped carry to its end. It then retraced down 60 pips to 1.8864 in a Wave 1 downtrend, and then went up in a Wave 2 corrective wave. We believe that 1.8895 may be at or near to the top of this corrective wave.

Trade Signal #183 Sell GBP/USD at 1.8895

Stop is 1.8921

Target #1 is 1.8700

Target #2 is 1.8580

Target #3 is 1.8500

Risk is 29 pips

Reward is 192 / 312 / 392 pips

Reward : Risk ratio is 6.6 / 10.7 / 13.5 to 1

For research purposes only.

Note: GBP/USD rose up to 1.8914, a little higher than our entry price, but lower than our stop. This looks like the precise top of this corrective wave.

Wednesday September 20 at 20:45 ET

Re-entry opportunity Trade Signal #176A Sell EUR/USD at 127.15

EUR/USD just rose as expected to 1.2715, which affords a good re-entry opportunity to sell EUR/USD at that price.

Stop is 1.2733

Target is 1.2555

Risk is 30 pips

Reward is 158 pips

Reward : Risk Ratio is 5.3 to 1

For research purposes only.
_____________________________________________________

Previous comment and trade signal:

We are still short EUR/USD <hr style="color: rgb(209, 209, 225);" size="1">Wednesday September 20 at 17:00 ET

While we have been stopped out on our recent GBP/USD short trade, we are still holding our EUR/USD short trade from Monday September 18 at 2:00 ET . For those not already short EUR/USD, we expect this pair to rise to 1.2700 to 1.2710, which will afford a good re-entry opportunity for a trade down to 1.2555
_______________________________________ _______

EUR/USD Update Monday September 18 17:00 ET

Last week we predicted a turnaround or reversal of the EUR/USD uptrend at 1.2750, which is what happened. However, due to problems counting the Elliott Wave on the one minute chart with a new system we have been learning, we doubted this conclusion. EUR/USD then descended 120 pips from the top of the swing wave at 1.2750 in a five wave set to 1.2630. On the upwards corrective wave my partner and I predicted a reversal point of about 1.2700, which is why I posted a prediction trade yesterday as quoted below. Now EUR/USD has risen to 1.2708. While I watched this I would have recommended in real time shorting this pair at this price ( 1.2708 ), with a stop at 1.2733 .

This shows the difference between a prediction trade and a pattern recognition trade. It is possible to enter at a more precise level and thus reduce the risk and increase the reward when the detailed pattern leading up to the entry opportunity has already been formed.

_____________________________________________

Prediction trade signal:

Monday September 18 at 2:00 ET

Trade Signal #176 Sell EUR/USD at 126.97
Stop is 127.32
Target is 125.55
Risk is 37 pips
Reward is 141 pips
Reward : Risk Ratio is 3.8 to 1

For research purposes only.

Wednesday September 20 at 22:00 ET

Upon careful inspection, it turns out that according to our system the correct stop on this short GBP/USD trade should be 1.8955. And there is always a likelihood that a pair will double top at the previous high, which was 1.8925. So the stop needs to be at least 15 pips higher than this price, which is 1.8940. The current high is 1.8923. Re-enter if necessary and raise stop to 1.8955 or higher. Same target as before.

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Previous trade signal:

Wednesday September 20 at 20:30 ET

It is easier to identify the approximate top of a corrective Wave 2 than the top of a trend which is at the top (or bottom) of Wave 5. GBP/USD peaked out at 1.8924 this morning in the strong trend that the FOMC announcement volatility helped carry to its end. It then retraced down 60 pips to 1.8864 in a Wave 1 downtrend, and then went up in a Wave 2 corrective wave. We believe that 1.8895 may be at or near to the top of this corrective wave.

Trade Signal #183 Sell GBP/USD at 1.8895
Stop is 1.8921
Target #1 is 1.8700
Target #2 is 1.8580
Target #3 is 1.8500
Risk is 29 pips
Reward is 192 / 312 / 392 pips
Reward : Risk ratio is 6.6 / 10.7 / 13.5 to 1

For research purposes only.