Low Risk, High Reward Trading Experiment

Monday October 2, 2006 at 13:30 ET

FXAsia, you were correct in the following statement you made on Friday September 29:

" Wave 5???? <hr style="color: rgb(209, 209, 225);" size="1">Would someone like to confirm if todays low of 1.2637 is the completion of wave 5??? For a while I thought it was just completing wave B of a abc retracement, but after further data following todays move it looks as if that is a completion of wave 5....so I entered into a buy at 1.2650 to ride the abc retracement, with a target of 1.2793 for its completion. Thanks!!!

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According to our system, the most likely reversal point for this corrective wave is about 1.2774, which would be a good re-entry point to short EUR/USD with a target of about 1.2575. The current price of EUR/USD is 1.2750

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Previous trade signal and predictions:

EUR/USD prediction as of Wednesday September 27 at 3:00 ET

We stated at 11:00 ET yesterday morning something that turned out to be both "precise and correct":

"(By the way, I believe that EUR/USD just hit the bottom of its current wave at 1.2661, and is due for a fairly large "abc" corrective wave. I studied the 30 year chart, the ten year chart, the 40 day chart, the 30 day chart, the five day chart, the one day chart, and the tick chart to arrive at that conclusion, which I believe is both precise and correct.)"

We earlier predicted a reversal into an upwards "abc" bounce wave "at 1.2677, 1.2660, or 1.2630". The reversal point was, in fact, exactly 1.2661.

We believe that EUR/USD has now completed the "ab" part of the upwards corrective wave, and is due now to ascend to between 1.2700 and 1.2747, after which it will reverse direction and proceed down to about 1.2600 or lower.
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Possible exit targets for short EUR/USD trade <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Tuesday September 26 at 6:30 ET

Depending on the strength of the EUR/USD downtrend, and the results of the data releases at 10:00 ET this morning, EUR/USD could do a major bounce upwards starting at 1.2677, 1.2660, or 1.2630. We advise exiting at one of these places and waiting to enter another short trade after a sizeable "abc" corrective wave pattern is finished.
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Friday September 22 at 4:30 ET

Trade Signal #176B Sell EUR/USD at 1.2830
Stop is 1.2851
Target #1 is 1.2600
Risk is 23 pips
Reward is 228 pips
Reward : Risk Ratio is 9.9 to 1

For research purposes only.

Hi Itme,
I'm glad to join this thread. Eur/jpy has been at around 149.80/90 for a few days. The current price is at 149.90. What do you reckon in this pair, please? Regards.

Hi Ploy001,

Welcome to this thread. Try to read some of the editorials I have interspersed between the trading signals throughout the thread if you are curious about our process and methodology. I am not revealing many details, but I have discussed several important general aspects of low risk / high reward trading, the mathematics behind it, and the process we are undergoing to develop this system. I started using Elliott Wave and another original system, and have added announcement trading based on the work of Thomas Yeoman, and my own observations of the interactions of impactful announcements and Elliott Waves.

You said, "I'm glad to join this thread. Eur/jpy has been at around 149.80/90 for a few days. The current price is at 149.90. What do you reckon in this pair, please? Regards."

Our system indicates that the most likely reversal point for the current upwards trend is about 150.45, after which EUR/JPY will reverse and decline precipitously towards about 147.50, and possibly lower.

That's the ride we wouldn't wanna miss...

Tuesday October 3 at 1:30 ET

We exited our trade buying CAD/JPY on Wednesday September 27 at a conservative target of 105.80. Our trend reversal system gave us 106.15 as the most likely reversal point, and the actual high value reached was 106.26, only 11 pips higher.

When we exited our buy trade, we still did not clearly see an unequivical "abc" upwards Elliott Wave pattern, which is the signal to reverse and sell, as the next comment we made indicated:

<TABLE class=tborder id=post107459 cellSpacing=1 cellPadding=6 width="100%" align=center border=0><TBODY><TR><TD class=thead id=currentPost>09-27-06, 23:36 <!-- / status icon and date -->
</TD></TR><TR><TD class=alt2 style="PADDING-RIGHT: 0px; PADDING-LEFT: 0px; PADDING-BOTTOM: 0px; PADDING-TOP: 0px"><!-- user info --><!-- / user info --></TD></TR><TR><TD class=alt1><!-- message, attachments, sig --><!-- icon and title -->http://www.forexfactory.com/forexfor...cons/icon1.gif No trades in CAD/JPY right now
<HR style="COLOR: #d1d1e1" SIZE=1><!-- / icon and title --><!-- message -->"do you have any signals with CADJPY"?

When this currency pair has clearly completed an upwards "abc" pattern, starting on September 21, then it will be time to short it down to 103.70 or so. This could be several days from now.
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The ABC upwards corrective Elliott Wave pattern was completed later when the top point of 106.26 was reached on Thursday the 28th at 14:00 ET, and would have been a good sell opportunity. It then fell to 105.21.

The current price is 105.45. We expect the second wave to carry the price back up again to about 106.25, which will present a second good entry opportunity for a short trade if it makes it that far and provides a clear "abc" wave pattern.

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Last comment:

Wednesday September 27 at 14:45 ET

Upon further consideration we believe that the current price of 105.80 is a possible reversal point for this upwards trend. Thus:

Exit Trade Signal #189 Buy CAD/JPY at market price of 105.80

This gives us a successful trade with 202 pips of profit and a reward : risk ratio of 4.4 to 1

Tuesday October 3 at 2:30 ET

Following my last comments as quoted below concerning GBP/USD, this pair descended more than expected, possibly due to some depressing U.K.or inspiring U.S. economic news ("GBP/USD continued to trend lower in early London trading as market participants are not yet done punishing Cable for the release of information that the Office for National Statistics admitted to an error in its calculation of annual inflation in export prices which caused a rapid sell-off as traders covered positions on a new negative outlook on possible interest rate hikes in the UK".....and "markets have so far shrugged aside worries that the slowing <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" /><st1:country-region w:st="on"><st1lace w:st="on">US</st1lace></st1:country-region> housing market could lead to a sharp fall in consumer spending. Alan Ruskin, chief international strategist at RBS Greenwich Capital, said: “Lower bond yields, stronger equities and lower energy prices, will cushion the near-term slowdown.”" ), to 1.8634. It then commenced its upwards corrective "abc" corrective journey, and is targetting about 1.8950 as a turnaround point according to our predictive model. As stated earlier, we expect that following the reversal at about 1.8950 this pair should descend all the way to 1.8600 or below within the next week.
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Comments from September 29 at 00:45 ET

GBP/USD expected movements

GBP/USD is likely to to descend a bit more, probably to 1.8690, then do a fairly large, long, complex upwards wave four "abc" correction, then descend all the way to 1.8600 or below within the next week. It should go down from the current price area at about 1.8775 in a five wave set to a point around 1.8690 ( a guess) before a major retracement. If I am wrong, then it may still double bottom at 1.8725, so you could exit your short trade there and take profits, which would be a conservative play.

I use wave counting along with Fib projections exclusively and hits its price target to the "T".....I will try to post screen shots on how they work. But you need charts that will allow you to add 2 additional fib numbers to your settings (.618 & -0.236) & ( .786 & 0.236)....these are magical & powerful tools to project price targets & believe me they work!!!

Thanks, FXAsia, that would be excellent. I know a bit about the fibo projections and a bit more about the Elliott Wave analysis. If you post your fibo projections, etc., then I can compare your numbers with the ones generated by our system, and together we can see how the results turn out. OK?

What do you think of "Fibonacci clusters"?

Tuesday October 3 at 4:45 ET

First of all, the correct number for this trade signal is 196. But since we already erroneously labelled it #195 (using this number twice) we will refer to it from now on as TS #195/6.

Our Trade Signal #195/6 Buy USD/CHF at 1.2423 had a target of 1.2580. It actually rose faster than expected. It rose 142 pips, formed an Elliott 5 - wave pattern and hit our adjusted most probable reversal target of 1.2565 almost exactly (perhaps 2 pip overshoot) at 9:00 ET on September 29. We were not monitoring the market at that time, so missed this fact.

We should have adjusted the target and exited this trade at that time. It then fell precipitously to 1.2405. It has since risen to 1.2445. We expect another rise to 1.2447. If anyone is still long this pair, they should switch and go short at 1.2447, with a target of 1.2394 or lower.
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Previous trade signal:


Thursday September 28 at 4:45 ET

I was about to post a long USD/CHF trade signal when a phone conversation and long discussion prevented me from doing so. For the sake of the experiment, however, I will post this signal which met our high probability reversal number exactly as well as completing a perfect "abc" corrective wave with all the parts clearly evident, at the price of 1.2423.

Trade Signal #195/6 Buy USD/CHF at 1.2423
Stop is 1.2382
Target #1 is 1.2580
Risk is 45 pips
Reward is 157 pips
Reward : Risk Ratio is 3.5 to 1

For research purposes only.
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Hi Itme

The current price of GBPJPY is over 222.50, the stop of 222.47 has already been triggered. Are there any chances to get in this pair agian, please ? Regards.

10/3/06: EUR/USD pair fib target to 1.2700 & then continue up to complete wave 4. (((Current price 1.2722)))

Itme...I will post some historical data on these Fib projections, for the meantime the latest data from last night gave me 1.2700 as the ending target for this retracement and will wait for more data for the up move to complete the wave.

do you think ECB rate hike will complete wave 4?

Tuesday October 3 at 13:45 ET

My system places the most likely reversal point for the current downwards wavelet on EUR/USD at 1.2716. This should be met quite soon. The upwards target will emerge as time unfolds, but is approx. 1.2775

The ECB rate hike is uncertain. The completion of Elliott Wave patterns is a near certainty. An unexpected rate hike or non-hike will exacerbate the size or velocity of the moves, but rarely effect the pattern.

Tuesday October 3 at 14:30 ET

In retrospect, our Trade Signal #195 Sell GBP/JPY at 221.67 had a poor case. In terms of Elliott Wave, there wasn't a clear "abc" corrective pattern, and our system given most probable reversal value, at about 122.10, was higher than the entry point by almost 45 pips.

The pair temporarily peaked out at 222.20, and descended 129 pips to 219.91, but then it started upwards again to complete its huge "abc" pattern.

The wave pattern has subsequently become clearer, as happens usually over time, and the emerging target for a reversal of the huge "abc" uptrend is at about 222.70. This will likely be a good sell opportunity, when both GBP/USD and USD/JPY trend downwards, bringing large movements to this large moving, volatile cross currency pair.

Due to the strength and unique patterns of this pair, it is better to only enter GBP/JPY when the conditions are ideal, and to use a larger stop than with other currency pairs. EUR/JPY, incorporating EUR/USD instead of GBP/USD as one of the constituent majors, is a better behaved and more easily predictable currency pair, still with large moves, but not as large as GBP/JPY - the giant of the forex currency pairs.

I think of trying to trade GBP/JPY as attempting to "ride the dragon".

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Previous trade signals:

Wednesday September 27 at 22:30 ET

Adjust stop on Trade Signal #195 Sell GBP/JPY
Trade Signal #195 Sell GBP/JPY at 221.67
Note: adjust stop on this trade again, this time to to 222.47

At 6:20 ET today we adjusted the stop to 222.06. According to the most recent configuration, the stop needs to be adjusted upwards again. The price will rise one more time, probably to 222.32, then start going down strongly again.
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We were correct earlier in our prediction when we stated "an upwards second wave should carry the price back up to 222.00 to 222.10" , as the price rose to 222.02.

Technically, our entry price should have been the current price which is 221.88. So we entered this trade prematurely at 221.67, which means that the stop has to be higher, and the risk higher.

Wednesday September 27 at 6:15 ET

Trade Signal #195 Sell GBP/JPY at 221.67
Stop is 221.92
Target is 217.90
Risk is 34 pips
Reward is 368 pips
Reward : Risk ratio is 10.8 to 1

For research purposes only.

We stated earlier this morning: "Note that the price of GBP/JPY rose this morning to a high of 221.78, and then proceeded down to a recent interim low of 221.41. We expect the price to proceed somewhat further down to about 221.35, then an upwards second wave should carry the price back up to 222.00 to 222.10, which will provide a second entry opportunity for a short trade near to the recent high. "
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Popularly known as the "Ninja beast" in my part of the world...lol

in my village "KUDA LIAR" make sad with my account....

Where is your village, and what does "KUDA LIAR" mean?

In "clusters" are you perhaps referring to Confluences as per Joe DiNapoli?

Wednesday October 4 at 2:45 ET

Whether due to confusion, fatigue, or a typo I don't know, but #181D Sell EUR/CAD at 1.4250 is not system compliant. The correct trade signal looks like this:

Our system indicates that the top of this upwards corrective wave on EUR/CAD lies between 1.4350 and 1.4360.

My apologies to anyone who acted on this false signal. This highlights our advise not to trade our signals without passing them through the test of another system first. This trading system is still in flux, our expertise is still developing, and present conditions do not allow us to discover, test, and monitor trade opportunities on a professional quality level. This is still an experiment.

Monday October 2, 2006 at 13:15 ET

Trade Signal #181D Sell EUR/CAD at 1.4350
Stop is 1.4405
Target is 1.3950
Risk is 65 pips
Reward is 390 pips
Reward : Risk Ratio is 6.0 to 1

For research purposes only.
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Previous trade signals:

Trade Signal #181D Sell EUR/CAD at 1.4250
<HR style="COLOR: #d1d1e1" SIZE=1><!-- / icon and title --><!-- message -->Monday October 2, 2006 at 13:15 ET

Following two successful trades shorting EUR/CAD, one from the top of the trend, and one a re-entry trade, we attempted to re-enter again at what we thought was the top of a corrective wave. This attempt was unsuccessful, as the price of EUR/CAD rose much more as EUR/USD rose about 130 pips in a Wave 4 upwards corrective wave of its downtrend, while USD/CAD also rose at the same time. This produced an upwards corrective wave in EUR/CAD of about 175 pips size.

Our system indicates that the top of this upwards corrective wave on EUR/CAD lies between 1.2450 and 1.4260

Monday October 2, 2006 at 13:15 ET

Trade Signal #181D Sell EUR/CAD at 1.4250
Stop is 1.4305
Target is 1.3950
Risk is 70 pips
Reward is 285 pips
Reward : Risk Ratio is 4.0 to 1

For research purposes only.

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Adjust stop Trade Signal #181C Sell EUR/CAD to 1.4166

Friday September 29 at 9:30 ET

Adjust stop Trade Signal #181C Sell EUR/CAD to 1.4166 (10 pips higher)

This trade was entered into a bit too low. According to our system the entry price should have been 1.4135, and the stop 1.4166.
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Friday September 29 at 4:30 ET
Trade Signal #181C Sell EUR/CAD at 1.4125
Stop is 1.4156
Target is 1.3950
Risk is 41 pips
Reward is 165 pips
Reward : Risk Ratio is 4.0 to 1

For research purposes only.
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Wednesday October 4 at 3:00 ET

Because, as we discussed earlier, we didn't pay close enough attention to the one minute chart in assessing the Elliott Wave pattern when setting the entry price on this trade, the price of USD/CAD didn't return to the bottom a third time as we had expected, so our entry price on our long USD/CAD was missed by 6 pips.

Then we decided to try something different and set an interim target and then advise re-entry after a sizeable correction.

As it turned out, our revised target of 1.1200 was met quickly and surpassed by 18 pips, followed by a 74 pip retracement to 1.1144. This would have been a good re-entry price, after the large "abc" correction. Our targetting system would have exited the sell trade if one had been entered, or to simply enter a new buy trade at 1.1154. The new target for the long USD/CAD trade is 113.15

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Previous trade signals:


Friday September 29 at 4:30 ET

Adjust target for Trade Signal #190A Buy USD/CAD at 1.1086 to 1.1200. This is an interim target. We can re-enter to capture the next phase of the trend after a bounce.
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Thursday September 28 at 18:30 ET

A very strong downwards move on USD/CAD on September 27 at 14:30 ET went 9 pips past the stop of 1.1097 in our Trade Signal #190 Buy USD/CAD at 1.1132. We believe that it will come down one more time at least to 1.1086 or further, where we can re-enter this trade. The price may descend further, however, to as low as 1.1045.

Trade Signal #190A Buy USD/CAD at 1.1086
Stop is 1.1039
Target is 1.1300
Risk is 50 pips
Reward is 210 pips

Reward : Risk Ratio is 4.2 to 1