Low Risk, High Reward Trading Experiment

Wednesday October 4 at 3:00 ET

EUR/JPY, according to our system, can reverse its upwards trend at either 150.50, or, more likely, 151.00 to 151.10. The safest strategy is to set the limit to short EUR/JPY at 151.00 with a stop at 151.57.

The target is far off, below 148.00, so a 60 pip risk is not a problem. If the upwards trend reverses at 150.50 instead of 151.00, then we can still enter the trade during the first upwards corrective wave, at the top of the minor Wave 2.

dear itme..
now current price 150.02..from this
is it good entry to short or late?
thanks?

Wednesday October 4 at 4:00 ET

EUR/JPY is still in a downwards corrective wave. It hasn't yet started its fifth Wave, which will carry the price up to between 150.50 and 151.10 according to our system. Sell when the five wave pattern is complete, and a probable reversal point has been reached. See above comments. Follow prudent money management and don't trust our experimental signals.

The following recent data releases don't seem to be strong enough to effect our predictions based purely on technicals:

<!--StartFragment -->
Today 04:30am *(UK) SEPT SERVICES PMI 57.0 V 56.5E - No revision

<!--StartFragment -->Today 04:00am *(EU) SEPT SERVICE PMI: 56.7 V 57.0E - prior was revised higher to 57.4 from 57.1


Today 03:55am *(GE) SEPT GERMAN SERVICE PMI: 54.4 V 54.3E - No revisions


Today 03:51am Note: If the chatter of a softer Eurozone PMI is to be believed, then the Geman PMI number should be very dissapointing given the strong French reading


Today 03:50am* (FR) SEPT SERVICE PMI 61.4 V 60.5E, A 71 MONTH HIGH - Prior was revised higher to 62.5 from 61. 3


Today 03:45am (IT) SEPT SERVICE PMI: 54.3 V 57.5E - No revision

Today 03:44am Hearing chatter that Eurozone PMI will be soft

<LI>http://www.tradethenews.com/breaking-news.php

Wednesday October 4 at 5:00 ET

Exit short trade on AUD/USD at .7418 (at bottom of Wave 3), taking about 120 pips profit, and re-enter short trade after bounce up to about .7445 , with target at about .7350
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Previous update and trade signal:

Wednesday September 27 at 4:30 ET


Revise target Trade Signal #168 Sell AUD/USD at .7543 from 1.7400 to 1.7350
Current price is .7505
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AUD/USD update - 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

Dear itme ,
may be there is something diffrent in my and your counts.
its my count . what do you think about it?

AUD /USD H1

Oedipean, at the price of AUD/USD approx. .7416, what you label the end of Wave 5 perhaps, I call the bottom of the Third Wave of the Third Wave. I understand your count, and it makes perfect sense, but I have my own way of counting. As the pattern unfolds, we shall see which method proves more usefull, ok?

Ok, but I didn't say you are wrong ,just wanted to tell my idea.
Thanks for your attentions and nice thread.
I Wish good trades for you today.

http://www.forexfactory.com/forexfor...cons/icon1.gif Impending reversal for EUR/USD and start of upwards move
<HR style="COLOR: #d1d1e1" SIZE=1><!-- / icon and title --><!-- message -->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.

Would you still be holding this?

Dear Newstrader FX,

You are quoting a comment we made, not a trade. We estimated where we thought that EUR/USD would reverse and continue to head upwards to the target we held for entry, at about 1.2775, which would constitute a good short trade opportunity with low risk and high reward potential. In fact, for some reason, either technical or fundamental (perhaps you could shed some light on the reason) EUR/USD descended strongly at about 3:00 ET today, in a move which we did not anticipate, but which in no way violates Elliott Wave theory.

We attempt to enter trades at points where we have a high probability of winning a high reward : low risk trade opportunity. Those opportunities are at the endpoints of certain waves. They are the beginning of Wave 1, the beginning of Wave 2-1, the Beginning of Wave 3, and the beginning of Wave 5, depending on the wave geometry. Not all reversal points can be accurately predicted with our system, and not all reversal points constitute high reward : low risk opportunities. But that doesn't stop us from making predictions to practise our techniques and learn.

Our last trade in EUR/USD ( Trade Signal #176D Sell EUR/USD at 1.2717) was stopped out. It is copied at the bottom of this comment. This trade is a supplementary trade. Our basic trade was entered earlier, on September 22, and involves entering the short EUR/USD position at the top of the trend and holding the trade to the end. This is the safest and most profitable way to trade. After the next two sentences are its particulars.

The supplementary trades are experiments to learn how to trade the minor waves, which is much trickier for a variety of reasons. Here is our basic system strategy trade, which was entered into on September 22, and is still active:

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.

<!-- / message --><!-- edit note -->In order to prevent getting bored, and to test our skills, sometimes we try to enter into trades mid-trend. For instance, in this case we identified the top of the corrective wave which we label as 3-4 at 1.2731, but since our one minute chart was malfunctioning, we missed that entry by 1 pip and instead sold at the next available opportunity - at 1.2717. We were targetting 1.2600 , which we think will be the bottom of Wave 5. The price dropped to 1.2637 which, being the bottom of Wave 3, would have been the preferred exit point.

However, in this experiment we are normally holding our trades all the way to the bottom of Wave 5, which involves enduring the large Wave 4 "abc" complex corrective wave. (The basic strategy is to enter at the beginning of the trend wave and exit at the end of the trend. That is, enter at the beginning of Wave 1 and exit at the end of Wave 5.) But in this case we entered midstream at the top of Wave 3-4. As it turns out Wave 4 often retraces quite high - sometimes above the bottom of Wave 1. In this case it retraced alot already - all the way up to 1.2764, which is enough to stop us out of our mid-trend trade by 22 pips - even though it has only probably completed the "a"of the "abc" retracement, and could still go even higher. Our stop was only 25 pips above our entry price. Our entry price at 1.2717 was already 14 pips below the top of Wave 3-4 because we failed to enter the correct price because we couldn't access the 1 minute chart to count the small waves. In order for this trade to succeed we would have had to either target the bottom of the Third Wave or else put in a larger stop in order to survive the Wave 4 corrective wave.

Obviously, then, the strategy should have been different for this mid-trend trade. The target was too distant, or the stop too tight. Since we entered late in the trend, at the top of Wave 3-4, and not even at the exact top, then we should have exited at the bottom of Wave 3, which is the end of Wave 3-5, and taken 77 pips of profit, before the large Wave 4 retracement.

Then the next opportunity to enter would be the top of the "c" wave of the "abc" Wave 4 correction, which is the beginning of Wave 5. That is estimated to be at 1.2774.

______________________________________________

Previous Trade Signal:

Thursday September 28 at 4:00 ET

When we made our last EUR/USD re-entry trade signal ( Trade Signal #176C ) we were aware that the price had reached our most likely reversal price level, but we thought that there might be one more small upwards price movement carrying the price 1 pip higher than the previous high of 1.2731 to 1.2732. The reason why we erroneously believed that was because it seemed to look that way on the 5 minute chart, and our charting service was malfunctioning, so we couldn't see the actual wave count on the 1 minute chart. When we checked the 1 minute chart on another chart service, then we realised that the Elliott 5 wave set was complete and well formed, and that the correct short entry price was indeed 1.2731. So we waited for a correction upwards, and got in at the next convenient opportunity - 1.2717.

Re-enter Trade Signal #176D Sell EUR/USD at 1.2717
Stop is 1.2742
Target #1 is 1.2600
Risk is 27 pips
Reward is 115 pips
Reward : Risk Ratio is 4.3 to 1

For research purposes only.

wow , it was a super trade . it was a super exact siganl .and I have 2 question about it :

1- how did you find that point i mean 1.2830 so much precise .
2-after losing first situation at 1.2830 why you didnot trade again when market rally to 1.2817 .

thanks

I myself pinpointed 1.2827 with fibonacci ratios . but could not trade it cause my count didnot confirm it

Wednesday October 4 at 10:15 ET
As predicted, AUD/USD rallied to .7445 ( so far a little past that to .7447)

This is an opportune time to re-enter this trade with the same stop and target as indicated below.

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Previous update and trade signal:

Temporarily exit Trade Signal #168 Sell AUD/USD at .7543

Wednesday October 4 at 5:00 ET
Exit short trade on AUD/USD at .7418 (at bottom of Wave 3), taking about 120 pips profit, and re-enter short trade after bounce up to about .7445 , with target at about .7350
__________________________________________________ _____________
Wednesday September 27 at 4:30 ET


Revise target Trade Signal #168 Sell AUD/USD at .7543 from 1.7400 to 1.7350
Current price is .7505
__________________________________________________ __________-
AUD/USD update - 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
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dear itme

When we follow our system properly, which we always try to do, we employ a combination of Elliott Wave analysis on all time frames, from one month to the tick chart, combined with another system that generates probable reversal points. In the case of the top of EUR/USD, our targetting system worked extremely well, and it was confirmed by EW Theory, according to our counting system.

I don't understand your second question, oedipean. Please explain further.

For the short AUD/USD trade at .7445 the stop is .7492

2-i meant after missing first situation at 1.2830 why you didnot trade it when market rallied to 1.2817 .

Hi Oedipean, I think I know what you mean. EUR/USD did not reach 1.2830, only 1.2827 perhaps. I don't recall the particulars of what happened on that occasion. It doesn't make sense for us to place the entry price above the downwards trendline from 9/4/2006 at 1.2875 to the recent high on September 22 at 1.2829. The sensible entry price would be 1.2826, slightly below the trendline, which was met. We always place our entry price at a conservative location, where it will be hit for sure. Anyways, all that is in the details of the precise entry price. We recognised this price region as a good low risk / high reward entry zone.

In actuality, we would make sure we either entered at the very top of the trend, or at the top of the corrective wave following the first downwards wave. ( In this case, that would be at 1.2820. ) When we think we are near to the top of a trend, we make sure we catch the opportunity, and don't hold out for the last pip. It would be stupid to miss an infrequent excellent trade opportunity to gain a pip or two. In the two hundred or so trade predictions that we have done so far in this experiment, there has been only one or two where we have failed to set an entry price that was met.

I cannot explain the anomoly wherein the entry price was placed above the trendline in this example, which is foolish, and then a re-entry was not executed. We were probably called away and unable to do a proper entry at the exact price.

I agree, if for some reason we missed an entry, we will enter at the top of the next corrective wave, whether large or small. We do not have a problem making sure we catch entries. The big challenge is recognising the right point in the chart to jump onto the train.

Thanks for your complete answer itme.

ItMe-Thank you for that very clear explanation-I appreciate you taking the time to respond so throughly...due to my inexperience at fully understanding your methods, I thought that was a clear signal. You're doing a great job here. Thanks again.

Hi Itme....can you confirm your count on the EUR/USD pair....I have todays low of 1.2665 as the end of wave B of wave 4 forming and now on the way to wave C to complete Wave 4. Others have todays low as subwave 1 of an already formed wave 4???

Thanks E-Wavers!!!!!