Low Risk, High Reward Trading Experiment

I can offer a .618 and FE target there (I think DiNapoli calles it OP or something) as well, plus previous resistance
1.8840-60 usually can bottle things short term so at the least it might present a scalp opportunity for 20-40 pips IF we approach it slow enough...too much speed and even barriers can get run over if the market has the energy for it.

I currently trade "lagged" and with price action unless a trendline lends itself to an early entry like today...

Good luck either way!

HI Fix,


Can you please post GBPUSD chart ...how is GBPUSD looking to you any idea about the next week move...

Thanks

Any update on AUD/USD trade itme?

Monday October 23 at 4:45 ET
Trade Signal #214 Buy EUR/USD at 1.2574
Stop is 1.2548
Target is 1.2675
Risk is 28 pips

Reward is 99 pips

Reward : Risk ratio is 3.5 to 1

For research purposes only.

p.s. - A strong move downwards on EUR/USD threatens our stop but does not cancel the fundamentals of this trade concept. Therefore adjust stop 10 pips downwards to 1.2538

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Monday October 23 at 4:45 ET

This trade signal is for the last wave up in the "c" of the "abc" upwards corrective wave which we count as Wave 4 in a 5-wave downwards trend.

Trade Signal #215 Buy GBP/USD at 1.8735


Stop is 1.8698

Target is 1.8950

Risk is 40 pips

Reward is 210 pips

Reward : Risk ratio is 5.2 to 1

For research purposes only.

Monday October 23 at 4:45 ET

This trade signal is for the last wave up in the "c" of the "abc" upwards corrective wave which we count as Wave 4 in a 5-wave downwards trend.

What you estimated in the GBPUSD & EURUSD in the downward maximum. What it touch the Thursday low 1.8664.

got stopped out !!!!!!!

I went long at 1.8703 this morning too. But I set my limit at 1.8825 for now and will adjust it up along with the stop loss when the pair goes upward.

When do you expect it will reach your 1.8950 target? (which I am sure it will in the near future)

I would bet more for the short ,not for the long now.

See on my thread

http://www.forexfactory.com/forexfor...ead.php?t=9163

Hi itme, I enjoy reading your posts. My strategy is to simplify all the info from different sources.

I saw eur/usd pair forming a triangle in 1 hour chart at about 23:00 yesterday (U.S eastern time), eur/usd was at 126.15. So I placed an entry order to sell at 1.2595.
SL was 1.2635.
Took profit taday at 1.2542
net profit: 50 pips

I also had entry order to buy eur/usd at 1.2645 at same time just in case the pair was going to break in the opposite direction ( I have removed the buy order for now).

Tuesday October 24 8:00 ET

Temporarily exit TS# 197A EUR/JPY Long trade at 149.96

In anticipation of sizeable Wave 4 retracement exit this trade and re-enter at bottom of "abc" corrective wave for final run up to 150.50 to 151.00

__________________________________________________--

Previous trade signal:

Tuesday October 17 at 6:45 ET
We now believe that we are at the bottom of the "c" corrective wave, preparing for the final fifth wave up.
TS# 197A Buy EUR/JPY at 148.65
Stop is 148.43
Target #1 is 150.50
Risk is 25 pips
Reward is 182 pips
Reward : Risk ratio is 7.3 to 1

For research purposes only.

Tuesday October 24 8:00 ET

GBP/USD just reversed direction at our probable reversal price of 1.8720 and is expected to decline to 1.8654 where it should reverse and head up to about 1.8800, providing a good low risk : high reward trade opportunity. We will try to confirm the precise entry price at the expected time of arrival at 1.8654 , approx. 10:00 ET.

Tuesday October 24 11:45 ET

GBP/USD and EUR/USD both rose at the same time in typical fashion to high probability reversal values which allow for a low risk : high reward trade opportunity.

Trade Signal #216 Short GBP/USD at 1.8751

Stop is 1.8771

Target is 1.8654

Risk is 24 pips

Reward is 94 pips

Reward : Risk Ratio is 3.92 to 1

For research purposes only

i see the price is still strong uptrend....

Hi Kenari,

You speak in the present tense about a trend as if it extends from the past into the future. In doing so you are implicitly making a prediction that the uptrend will continue higher. What is your prediction for the reversal point of the uptrend which you seem to believe will continue higher?

Any trade is a prediction. Some trades predict that a trend will reverse some time in the future. Other trades predict that a trend will reverse at the point that the trade is entered - these are trend reversal trades. Either way a prediction is involved. Our system involves attempting to predict the precise point at which a trend reverses. By doing so we can enter a trade with a minimum sized stop and maximum sized target. This produces the optimum reward : risk ratio and allows the best risk factor as well. The product of these two gives the return on capital from the trade. Success in trend reversal trading thus allows the highest possible rate of return on capital. It is also the most challenging kind of trading, requiring the highest degree of knowledge, skill, patience, accuracy and discipline.

itme,<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

<o></o>

Just some observations, if I may. And PLEASE take them in the positive and constructive fashion that they are intended. As I have said previously, your methodologies (as shown by your results) are heading deeper and deeper into a blind alley and the accumulated losses are now growing almost exponentially.<o></o>

<o> </o>

I think that you may also have recognized that fact by your post below:<o></o>

<o> </o>

Quote

Disliked

Originally posted by itme<o></o>

<o> </o>

… we have not yet clarified all the subtleties of our model and neither have we developed the requisite skill to employ it effectively<o></o>

<o></o>
<o></o>

I am convinced that you are a very intelligent person as evidenced by your posts. <o></o>

<o></o>

However, you have said in a number of your posts that you are tired/exhausted and are making a few mistakes, so from a trading point of view I would just like to alert you to a few things that perhaps you have not thought through. <o></o>


1. By adjusting the stops in your trades, you significantly reduce your reward to risk ratios. In a number of your posts you have significantly adjusted the stops on your trades and your risk reward ratios of your adjusted trades have usually declined to approximately half of the original ratios.
Furthermore, some of your Target Prices are very deep discounts/premiums to the existing prices which has the tendency to initially inflate the reward risk ratio.<o></o>
<o></o>

2. In some of these trades, the trades were (temporarily) profitable to a relatively small degree after the positions were taken. Following the sage advice from merlin, if you had incorporated a trailing stop in these trades you would have made a profit (albeit small). Invariably, you then went into negative territory on these trades and was stopped out.<o></o>

<o></o>

<o></o>

3. Those trades have now gone into loss. This contradicts a fundamental axiom of trading: NEVER let a profit turn into a loss<o></o>

<o></o>

4. At present, your win rate is less than 20% (and dropping quickly)<o></o>

<o></o>

Another way of looking at this is that over 80% of the Elliott Wave (and the Q factor) has missed the target, whether that be <o></o>

(i) a result of incorrect wave count,<o></o>

(ii) confusion over what constitutes a wave.<o></o>

(iii) your tiredness <o></o>

<o></o>

Also note: This figure does not include the trades that never occurred because the predicted entry point (as predicted by the Elliott Wave and Q factor) did not get met.<o></o>

<o></o>

Whatever the reason, it would tend to imply to a neutral observer that Elliot Wave is not a "sufficiently reliable" model to generate consistent profits from predicted entry point or exit points.<o></o>

<o> </o>

5. Your last five forays into the GBP/USD and EUR/USD have been terrible losses. Your accumulated losses are growing alarmingly quickly and the losses are now beyond what any realistic model would accept as reasonable. <o></o>

<o> </o>

While I accept that you place a disclaimer that the trading signals are for research purposes only, any person (that is, any impressionable newbie) who tried to successfully trade these trades would have been financially devastated. <o></o>

<o> </o>

<o></o>

<o></o>

As you are aware, I am not a believer in Elliott Wave theory. I thoroughly checked out the model some time ago and found it seriously wanting in its ability to predict Forex (or any tradable commodity).<o></o>

<o></o>

However, as I have said above, I am only trying to alert you to some pertinent issues in your strategies.<o></o>

<o></o>

If you are already aware of those issues, then please disregard this post.<o></o>

<o></o>


Good luck in your future trading.<o></o>
<o> </o>

P.S. I am still at a loss as to why your trader friend who has a “80% success rate… using a 25 pip stop, and has recently won 12 trades in a row” wont help you.

To everyone,
Sorry about the spacing in the post above.
I didn't realise that it was so spacey and I can't seem to edit the post.

Thanks, Jacko, for your comments. They are very interesting and helpful. However, our perspective on all of the matters you touched on is different than yours, chiefly as a result of the fact that:

1) you are not party to alot of information that we are party to,
2) that your beliefs are diametrically opposed to ours, and
3) you either don't believe or are unaware of many things that we have asserted in our posts in our two threads,
4) you have an active imagination, and
5) your characterisation of the "performance" of our experimental trade signals is inaccurate.

We have no losses, and certainly not exponential losses, as we are not trading any money. If we were, we would not risk money on our experimental trade signals. We would employ a conservative trading system based on proven techniques. The actual trading system we are developing is very different from the experimental trade signals we have been generating. It involves exclusively trading EUR/USD and GBP/USD. It involves entering trades not based on predictions, but on predictions confirmed by other evidence at the time of the entry. It involves very small stops. It involves stops which are moved to break even to eliminate risk after the initial move in the direction towards our target. It involves optimised exiting of trades at the endpoints of the trends. It involves very few trades - perhaps only one or two per week.

Yes, our Trade Signals # 214 and #216 going long on EUR/USD and GBP/USD were stopped out. That is because the Elliott Wave pattern was irregular and confounded us, as it confounded many other Elliott Wave traders. That is part of the reality of the market. However, going long at that point midstream in the trend is not our live trading model, because the reward : risk ratio is not optimal according to this type of set-up, and the difficulty in making accurate assessments of the wave count and entry and exit prices is much harder when trading the smaller oscillations within trends. Our experimental trade signals were designed not to optimise performance but to test various theories and approaches and to test our skill at predicting movements on a scale that is much harder than our actual trading system requires. The purpose of our experimental trade signals is for learning and skill development through challenge and practise - as we have always maintained.

Our actual trading model involves trading the endpoints of the swing trends, not the mid-trend oscillations. Trading from the endpoints of the larger trends is much easier and has a much higher reward : risk ratio than attempting to trade the mid-trend oscillations. Our actual trading system also involves adjusting the stop in a fashion that reduces the risk of loss to almost 0%, and the size of losses to a negligible amount. Through this method our mentor has reduced the percentage of losses to less than 1% over several hundred trades, and the risk to less than 5 pips, or less than 1% of capital. We expect to approximate this performance over coming months.

Even if, as you assert, the approximate win rate of our experimental trading signals of late has been about 20%, then this approximates the performance of the average professional forex fund manager, which is approximately break even. Since the reward : risk ratios average about 4:1, and range up to over 10:1, and we would not in practise enter any trade without a reward : risk ratio of at least 5:1, and we would not trade any currency pair with which we were not intimately familiar, then it is evident that the "performance" of even our trading signal experiments has been somewhat positive.

A 20% success rate means that for every four losses there is one win. If the risk factor happened to be 10%, then each loss of a trade with a reward / risk ratio of 5 : 1 would reduce the capital by 10%, whereas each win would increase the capital by 50%. The result of 100 such trades would be the loss of only 27% of capital.

If the win rate were increased to only 33% (one win for every two losses), then the result of 100 such trades with a 10% risk factor would be 556 times multiplication of capital. If a 20% risk factor were employed, which is realistic, then the multiplication of capital would be 2,760 times.

Our goal is a 75% win rate, which will warrant a minimum 20% risk factor, which will produce a multiplication of capital of 10,737 times in only 20 trades. Eureka! We wish you the same performance with your methodology, if that is possible.

All our colleagues are not unresponsive to each other's needs, and are actively engaged in assisting each other day and night. In fact, we have been doing so for several years. We are learning a great deal from each other, and improving in skill daily. If the level of our skill is not reflected in the experimental trade signals here, then that is for a variety of reasons, some of which I have already touched on. The friend who I am sitting beside, for example, has watched his account double in the past 24 hours. If things go according to plan, it will double two or more times before the week is over. He is preparing to enter into the FX Solutions Contest, so we can see what he is capable of. I may also do the same.

We have only spent two hours of instruction with our mentor ever, and that happened about 6 weeks ago, but we hope to be studying with our mentor daily. Up until now we have only been guided by his example, but haven't had his specific methodologies explained to us. Meanwhile, we are consulting with various fellow students of the Q-E trading methodology. Our learning curve is very steep, and we have made several large leaps in knowledge and skill over the past several weeks, even though our trading journal may not seem to reflect it. Our understanding and style have changed dramatically, which involves a certain degree of getting used to. We still have alot to learn, but we believe we have finally, over the past three weeks, come to understand the basics of what our mentor has found to be so wonderfully effective, after over a year of independent research, self study and practise.

The biggest obstacles to learning have been tiredness, our focussing on other models, our spreading ourselves too thin over too many currency pairs, our lack of belief in this approach to analysis, and our lack of careful diligence in the application of this model. Proper application of this model is very time consuming and requires very deep concentration. It is unlikely that an experienced full time Q-E trader could follow more than two currency pairs at the same time, let alone a beginner who barely knows what he or she is doing.

We are preparing to implement one or more of several different trading programs, all of which involve high rates of return. We are designing protocols and backtesting them. The results are very encouraging. Our research has been very productive, and we believe we have learnt most of what we set out to learn.

That was the purpose of this experiment - to learn. The scientific method involves deliberately performing experiments in order to generate data which, upon further review and analysis, yields knowledge. Knowledge, in turn, can be translated into technology. That is what we have been engaged in.

The next step is to test the technology we have invented to either achieve our objective (rapid wealth accumulation) or to gain more knowledge.

Thank you for your interest in our research, and for your thoughtful comments. We are very happy that you don't believe what we have been asserting. That has been our intention. We hope that your beliefs remain the same, and that you continue to succeed with your present method, if it is effective.

Wednesday October 25 4:30 ET

Trade Signal #216 Short GBP/USD at 1.8751 entered into yesterday morning rose to 1.8767 shortly after the trade signal was generated, and then to 1.8775 recently. The stop was set at 1.8771 at the time of entry.

We studied this situation all day in concert with several other traders employing our model, and decided that the price would likely descend one more time to about 1.8735 (or a bit lower), which it did, then rise again one more time to a new high before a larger fall to our target. The expected high for the Wave C of this upwards corrective wave is between 1.8777 and 1.8800. Thus we should have advised exit from the trade (adjust target) at 1.8735, and re-entry at 1.8777 with a stop at 1.8816.

We were busy and thus failed to make this adjustment to the trade signal, so those who theoretically entered this short trade were stopped out by 4 pips. They can re-enter if / when the price rises again to 1.8777.

___________________________________

Tuesday October 24 11:45 ET

GBP/USD and EUR/USD both rose at the same time in typical fashion to high probability reversal values which allow for a low risk : high reward trade opportunity.

Trade Signal #216 Short GBP/USD at 1.8751
Stop is 1.8771
Target is 1.8654
Risk is 24 pips
Reward is 94 pips
Reward : Risk Ratio is 3.92 to 1


For research purposes only

Wednesday October 25 6:45 ET

Trade Signal #217 Sell EUR/USD at 1.2585

Stop is 1.2606

Target is 1.2505

Risk is 23 pips

Reward is 78 pips

Reward : Risk Ratio is 2.8 to 1

For research purposes only.