Low Risk, High Reward Trading Experiment

Jacko I'm not taking your comments in a negative way and furthermore I think itme replied to all of your oberservations in a very debonair manner. But I just have 1 question for people as yourself What system have you come up with for us to critique. By the way when your wave count is correct ELLIOT WAVE TRADING is how forex is traded to a tee. I have made very close to 1000 pips since Sept. 11 2006 using my own ELLIOT WAVE TRADING SYSTEM. Its people like itme that has motivated me to come up with my own system that works for me maybe you should do the same Mr. Jacko. Oh and by the way Please dont take what I have previously said personal I just wanted to give you something to think about to maybe help you to become a better trader.

Is the above % correct? And if it is, is it from the beginning or just recently?? If this is true from the beginning, I am done here.

To whom it may concern:

We have addressed the question of the "performance" of these experimental trading signals on dozens of occasions. We refer you to these comments, which are interspersed throughout this thread. If you are looking for trade signals to trade, then you are looking in the wrong place, and should definitely look elsewhere.

That does not sound like a very confident reply. If not to trade, why be aournd. See you.

Our Trade Signal was stopped out when the price recently rose to 1.2621

The Trade Signal #217 Sell EUR/USD at 1.2585 was based on a probable reversal value. However, there was an imminent FOMC interest rate statement at 3:15 ET, just three hours later, which could have gone either way, making it a high risk trade.

As it turned out, the FOMC comments were interpreted to favor the EUR. This caused another upwards wave to 1.2621. This latter is an even stronger probability reversal value.

A strategic trader who shorted EUR/USD at 1.2585 stood a good chance of making a large profit if the FOMC had made remarks which favored the USD. He / she would have adjusted their stop to 1.2598 (the previous recent high) +3 pips just prior to the announcement, to minimize risk.

When the upwards spike occured, our micro and macro analysis of the pattern created indicated a relatively mild upwards bias, and a high probability of reversal at 1.2620. We advised our trading partners here of this perspective, but were then called out of the office for a meeting before we could post this position here and advise re-entry at 1.2620. So at this stage, according to our system, we have re-entered our high risk experimental short EUR/USD trade at 1.2620 and placed our stop at 1.2641

Re-enter Trade Signal #217A Sell EUR/USD at 1.2620

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Previous trade signal:

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.
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The purpose and structure of this trade journal presupposes a fairly advanced understanding of trading the Forex market and the mathematics of high performance Forex investing. Those who understand and are interested in the explanations, research, and specific trade experiments in this thread will find it of value, those who don't understand or who have different needs or interests will not find value here.

That is the case with every one of the hundreds of threads on this site. No one thread is for everyone.

There are several threads on this forum and on other forums that I am aware of which post trade concepts which demonstrate a very high success rate, employing a diversity of methodologies, some explained, and some not explained. I commend these threads to people who are looking for this kind of information. Note, however, that high success rate and high rate of return are not identical concepts.

We are avant garde daredevil traders who are seeking to develop the skill to multiply capital at an unusually rapid pace. This is a difficult task and requires unconventional approaches and alot of research, patience, skill and practise. Many do not believe that what we are trying to do is even possible. That is natural and good. If too many people made large amounts of money in the Forex market quickly, then problems would ensue.

Re-enter Trade Signal #217B Sell EUR/USD at 1.2658

Target is about 1.2400

Stop is 1.2706

Reward / Risk Ratio is 5.1 to 1

For research purposes only.

My partner and I have been intensely studying the EUR/USD currency pair for the past week, and following its every move. It has been our teacher, and will continue to be.

At first we thought the high of 1.2640 on October 19 was the top of the 3rd wave of the "C" part of the "ABC" upwards corrective fourth wave of the large downwards wave. At that time we expected a modest corrective downwards wave and then a rise to about 1.2670 in the fifth wave up to complete Wave 4C. But this didn't happen, causing our long trade from a price which we estimated to be the bottom of the component Wave 4 to be stopped out. Thus our long trade attempt failed.

Instead the downwards move to 1.2524 happened, carrying the price below even the top of the first wave up of the Wave 4C, which is a "rule violation". But rules are made to be violated.

At this point we were forced to reconsider our wave count hypothesis, and hypothesised that the 3rd component of Wave 4C had been followed by a failed fifth wave, so that Wave 4C was actually complete, and we were witnessing the first component wave of the large Fifth Wave down. Accordingly, we expected a correction up to about the bottom of the first component wave at about 1.2596, which was reached a few hours prior to the release of the FOMC minutes (Trade Signal #217 Sell EUR/USD at 1.2585 ). This was a good strategic entry point, with a better than 50% probability of making a 4:1 or 5:1 trade.

The FOMC minutes created an upwards bias which propelled the EUR/USD up, not down, so we lost this short trade.

A study of the post data-release micro price pattern, etc. caused us to hypothesise that the FOMC influence was mild, and that the upwards corrective wave was complete at 1.2620. We admit that our expertise at interpreting the micro post announcement price patterns is mediocre, as we have only been observing this for a few months, and not very intensively.

As it turned out, our guess that 1.2620 was the top of the Wave 2-1-5 corrective wave was incorrect. In fact, our entire hypothesis concerning the failed fifth wave in Wave 4C and the beginning of Wave 5 down was incorrect.

The recent price movement above 1.2620 and on up to 1.2670 caused our stop to be hit a second time, and indicates that Wave 4C was not completed by a failed fifth wave, and that what in fact occured was an over-extended corrective 4th wave down within Wave 4C to 1.2424 that was followed by the upwards fifth wave within Wave 4C which was propelled upwards to a recent high of 1.2670 by the dovish interpretation placed on the FOMC comments.

Now that the pattern has unfolded we have a whole slew of arguments and evidence that the price of 1.2670 is a high probability reversal point for the upwards corrective movement which began on October 13. There is no absolute certainty in predicting reversal points, only probabilities. According to our Q model 1.2670 is an extremely high probability reversal point. I have just been informed that according to another broker this price was in fact reached. We are also satisfied on every timeframe that a viable complete Elliott Wave pattern exists. We are therefore almost as certain as possible that the price of 1.2670 will be the beginning of a sizeable downtrend in EUR/USD.

Note: if this trade is successful then it will increase the capital (theoretically) in the theoretical experimental trading account by a factor of (1 + (Risk Factor * 5.1)). If this, the third attempt to short EUR/USD is successful, then it will counterbalance the diminution of capital produced by two previous unsuccessful attempts which would have created a decrease in capital by (1- Risk Factor)*(1-Risk Factor). If Risk Factor is expressed by the symbol RF, then the multiplier (M) of capital produced by the two losses and one win is expressed by the formula:

M = 5.1 * RF EXP 3 - 9.2 RF EXP 2 + 3.1 * RF + 1

If, for example, the Risk Factor = 10%, then

M = 1.223

Therefore, the combination of the three trades taken together, two losses and one win, employing a risk factor of 10%, will produce a return on capital of 22.3%. If a risk factor of 20% is employed, then the return on capital would be 29.3% .
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Previous trade signals:

Re-enter Trade Signal #217A Sell EUR/USD at 1.2620

Our Trade Signal was stopped out when the price recently rose to 1.2621
The Trade Signal #217 Sell EUR/USD at 1.2585 was based on a probable reversal value. However, there was an imminent FOMC interest rate statement at 3:15 ET, just three hours later, which could have gone either way, making it a high risk trade.

As it turned out, the FOMC comments were interpreted to favor the EUR. This caused another upwards wave to 1.2621. This latter is an even stronger probability reversal value.

A strategic trader who shorted EUR/USD at 1.2585 stood a good chance of making a large profit if the FOMC had made remarks which favored the USD. He / she would have adjusted their stop to 1.2598 (the previous recent high) +3 pips just prior to the announcement, to minimize risk.

When the upwards spike occured, our micro and macro analysis of the pattern created indicated a relatively mild upwards bias, and a high probability of reversal at 1.2620. We advised our trading partners here of this perspective, but were then called out of the office for a meeting before we could post this position here and advise re-entry at 1.2620. So at this stage, according to our system, we have re-entered our high risk experimental short EUR/USD trade at 1.2620 and placed our stop at 1.2641

Re-enter Trade Signal #217A Sell EUR/USD at 1.2620

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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.
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What you think of AUD/USD Itme?

I agree with your analysis of euro waves. It shouldn't have gone into the territory of wave 1 like it has. But if the price stuck right to the rules then elliott wave would be 100% right all the time.

1.2696 would be a 61.8 retrace from 1.2829 high on 9-22-06 and 1.2483 on 10-14-06. So price can still get to that level.

But shouldn't get past there. "shouldn't" But the euro$ does like to retrace 78.6% alot of times.

And it is possible that the 5 waves down we were trying to count could have infact been an a,b,c, of some kind and we are looking at wave 1 impulse of a greater trend up to 1.3000 and above.

I stopped trading strictly from wave analysis because of too many alternate wave counts.

I still belive another down move is comming befor 1.3000 comes into play. And since the 80% is going to be thinking up trend now its more likely to take the move down we want since 80% is usually wrong. "usually"

Itme,
Am I reading the GBP daily correct. I see that we have either just completed or are about to complete a small upward ABC before a larger 12345 down to around 1.8500 (or probably less). I was thinking of taking a short at 1.8950/60 assuming the up continues tomorrow. If things start to go down tomorrow then I'll wait and take a short on Sunday. Any thoughts ?

Friday October 26 3:45 ET

Thanks. I agree with the above. GBP/USD recently reached what to us is the top of Wave 3 of the "c" wave of an "abc" upwards corrective wave at the high of 1.8925. We just sold it down to 1.8870. We expect a reversal soon and a rise to about 1.8975 to 1.8990 either today or by Monday. Following that a large downwards 1-2-3-4-5 impulse wave, either the fifth wave or the fifth of an extended third wave, targeting 1.8500 approximately.

I sure hope we are correct ;-) I think I have finally found my trading style thanks to you, fixme1too and James16....thanks guys ...you rock !

As long as the high for today holds at 1.9003 its a perfect bounce off the 78.6 fib from the August high of 1.9143. Almost to the pip ! I'm hoping for a pin bar on the daily today but who knows. Look out below!

Friday October 26 11:00 ET

The high so far is 1.9002, slightly higher than predicted. We are now in a corrective phase. According to our analysis, there is one more impulse up about to happen, though it may not reach any higher than the last, nevertheless beware! 1.9007 to 1.9030 is our probable reversal zone.

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Previous trade signal:

GBP/USD update
<HR style="COLOR: #d1d1e1" SIZE=1><!-- / icon and title --><!-- message -->Friday October 26 3:45 ET

Thanks. I agree with the above. GBP/USD recently reached what to us is the top of Wave 3 of the "c" wave of an "abc" upwards corrective wave at the high of 1.8925. We just sold it down to 1.8870. We expect a reversal soon and a rise to about 1.8975 to 1.8990 either today or by Monday. Following that a large downwards 1-2-3-4-5 impulse wave, either the fifth wave or the fifth of an extended third wave, targeting 1.8500 approximately.
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dear item...
want you to know how much i like your thread ...
for GBPUSD I think his last destenation is 1.9007
but if hi brake it up hi'll next stop 1.9034 than 1.9071"more posible to be the last"
by the way thanks for the name

Success Report:

While we were flailing like a drunken swordsman at the EUR/USD and GBP/USD last week due to incorrect Elliott wave counts caused by unusual wave behaviour and our lack of familiarity with a new form of Elliott Wave analysis we had recently learnt (until yesterday when the situation finally came into focus), our TS# 197A EUR/JPY Long trade at 149.96 performed admirably. I will analyse this trade as an example of how a Q-E trade should unfold ideally, and how powerfully effective a successful low risk / high reward trade can be at multiplying capital.

We caught the reversal point of EUR/JPY from a downtrend to an uptrend with 16 pips accuracy and predicted the target with 21 pips accuracy over a 222 pip move. We also advised an interim exit prior to a wave 4 correction with an 8 pip accuracy.

By exiting at the interim bounce point and re-entering after the "abc" fourth corrective wave at 149.60, an extra 30 pips of profit plus an extra compounding of the capital was achieved. This greatly enhanced the return on capital for the trade, as we will explain below.

The original trade had a Reward : Risk Ratio of 7.3 : 1. This is a healthy R: R ratio in general, in this case produced by a situation where we were able to employ a relatively small stop size in a trade with a relatively large anticipated target size. EUR/JPY is a good currency pair for low risk : high reward trading for this very reason. The trend sizes are frequently large, and there are occasional instances where the reversal points can be determined with considerable accuracy.

By exiting at 149.96 and re-entering at 149.60, the effective Reward : Risk Ratio (RRR) increased to 17.8 : 1 from the original 7.3 :1 (The first segment of the trade yielded 5.1:1 RRR, and the second yielded 3.5:1 RRR. Together the result is an effective 17.8:1 RRR. The return on capital for a trade equals the RRR times the Risk Factor ( RF).)

Furthermore, if we had performed a target analysis immediately on the last leg of the upwards journey, our system would have given a conservative target of 150.60, 10 pips higher than the original prediction, and 11 pips shy of the ultimate high. This late term target adjustment would increase the effective Reward : Risk ratio from 17.8 to 19.9 to 1.

If one were trading with a 20% Risk Factor, then this one winning trade above would produce a return on capital of RRR * RF = 19.9 * .20 = 4.0. In other words, the initial capital would increase five fold in this one trade. Furthermore, this one trade would balance out the impact of 6 losing trades, and produce a 4% increase in capital. With a 10% Risk Factor, a combination of 6 losing trades and the one above winning trade would produce a net 6% increase in capital.

This is a feature of low risk : high reward trading that few people understand.
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Previous trade signals:

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

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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.
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Friday October 26 11:00 ET

Update on Trade Signal #203 Sell EUR/CAD to 1.4341

As predicted EUR/CAD put in a high at 1.4320, then descended 198 pips in a Three Wave Pattern to a low of 1.4122. This would have been an excellent point for an interim exit from the trade pending a fourth corrective wave. This fourth corrective wave was very large, returning the price almost all the way to the beginning of the downtrend at 1.4314.

The future movement is expected to progress towards our target of 1.4075, and possibly 1.4050.
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Previous trade signal and commentary:

Tuesday October 17 17:00 ET

Adjust stop on Trade Signal #203 Sell EUR/CAD at 1.4274 to 1.4341. We entered our short trade on this pair at the top of the "a" of the "abc", mistaking it for the top of the "c". The recent high of 1.4315 may be the real top of the upwards corrective wave, or it may still ascend to about 1.4325 before reversing. The recent high and the 1.4325 projected possible high are two high probability reversal points.

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Update Trade Signal #203 Sell EUR/CAD at 1.4274
<HR style="COLOR: rgb(209,209,225)" SIZE=1>
<!-- / icon and title --><!-- message -->Friday, October 13 at 12:45 ET

Our trade signal #203 shorting EUR/CAD pinned the top of the last uptrend to the exact pip at 1.4274. Subsequently the price fell to 1.4200, 74 pips lower this morning, two days later.

EUR/CAD has been range bound to an unusual extent over the past two days. It is therefore likely to shoot strongly out of this narrow range in the near future, either down or up. We aren't certain of which, but our "money" is on the short side of the "bet", and we positioned ourself in this trade in the most ideal price position.

Perhaps USD/CAD will fall strongly, while EUR/USD consolidates at the lower level it is now approaching, which would cause EUR/CAD to fall strongly. Owing to its lesser liquidity, USD/CAD moves with greater volatility than EUR/CAD.
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Previous trade signal:
Wednesday October 11 at 6:00 ET

Trade Signal #203 Sell EUR/CAD at 1.4274
Stop is 1.4305
Target is 1.4075
Risk is 41 pips
Reward is 189 pips
Reward : Risk ratio is 4.6 to 1

For research purposes only.
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Monday October 30 at 10:45 ET

Update #2 on our Trade Signal #210 Buy CAD/JPY at 104.15

Our buy trade on CAD/JPY that was based on a prediction progressed 227 pips from 103.72 to 105.99, completing a 3 wave pattern (the first 1-2-3 of a 1-2-3-4-5 wave set). This interim high would thus have been a good interim exit opportunity while Wave 4 descended, which it did to 104.43, over 150 pips. There is chance of slightly more descent, but the Wave 4 is essentially over, and the path upwards towards our target at 106.40 should be resumed soon.
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Previous trade signals:

Update #1 on our Trade Signal #210 Buy CAD/JPY at 104.15

Wednesday October 18 at 13:45 ET

On Monday October 16 at 5:00 ET when the price was about 104.70 we entered the prediction trade signal Signal #210 Buy CAD/JPY at 104.15
The price subsequently fell to the predicted entry price on October 17, and continued on past that price to 103.72, 6 pips past our stop. However, at the time the entry was triggered the stop should have been adjusted to 103.59 according to our system. Furthermore, an Elliott Wave analysis indicates that the downwards trend was not yet complete at the predicted entry point, and that another impulse wave was indicated. The next high probability reversal target should then have constituted the entry point. That point was at 104.90, which would have been the optimal entry point according to our system, with the stop at 104.59 or even lower. So we are technically still in this long trade, which has risen so far to 104.74, but we entered at a sub-optimal price, 25 pips higher than we would have entered had we monitored the situation at the time of entry and made the correct determinations.

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Monday October 16 at 5:00 ET
Trading Wave 5 up:
Trade Signal #210 Buy CAD/JPY at 104.15
Stop is 103.78
Target is 106.40
Risk is 47 pips
Reward is 215 pips
Reward : Risk ratio is 4.6 to 1

For research purposes only.
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Monday October 30 at 15:15 ET

Trading Wave 5 down:

Trade Signal #218 Sell USD/CAD at 1.1280

Stop is 1.1296

Target is 1.1170

Risk is 21 pips

Reward is 121 pips

Reward : Risk ratio is 5.8 to 1

For research purposes only.

Monday October 30 at 15:15 ET

Trade Signal #219 Sell EUR/CAD at 1.4342

Stop is 1.4372

Target is 1.4075

Risk is 42 pips

Reward is 257 pips

Reward : Risk ratio is 6.1 to 1

For research purposes only.
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