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Low Risk, High Reward Trading Experiment

  • #1,541
  • Oct 30, 2006 6:10pm Oct 30, 2006 6:10pm
Quoting itme
Monday October 30 at 15:15 ET

Trading Wave 5 down:

Trade Signal #218 Sell USD/CAD at 1.1280

Stop is 112.96

Target is 1.1170

Risk is 21 pips

Reward is 121 pips

Reward : Risk ratio is 5.8 to 1

For research purposes only.
something wrong with this call...

we not reaching 1.1280 yet...and how come stop is 112.96???????
{Link Removed}]
  • #1,542
  • Oct 30, 2006 6:21pm Oct 30, 2006 6:21pm
Quoting kenari05
something wrong with this call...

we not reaching 1.1280 yet...and how come stop is 112.96???????
lol....seriously dude, it's obvious she ment 1.1296
  • #1,543
  • Oct 31, 2006 9:22am Oct 31, 2006 9:22am
Tuesday October 31 at 10:30 ET

Trade Signal #220 Sell GBP/USD at 1.9060
Stop is 1.9081


Target is 1.8950


Risk is 25 pips

Reward is 106 pips

Reward : Risk ratio is 4.2 to 1

For research purposes only.

<!-- / message --><!-- / message -->
  • #1,544
  • Oct 31, 2006 9:35am Oct 31, 2006 9:35am
Tight stop for such volitility. I commend your courage Itme.
  • #1,545
  • Oct 31, 2006 11:13am Oct 31, 2006 11:13am
Quoting itme
Tuesday October 31 at 10:30 ET

Trade Signal #220 Sell GBP/USD at 1.9060
Stop is 1.9081


Target is 1.8950


Risk is 25 pips

Reward is 106 pips

Reward : Risk ratio is 4.2 to 1

For research purposes only.

<!-- / message --><!-- / message -->
stopped out again !!
{Link Removed}]
  • #1,546
  • Edited 1:21pm Oct 31, 2006 11:55am | Edited 1:21pm
Hi Twinchell,

Shorting GBP/USD when it was barreling up today was like jumping in front of a freight train. Definitely reckless. Do not repeat in your live accounts! I was expecting a smaller wave, and didn't really pay close attention to the style of movement that should have been a signal that a strong move was underway. Is there a fundamental explanation, or is this a technical move?

When a strong move is underway, it is better not to try to predict its endpoint, but rather to choose a judicious entry point when the reversal has already suggested itself.

EFXNews :

The market has recently become relatively numb to volatile moves and this could set up a larger breakdown than many people have become accustomed too. Over the past several months, there has always been the opportunity to play the move from the opposite side, assuming you pick your spots well, but the current move feels more ominous and traders who go against the move risk being left behind with train tracks on their foreheads.<!-- / message --><!-- sig -->
  • #1,547
  • Oct 31, 2006 12:03pm Oct 31, 2006 12:03pm
Tuesday October 31 at 13:00 ET

Trade Signal #221 Sell AUD/USD at 1.7750

Stop is 1.7776

Target is 1.7540

Risk is 30 pips

Reward is 205 pips

Reward : Risk ratio is 6.8 to 1

For research purposes only.
Note: the Elliott Wave count is not clear, so this is a low confidence trade, just an experiment.
  • #1,548
  • Oct 31, 2006 12:10pm Oct 31, 2006 12:10pm
Itme, don't take this personal, but sometimes I think you look too far into the risk versus reward and let that blind you sometimes. Today was an example. If the stop would have been a bit larger, it could have had a much greater probability of succeding; however the R:R wouldn't be as high as it was. But of course I realize the whole point is low risk and high reward, so I digress. For the record, I follow your journal relatively close, and it is interesting to me, even though I have not read one thing about Elliott waves.
  • #1,549
  • Oct 31, 2006 12:36pm Oct 31, 2006 12:36pm
Quoting itme
Tuesday October 31 at 13:00 ET

Trade Signal #221 Sell AUD/USD at 1.7750

Stop is 1.7776

Target is 1.7540

Risk is 30 pips

Reward is 205 pips

Reward : Risk ratio is 6.8 to 1

For research purposes only.
Note: the Elliott Wave count is not clear, so this is a low confidence trade, just an experiment.
Hi Itme,

How confident are you about this signal...

Thanks
  • #1,550
  • Oct 31, 2006 12:41pm Oct 31, 2006 12:41pm
Quoting babarmughal
Hi Itme,

How confident are you about this signal...

Thanks
Is this a rhetorical question, or am I just missing something? Maybe you should go back and reread his post.
  • #1,551
  • Oct 31, 2006 12:43pm Oct 31, 2006 12:43pm
I think she said:

the Elliott Wave count is not clear, so this is a low confidence trade, just an experiment.
fxtrada.com
  • #1,552
  • Oct 31, 2006 12:44pm Oct 31, 2006 12:44pm
Quoting itme
Tuesday October 31 at 10:30 ET

Trade Signal #220 Sell GBP/USD at 1.9060
Stop is 1.9081


Target is 1.8950


Risk is 25 pips

Reward is 106 pips

Reward : Risk ratio is 4.2 to 1

For research purposes only.

<!-- / message --><!-- / message -->
Hi Itme,
Do you still see a 12345 Down (Larger C wave) to come ? That was a pretty darn strong C move up which almost leads you to believe it might have been a 3 and we are still on the way up. Is this fun or what ....
  • #1,553
  • Oct 31, 2006 12:46pm Oct 31, 2006 12:46pm
Quoting itme
...Is there a fundamental explanation, or is this a technical move?
I don't keep up with the fundies; however, both Consumer Confidence and Chicago PMI were released about the time of the move upward. I would venture to guess this was the driving factor.
  • #1,554
  • Oct 31, 2006 1:30pm Oct 31, 2006 1:30pm
First of all, Twinchell, thanks for the comment. I think you are right. There is alot of complex reasoning that can go into a trade, and trying to find the right balance between risk and reward, and probability of success is a complex issue. That being said, the difficulty of getting things right is much reduced if one has done one's homework, has analysed the patterns thoroughly while in a calm and clear state of mind, and has the latest information about data releases, etc.

This morning, for instance, the Forex Factory calendar showed two important data releases at 11:00 Eastern Time. DailyFX calendar shows these releases at 10:00 ET. The market moved strongly at 10:00 ET. Is the FF calendar wrong? I checked it and developed the view that the market move was unrelated to a data release, which was apparently incorrect. If I had known that the data releases had occured and were moving the market, I would have exercised much more caution.

<TABLE class=tborder cellSpacing=0 cellPadding=3 width="100%" align=center border=0><THEAD><TR><TD class=alt1>11:00am </TD><TD class=alt1 align=middle>USD</TD><TD class=alt1>Consumer Confidence</TD><TD class=alt1 align=middle>http://www.forexfactory.com/forexfor...isc/mi_med.gif</TD><TD class=alt1 align=middle>105.4</TD><TD class=alt1 align=middle>108.0</TD><TD class=alt1 align=middle>104.5</TD><TD class=alt1 id=collapsecal_eventanalysis_2927 align=middle>[read] </TD></TR></THEAD><TBODY id=collapseobj_eventanalysis_2927 style="DISPLAY: none"><TR><TD class=alt1 style="PADDING-BOTTOM: 11px; BACKGROUND-COLOR: #f0feed" width="100%" colSpan=9>

<FIELDSET class=smallfont style="PADDING-RIGHT: 10px; PADDING-LEFT: 10px; MARGIN-BOTTOM: 9px; PADDING-BOTTOM: 2px; WIDTH: 70%; PADDING-TOP: 4px"><LEGEND>Definition</LEGEND>

Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.

</FIELDSET>

</TD></TR></TBODY><THEAD><TR><TD class=alt1 noWrap></TD><TD class=alt1>11:00am </TD><TD class=alt1 align=middle>USD</TD><TD class=alt1>Chicago PMI</TD><TD class=alt1 align=middle>http://www.forexfactory.com/forexfor...isc/mi_med.gif</TD><TD class=alt1 align=middle>53.5</TD><TD class=alt1 align=middle>58.0</TD><TD class=alt1 align=middle>62.1</TD><TD class=alt1 id=collapsecal_eventanalysis_2928 align=middle>[read]</TD></TR></THEAD></TABLE>
  • #1,555
  • Edited 10:31pm Oct 31, 2006 1:44pm | Edited 10:31pm
I have interspersed a few comments about the Elliott Waves into my trade signals and commentaries / updates. My mentor's perspective on the current waves on EUR/USD is that we are engaged in an upwards Wave C of a 4th Wave correction on a larger 5 wave downwards trend. He didn't expect another rise, though I did. The latest rise doesn't seem complete either. I guess this latest news that came out this morning resulted in a fairly strong last wave up to complete, or nearly complete, the Wave c, to be followed by a large wave down. But this is only one hypothesis, subject to validation by the market's behavior. The wave patterns have been atypical and difficult to analyse lately on this currency pair. Another interpretation is that this entire recent uptrend is a Wave A, to be followed by a downwards Wave B and another upwards Wave C.

GBP/USD topped out at 1.9097 today, and may not rise any higher. But the wave count is not clearly complete, so it may rise again a bit higher. And strong resistance at 1.9100 may produce a failed fifth wave on this latest uptrend, or a small break above 1.9100.

Our recent analysis of EUR/USD gives us evidence to believe that the price will decline to 1.2720 to 1.2740, and then rise to as high as 1.2850 to 1.2860.

The downwards trend on EUR/GBP looks to be complete, so no further large upwards moves on GBP/USD are required to complete the EW pattern in that pair.
  • #1,556
  • Oct 31, 2006 2:01pm Oct 31, 2006 2:01pm
Keep in Mind your have 5 usd news pieces between 8:15am est. and 10:30am including the ISM then at 1pm Bernanke speaking. So all this will have a huge influence on the usd, which direction who knows but put on your seat belts...
Enter Signature
  • #1,557
  • Oct 31, 2006 2:06pm Oct 31, 2006 2:06pm
Itme,

I had GBP/USD & 1.9080 as an absolute tops ( give or take 5 pips) & found 1.9100 had been hit this afternoon (I'm in France)!!

I have no complex wave formula, in fact, my slowly developing system is primative BUT if I take 1.9100 as a ceiling, 1.8600 is my end year projection.

How does your E+Q system see the end December?

Supplimentary question - the news today obviously pushed the pair up, so, do you still maintain that news cannot effect your E+Q forecasts?

Best regards

Quoting itme
Tuesday October 31 at 10:30 ET

Trade Signal #220 Sell GBP/USD at 1.9060
Stop is 1.9081


Target is 1.8950


Risk is 25 pips

Reward is 106 pips

Reward : Risk ratio is 4.2 to 1

For research purposes only.

<!-- / message --><!-- / message -->
  • #1,558
  • Oct 31, 2006 3:01pm Oct 31, 2006 3:01pm
Quoting itme
This morning, for instance, the Forex Factory calendar showed two important data releases at 11:00 Eastern Time. DailyFX calendar shows these releases at 10:00 ET. The market moved strongly at 10:00 ET. Is the FF calendar wrong? I checked it and developed the view that the market move was unrelated to a data release, which was apparently incorrect. If I had known that the data releases had occured and were moving the market, I would have exercised much more caution.

<TABLE class=tborder cellSpacing=0 cellPadding=3 width="100%" align=center border=0><THEAD><TR><TD class=alt1>11:00am </TD><TD class=alt1 align=middle>USD</TD><TD class=alt1>Consumer Confidence</TD><TD class=alt1 align=middle>http://www.forexfactory.com/forexfor...isc/mi_med.gif</TD><TD class=alt1 align=middle>105.4</TD><TD class=alt1 align=middle>108.0</TD><TD class=alt1 align=middle>104.5</TD><TD class=alt1 id=collapsecal_eventanalysis_2927 align=middle>[read] </TD></TR></THEAD><TBODY id=collapseobj_eventanalysis_2927 style="DISPLAY: none"><TR><TD class=alt1 style="PADDING-BOTTOM: 11px; BACKGROUND-COLOR: #f0feed" width="100%" colSpan=9>

<FIELDSET class=smallfont style="PADDING-RIGHT: 10px; PADDING-LEFT: 10px; MARGIN-BOTTOM: 9px; PADDING-BOTTOM: 2px; WIDTH: 70%; PADDING-TOP: 4px"><LEGEND>Definition</LEGEND>

Measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future. Higher readings point to higher consumer optimism. When consumers are optimistic they tend to purchase more goods and services, which stimulates the economy.




</FIELDSET>




</TD></TR></TBODY><THEAD><TR><TD class=alt1 noWrap></TD><TD class=alt1>11:00am </TD><TD class=alt1 align=middle>USD</TD><TD class=alt1>Chicago PMI</TD><TD class=alt1 align=middle>http://www.forexfactory.com/forexfor...isc/mi_med.gif</TD><TD class=alt1 align=middle>53.5</TD><TD class=alt1 align=middle>58.0</TD><TD class=alt1 align=middle>62.1</TD><TD class=alt1 id=collapsecal_eventanalysis_2928 align=middle>[read]</TD></TR></THEAD></TABLE>
Itme, my calendar shows 10:00 for the releases. Maybe you have a conflict due to the daylight savings time change. You may want to look further into this.
  • #1,559
  • Oct 31, 2006 3:34pm Oct 31, 2006 3:34pm
"Supplementary question - the news today obviously pushed the pair up, so, do you still maintain that news cannot effect your E+Q forecasts?"

Obviously the news moves the markets, particularly on the short term, and perhaps even on certain longer time frames. We studied announcement trading for three months recently - and are aware of the science of announcement trading.

It's a more complex question as to whether certain longer trend targets are inevitable. It will take alot more study and observation to answer this question definitively, but suffice it to say that there are many times that we have observed the prices moving to a predetermined target in spite of fundamentals that either did not motivate it or which should theoretically, according to naive fundamentalists, have retarded it.

We have described before on this thread how we have observed the fundamental data releases creating certain typical movement patterns when they interact with the Elliott Wave and other technical factors influencing market behavior. By factoring all of the pertinent factors - both technical and fundamental - into the equation, it seems that most or all of the market's moves can be explained, if not predicted. This type of analysis is extremely complex, however, because each component is complex, and the interactive dimension adds another order of complexity into the situation.

The goal of our trading system is to learn to recognise and exploit circumstances which are either relatively simple or where all the factors reinforce each other, where the low risk : high reward trader can safely enter the market and have a good chance of winning his or her trade.
  • #1,560
  • Oct 31, 2006 3:41pm Oct 31, 2006 3:41pm
Thanks, Twinchell,
I checked my forex factory data calendar page and found that my time zone setting had somehow migrated to Eastern Canada Time, which is different than ET. Thanks for helping to solve this mystery. As in many fields involving data analysis - garbage in , garbage out. Today my information about data releases was flawed because of the wrong time setting, which caused me to believe that the move was technically motivated, not fundamentally motivated, causing me to step in front of a moving freight train. Those who seek to avoid problems - take a lesson from this "experiment". Make sure all your assumptions going into a trade are valid, by verifying from more than one source if possible.
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