Low Risk, High Reward Trading Experiment

itme.... how about EU....second mini wave have finish on daily chart? what do u think...

Dear itme,

For the AUD/CAD siganal you post yesterday with a target at .8510, how many days to reach the target?

Roche.

looks like it reached the stop.

The comment I made last night about there being a possible, though poor quality trade set-up on GBP/USD indicates two things:

First, our trade system has a built in protective aspect, because when a trade set-up is poor, such as in this example, where the Reward : Risk ratio is only 2.0 :1, which isn't even close to our system minimum of 5:1, then there is also a higher risk of failure. When the reward : risk ratio enters our acceptable zone of 5:1 to 20:1, then the probability of success is much higher. This helps to keep us out of losing trades.

Second, basic common sense and good industry practise would have us put our stop above the recent high or low, in this case at 1.9133. This isn't an absolute rule, but it is very sensible. In this case, putting the stop at about 1.9150 would have prevented our being stopped out, but also prevented us from entering a dangerous trade because the reward : risk ratio would be very low.

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Previous failed prediction:

Possible short trade of GBP/USD <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Selling GBP/USD at 1.9053 with a stop at 1.9110 and a target of 1.8925 is a fair trade with a high probability of success, though a mediocre reward : risk ratio.
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Tuesday November 7 at 13:00 ET

Trade Signal #225 Sell EUR/USD at 1.2818

Stop is 1.2876

Target is 1.2500

Risk is 60 pips

Reward is 316 pips

Reward : Risk ratio is 5.2 to 1

For research purposes only.

Note: the current price is 1.2811. When the price reached 1.2818, it reached a high probability reversal value, which would have been the correct entry price according to our system. At the same time that EUR/USD reached a high probability reversal value at 1.2818 (10:20 ET), USD/CHF had also reached a high probability reversal value, which is confirmation of a possible reversal.

I was not monitoring EUR/USD at the time, so this escaped my attention. An entry at about 1.2811 is very close to 1.2818 in this case, however, and would not deteriorate the reward : risk value very much. The price could return to 1.2818, or go even higher.

<TABLE class=tborder id=post131991 cellSpacing=1 cellPadding=6 width="100%" align=center border=0><TBODY><TR><TD class=thead>Tuesday November 7 at 14:00 ET


On November 3 we made the following statement:

11-03-06, 11:50 <!-- / 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 --></TD></TR><TR><TD class=alt1><!-- message, attachments, sig --><!-- icon and title -->EUR/CAD is worth examining as a long trade now


EUR/CAD might be a good buy now. Both EUR/USD and USD/CAD could rise simultaneously, producing a large upwards move. It will require more study.

The current price is 1.4339. It could descend a bit more to provide a premium entry opportunity.


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The price of EUR/CAD did in fact decline slightly further, to 1.4332, before rising 121 pips to a recent high of 1.4453. Therefore it was indeed a viable long trade opportunity with low risk and high reward.

The price of 1.4450 is a high probability reversal value based on both Elliott Wave theory and our reversal prediction system. The price movement should reverse from upwards to downwards.

This is a system compliant trade. The stop is 1.4511 and the target is 1.4175. The trade is a short, as should be evident from the position of the stop and target. The entry point was at 1.4450. Unfortunately that is not the current price, which is 1.4440. If it rises again to 1.4450 then the opportunity will repeat itself. Otherwise the opportunity for the same trade has passed.

Sorry, but sometimes that's the way it is. Often the price returns to the entry zone and gives us a second or third chance. Otherwise, we should consider these situations as opportunities to test our system and learn. Knowledge and skill are the of the greatest value - above all else, along with patience and discipline.

ps - a few hours later the price rose again to 1.4448
pps - a little later the price of 1.4452 was touched
ppps - a few hours later the price came and hit the upper trend line a third time, this time rising to 1.4470, completing a five wave pattern on the last upwards impulse

is eurocad long now?
pls spesific point to entry itme?

I think he said it will be a good short entry at 1.4450.

Tuesday November 7 at 20:30 ET

Trade Signal #226 Sell EUR/CAD at 1.4448
Stop is 1.4511
Target is 1.4175
Risk is 72 pips
Reward is 263 pips
Reward : Risk ratio is 3.8 to 1

For research purposes only.

In terms of Elliott Wave, this is estimated to be the top of the "C" wave of a Wave 2 corrective wave.<!-- / message -->

Tuesday November 7 at 23:45 ET

Trade Signal #227 Buy USD/CHF at 1.2470

Stop is 1.2433

Target is 1.3000

Risk is 42 pips

Reward is 525 pips

Reward : Risk ratio is 12.3 to 1

For research purposes only.

In terms of Elliott Wave, this is estimated to be the fifth impulse wave of the "C" wave of a large upwards corrective wave.

P.S. - I was hoping for a bit of a fall to 1.2470 for USD/CHF, but then as I watched recently (it is now Nov 8 at 2:30 ET) I noticed that the price pattern had moved sideways in a small band over to the rising trendline, and dropped only to 1.2479. I could see that the chance of a break of the rising trendline and a fall to 1.2470 was not very high by that point, and for such a good potential trade to risk missing the entry price for an extra 9 pips was not worth it.

I was about to modify the entry price to 1.2480 when a visitor coming to my house prevented me. However, the system correct action would have been to enter at 1.2480. This is a mid-trend entry, which is not ideal. The real correct entry price is actually 1.2440, which is exactly the probable reversal price according to our trend reversal system, and also the exact bottom. It corresponded in time to the reversal point of EUR/USD , as pointed out above.

(EUR/USD note from above: "Note: the current price is 1.2811. When the price reached 1.2818, it reached a high probability reversal value, which would have been the correct entry price according to our system. At the same time that EUR/USD reached a high probability reversal value at 1.2818 (10:20 ET), USD/CHF had also reached a high probability reversal value, which is confirmation of a possible reversal.

I was not monitoring EUR/USD at the time, so this escaped my attention. An entry at about 1.2811 is very close to 1.2818 in this case, however, and would not deteriorate the reward : risk value very much. The price could return to 1.2818, or go even higher.")<!-- / message --><!-- / message -->
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Tuesday November 8 at 00:45 ET

Trade Signal #228 Buy CAD/JPY at 103.85

Stop is 103.54

Target #1 is 105.70

Target #2 is 107.30

Risk is 41 pips

Reward is 175 / 335 pips

Reward : Risk ratio is 4.3 /8.4 to 1

For research purposes only.

In terms of Elliott Wave, this is estimated to be the third impulse wave of a large upwards fifth wave.<!-- / message -->
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My newbie luck . I wonder what will happen after GBP release the interest rate statement. since it has already discounted, will it retrace down?. USD interest rate cut is expected next year which mean USD weaken further.

Going for this one, too good reward.

Buy USD/CHF now - at 1.2450, and the stop can be lowered, while the reward is increased!

Trade at your own risk. Caution!

Hello itme,

I`m just wondering for how long in average does your signals meet the target. Hours, days, weeks?
Thanks for your valuable info.

Roche.

Hi Roche, Thanks for the question. The answer lies on the one day chart. The period of a half cycle, from peak to trough, varies widely. The maximum daily travel is 550 pips in 24 hours, on GBP/USD and GBP/CHF.

USD/CHF recently rose from 1.2288 to 1.2769 (481 pips) during the period September 25, 2006 to October 13, 2006, a period of about 15 days. It then came down 366 pips in 13 days.

USD/CHF fell 680 pips in 11 days starting on April 17, 2006.

On December 30, 2005, USD/CHF fell 523 pips in only 5 days.

Wednesday November 8 at 8:45 ET

There is a possibility that EUR/USD will go up one more time on a Wave C of a largish corrective wave to as much as 1.2815, so we recommend exiting temporarily at 1.2765, capturing a 48 pip profit, awaiting an upwards 1-2-3-4-5 wave before re-entering. Alternatively, EUR/USD may have finished its A-B-C corrective wave, and be about to do a Wave 4 bounce on its downwards 5 wave set.

Those who bought USD/CHF at 1.2450 may also want to exit temporarily and claim about 43 pips profit.

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Previous trade signal:

Tuesday November 7 at 13:00 ET

Trade Signal #225 Sell EUR/USD at 1.2818

Stop is 1.2876

Target is 1.2500

Risk is 60 pips
Reward is 316 pips
Reward : Risk ratio is 5.2 to 1

For research purposes only.

Note: the current price is 1.2811. When the price reached 1.2818, it reached a high probability reversal value, which would have been the correct entry price according to our system. At the same time that EUR/USD reached a high probability reversal value at 1.2818 (10:20 ET), USD/CHF had also reached a high probability reversal value, which is confirmation of a possible reversal.

I was not monitoring EUR/USD at the time, so this escaped my attention. An entry at about 1.2811 is very close to 1.2818 in this case, however, and would not deteriorate the reward : risk value very much. The price could return to 1.2818, or go even higher.
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Being a relative newcomer to the wonderful world of forex, I have learned so much from you, Itme... Thank you for your valuable insight....


Scott

Thanks, Scott.

Wednesday November 8 at 9:00 ET

I just took a look at GBP/JPY, which is the dragon (fastest and largest moving) of the currency pairs. It has been hibernating in a 50 pip horizontal channel for about three days, and is likely to come shooting out of this narrow channel with a vengeance soon. We should have entered a buy trade at the bottom of the channel, at about 224.00, with a target at 225.30, and a stop at 223.79. We will enter this trade strictly as a thought experiment, in order to research the effectiveness of our trading system.

Tuesday November 8 at 00:45 ET

Trade Signal #229 Buy GBP/JPY at 224.00

Stop is 223.79

Target is 225.30

Risk is 30 pips

Reward is 121 pips

Reward : Risk ratio is 4.0 to 1

For research purposes only.

In terms of Elliott Wave, this is estimated to be the fifth impulse wave of a large upwards fifth wave.<!-- / message -->
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Question-- as I type this, the GBP/JPY is at 224.29.... how late should one enter this trade if he chose to do so??