Low Risk, High Reward Trading Experiment

please can somebody tell me how exactly do i calculate the RRR in my trade? dont be annoyed, i am only a newbie, but i need to know. so please help

No problem. If you have a fixed stop going into a trade, and a probable target, then the Probable Reward is the difference between the entry price and the probable target, less the spread. The Probable Risk is the difference between the entry price and the fixed stop, plus the spread. The Reward divided by the Risk is the Reward : Risk Ratio.

Thursday November 9 11:00 ET

Trade Signal #232A Sell EUR/USD at 1.2827

Stop is 1.2866

Target is 1.2720

Risk is 43 pips

Reward is 105 pips

Reward : Risk ratio is 2.4 to 1

For research purposes only.

Thursday November 9 12:00 ET

Trade Signal #233 Buy GBP/CHF at 2.3666

Stop is 2.3634

Target #1 is 2.3840

Risk is 47 pips

Reward is 160 pips

Reward : Risk ratio is 3.4 to 1

For research purposes only.
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GBP/CHF the price now 2.3673...i think u miss something

Thanks, Phai. Typo.

Thursday November 9 12:00 ET

Trade Signal #234 Sell CHF/JPY at 94.90

Stop is 95.20

Target is 92.40

Risk is 40 pips

Reward is 240 pips

Reward : Risk ratio is 6.0 to 1

For research purposes only.
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There has to be an error either in the direction of the trade or of the SL and TP. I believe that it is in the direction of the trade since there is a pin bar on the 1H chart suggesting that a short may be in order. Am I correct?

Thanks, Moonchild. CHF/JPY is indeed a short. Haste makes waste. There are trade opportunities here and there, and I am trying to assess a few.

Thursday November 9 12:30 ET

Trade Signal #235 Sell EUR/JPY at 151.37

Stop is 151.61

Target is 149.40

Risk is 26 pips

Reward is 175 pips

Reward : Risk ratio is 6.7 to 1

For research purposes only.
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GBP/JPY came within 3 pips of our target (recent high of 225.27) at what appears to be the top of the third component wave up. A target adjustment close to the target being reached would have triggered a small adjustment, however, as the target hit is an exact high probability reversal value. If we had been paying closer attention to this currency pair, we would have both purchased at 224.00 and exited at 225.27 to capture 118 pips of profit with a risk of 30 pips, resulting in a trade with a Reward : Risk Ratio of 3.9

The extended narrow consolidation range that GBP/JPY was stuck in made this a particularly safe, easy, obvious, and fast trade for our trading system.

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Previous trade signal:

Trade Signal #229 Buy GBP/JPY at 224.00

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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We were incorrect in our wave count with Trade Signal #226 Sell EUR/CAD at 1.4448 entered on November 7, 2006. The entry price was not the top of Wave C of the corrective wave (as thought and noted at the time the trade signal was posted), only the top of Wave C-1. The trade was up 56 pips of profit at one point as the second wave descended, but then it rose again to complete waves 3, 4 and 5 of Wave C (1-2-3-4-5), eventually meeting our original stop.

The Top of Wave C is the end of Wave C-5 which appears to have been met this morning, November 9, when the price met 1.4513, 2 pips past our stop. By the time the stop was met, however, our system would have re-adjusted the stop to 1.4527 .

Note that the size of this corrective wave is unusually large, so the original mistake was very understandable. The proper time of entry into this short EUR/CAD trade was actually at the beginning of the downwards impulse wave at 1.4525, not the top of the first upwards corrective wave at 1.4448, which can be quite difficult to pin down.

Mid-trend entry trades are both less strategic in terms of Reward : Risk Ratio, and in terms of the difficulty to properly assess the correct entry price.
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Previous trade signal:

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 -->

With Trade Signal #221 Sell AUD/USD at 1.7750 we sold AUD/USD at 1.7750, then we did an interim exit at the market price of .7687 to capture 60 pips of profit, then we re-entered at what we took to be the top of the corrective wave at .7692 . The price subsequently rose to .7760, much higher than expected, and then recently fell to .7645, still far short of our original target at .7540 .

A re-appraisal of the AUD/USD situation leads us to believe that the original premise of this trade is incorrect, and that we were trading a corrective wave down with a target of the recent low price, that the price may not descend any lower than this recent low price, and that we should have exited the trade at the recent low of .7645 to take a second profit of 44 pips, and that the upwards target of this present move, which is the fifth large wave of the trend which began October 11, 2006 at a price of .7415 is between .7800 and .7885.

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Previous Trade Signals:

Re-enter Trade Signal #221 Sell AUD/USD at market price

Monday November 6 at 4:00 ET

We advised an interim exit of trade on Friday pending a Wave 4 correction.
The correction finished at .7704, 17 pips higher. That would have been the perfect price to re-sell. If that was not done, then re-enter now at .7692.
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Previous Trade Signal:

Friday November 3 at 9:00 ET

Exit Trade Signal #221 Sell AUD/USD at 1.7750 at the market price of .7687

Profit is 60 pips
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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.

Dear itme..
well..i am confuse with gbp, what happen with it, could you give some opinion with cable, itme? and euro of course itme.. what cause that euro climbeb to 1.2865,is this any something wrong outside?
thanks my friend..
waskito

The trade concept Trade Signal #233 Buy GBP/CHF at 2.3666 was predicated on a failed fifth wave down. This turned out not to be the case, as a fifth wave materialised, carrying the price down to 2.3643 - precisely our stop . The problem is that I didn't calculate the most probable reversal values, and it turns out that 2.3643 is the most probable reversal value exactly . So, in a conservative strategy, we would not enter a trade before the most probable reversal value is reached, and furthermore, we would never place a stop precisely on a most probable reversal value, but 10 to 15 pips on the far side of it .
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Previous trade signal:

Thursday November 9 12:00 ET

Trade Signal #233 Buy GBP/CHF at 2.3666
Stop is 2.3634
Target #1 is 2.3840
Risk is 47 pips
Reward is 160 pips
Reward : Risk ratio is 3.4 to 1

For research purposes only.

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Hi Waskito, my trade signals on GBP/USD have been confused, but my analysis has been spot on. We analysed it carefully yesterday and determined that there would be a good buy if it fell to 1.8950, which was not likely. The next good low risk / high reward trade would be shorting it from the top of the last rise up, at about 1.9100 or higher.

When I saw it reach the bottom of a wave, I placed a buy signal at 1.9035, knowing it would be heading upwards for another wave. Upon further consideration, I figured out that there would be another wave down probably before the big fifth wave up, so I exited that trade. I concured with Kenario that 1.9075 would be a good limit for the topside movement before the last wave down, and thus a good short sell trade opportunity. ("I agree, a rise of GBP/USD to 1.9075 is quite possible, which could be a good short opportunity depending on the EW count at the time.") . I issued a sell signal when the price reached 1.9075 and the wave pattern looked complete, but I should have employed a conservative target of 1.9000 for that short trade, however, and not the extreme low possibility of 1.8950 as a target. That was a blunder. The lower figure was the figure we arrived at earlier for a viable low risk / high reward long trade up to a target of 1.9100.

The price came down to 1.8973 and reversed direction, but I wasn't monitoring the market at the time. We should have exited our short trade at 1.9000 for 70 pips of profit and entered a long trade at 1.8975. The rise up was exactly as predicted. The high so far is 1.9108, and it could be the ultimate high. However, there could be one more impulse up to complete the pattern.

("Thursday November 9 at 00:00 ET -- Agreed, Kenario, I think GBP/USD will go down again to about 1.9000 or 1.8965, or even 1.8935 to complete its present downwards corrective wave before it rises again to above 1.9100, if it does so.")

Selling EUR/USD at 1.2827 was a bit of impulsiveness (Trade Signal #232A Sell EUR/USD at 1.2827), as we saw signs of a reversal at about that price, but it was obviously unwise. That was just near to the top of Wave 3, and obviously not the top of Wave 5. Also, the price level wasn't right for a major reversal. When we studied the situation further, we realised we could exit that trade at the bottom of the Wave 4 correction at about 1.2824 for break even, but the forum was out of commission for server maintenance, so we couldn't post anything then. Anyone with even a rudimentary knowledge of Elliott Wave theory could see that the uptrend on EUR/USD and GBP/USD was incomplete, and that there was a fifth wave still coming. Thus they should have know to exit at the bottom of the ABC downwards Wave 4 corrective wave.

Friday November 10 2:00 ET

Trade Signal #233A Buy GBP/CHF at 2.3630

Stop is 2.3597

Target #1 is 2.3865

Risk is 48 pips

Reward is 220 pips

Reward : Risk ratio is 4.6 to 1

For research purposes only.
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Previous trade signal:

Comment on Trade Signal #233 Buy GBP/CHF at 2.3666

The trade concept Trade Signal #233 Buy GBP/CHF at 2.3666 was predicated on a failed fifth wave down. This turned out not to be the case, as a fifth wave materialised, carrying the price down to 2.3643 - precisely our stop . The problem is that I didn't calculate the most probable reversal values, and it turns out that 2.3643 is the most probable reversal value exactly . So, in a conservative strategy, we would not enter a trade before the most probable reversal value is reached, and furthermore, we would never place a stop precisely on a most probable reversal value, but 10 to 15 pips on the far side of it .
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Thursday November 9 12:00 ET

Trade Signal #233 Buy GBP/CHF at 2.3666
Stop is 2.3634
Target #1 is 2.3840
Risk is 47 pips
Reward is 160 pips
Reward : Risk ratio is 3.4 to 1

For research purposes only.

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Friday November 10 2:30 ET

I meant to post this about an hour ago, so part of my prediction of the EUR/USD movement may be history, if I am correct. According to our analytical model, I predicted that this small fourth downwards ABC corrective wave would carry the price down to about 1.2845, and then reverse to an upwards last small fifth wave with a top at about 1.2870 to 1.2880.

It has since fallen to 1.2847 and risen (so far) to 1.2864. It is engaged in what looks like a mini-wave four, and seems well poised to meet our target.

Friday November 10 3:30 ET

I meant to post this about two hours ago, so part of my prediction of the GBP/USD movement may be history, if I am correct. According to our analytical model, this small fourth downwards ABC corrective wave would carry the price down to about 1.9070 (which is what happened), and then reverse to an upwards last small fifth wave with a top at about 1.9130 to 1.9140.

It has since fallen to 1.9071 and risen (so far) to 1.9130. It is engaged in what looks like a mini-wave four, and seems well poised to meet our target of 1.9140.
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Thursday November 9 4:00 ET

GBP/USD just met our conservative high probability reversal value at 1.9173 and completed a full 5 wave Elliott Wave pattern.

Trade Signal #236 Sell GBP/USD at 1.9173

Stop is 1.9205


Target is 1.8975

Risk is 35 pips

Reward is 194 pips

Reward : Risk ratio is 5.7 to 1


For research purposes only.