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Low Risk, High Reward Trading Experiment

  • #1,701
  • Edited 2:06pm Nov 11, 2006 1:43pm | Edited 2:06pm
Tom, thanks for your comment. In the following comment, which of the eight or so different scales of waves are you refering to?

"New to the Elliot Wave theory but am wondering is the Eur/Jpy beginning wave 4 down then wave 5 up. Or is it just a small retracement on wave 3.

Thanks, Tom"

I suspect that you are refering to the trend that began on November 2. We may have reached the top of that trend, but a careful study suggests that we are trading wave 4 down, and that the reversal price will be about 150.50, followed by another upwards impulse wave - Wave 5 up to a new high at about 152.50 or so. On the other hand, Wave 3 may not be finished, and this will then be a smaller retracement, which may not go down much further than we have already witnessed. The conservative trader might want to exit their position and wait for a clarification of the wave count, and another better entry opportunity higher up, or at the bottom of a large correction. We should monitor this situation carefully.
  • #1,702
  • Nov 11, 2006 4:15pm Nov 11, 2006 4:15pm
Hello itme,

What´s your thought with the CHF/JPY?
  • #1,703
  • Nov 12, 2006 9:08am Nov 12, 2006 9:08am
ITME,

In a given day, 5 days per trading week, how long do u work out (? hours) at the charts, anlayzing the short term Time frames to the longer time frames(TF), plus more revision #s as TF gets shorter?

A wild goose guess - 10 hours per day?
CCI decipherer
  • #1,704
  • Nov 12, 2006 3:04pm Nov 12, 2006 3:04pm
What I have found is that it takes many hours to properly evaluate one currency pair. This analysis is only valid for a short time, and then must be repeated again and again ad infinitum. My mentor only analyses one pair - EUR/USD, and has spent so many hours familiarising himself with it that he knows it like the back of his hand. He builds on his previous analysis, and he has such a strong system and well-validated analysis that the updates take less than 1 hour per day, which is sufficient to keep him up to date with what is going on, and accurate most of the time.

My curiosity has lead me to study many currency pairs in order to understand the entire interconnected currency market system. This takes much more time, familiarity with each individual currency pair and its idiocyncracies is very difficult, and the quality of my analyses is thus frequently compromised by fatigue, hurry, and lack of time.

My global trading approach requires a team of five or ten people working full time to accurately identify and assess situations where a reliable market prediction can be made, and then collating the reliable predictive data from various currency pairs to construct a meta-hypothesis of the next major market move. If this capability is ever accomplished, then we will be able to identify high probability / large scale market movements and capitalise on them very accurately and efficiently.

However, this may never happen, as it is difficult to develop the individual proficiency to identify high probability / high profitability trading opportunities and to manage them effectively, let alone construct a team of uniformly proficient analysts that can work together to ongoingly generate a stream of accurate, reliable predictions that can be employed as input data for a meta-market analysis to optimise the trading strategy within the omni-market environment.
  • #1,705
  • Nov 13, 2006 1:04am Nov 13, 2006 1:04am
I just learnt about the FX Street signal tracker, and noticed a couple of profitable looking signal service providers. I checked out one that looked pretty good. I was thinking about quitting my research and letting the Mexicans trade my capital. Does anyone here have any good reasons why this wouldn't be a good idea? That way I could retire before I even got started and just sip pina coladas on the beaches of the world while the industrious Mexicans (who need jobs and would benefit from from diversification of their economy from oil, cocaine, marijuana, prostitution, and slave labor into the financial sector), could do my trading for me.

Here is a link to the thread I started to discuss this proposal:

http://www.forexfactory.com/forexfor...ad.php?t=10114

Please check it out and tell me what you think.
  • #1,706
  • Nov 13, 2006 1:31am Nov 13, 2006 1:31am
According to my analysis, if EUR/CAD rises to between 1.4645 and 1.4665 from its current price of 1.4555, and finishes a small upwards five wave pattern (starting at 1.4518), then it will possibly be a good short for a Wave 4 corrective wave down to about 1.4350.
  • #1,707
  • Nov 13, 2006 1:56am Nov 13, 2006 1:56am
Quoting itme
I just learnt about the FX Street signal tracker, and noticed a couple of profitable looking signal service providers. I checked out one that looked pretty good. I was thinking about quitting my research and letting the Mexicans trade my capital. Does anyone here have any good reasons why this wouldn't be a good idea? That way I could retire before I even got started and just sip pina coladas on the beaches of the world while the industrious Mexicans (who need jobs and would benefit from from diversification of their economy from oil, cocaine, marijuana, prostitution, and slave labor into the financial sector), could do my trading for me.

Here is a link to the thread I started to discuss this proposal:

http://www.forexfactory.com/forexfor...ad.php?t=10114

Please check it out and tell me what you think.

But Itme you've come so far....wouldn't this be a bad example for the rest of us? lol

Myabe you should just focus on one pair, I've often thought (no offense) that you've been a little pip crazy. Who really needs 50,000x return on their capital in just a few weeks? You probably could be pretty close to sipping pina coladas on those beaches if you'd relax and choose quality of trades instead of quanity.

And idk if this is personal but what drives you to spend all these hours getting each perfect trade on all these different currencies? I'm pretty sure its more than just financial independence, is it the challenge? Why this challenge? You know you could set your challenege 10x lower and still soar over 99% successful traders.
  • #1,708
  • Nov 13, 2006 2:22am Nov 13, 2006 2:22am
After buying GBP/CHF according to Trade Signal #233A Buy GBP/CHF at 2.3630 the price rose to 2.3729, and we advised a temporary exit at 2.3724 to capture 80 pips of profit. The price has since fallen 72 pips to 2.3652.


After reviewing the situation it looks like there is a chance that GBP/CHF has not finished its downtrend yet, and may fall once more in a fifth and final wave to a new low at about 2.3565. We could re-enter our buy trade at about 2.3650, but this would be a little bit risky. There will be a better entry position for a low risk / high reward buy trade if the price falls to about 2.3565.
______________________________________________

Temporary Exit of Trade Signal #233A Buy GBP/CHF at 2.3630

Friday November 10 16:45 ET

We believe that USD/CHF is due to fall quite strongly about now (current high about 1.2417), bringing down GBP/CHF. Therefore we advise temporary exit of GBP/CHF long trade at 1.3724 to capture 80 pips of profit.
Re-enter long position following completion of A-B-C corrective downwards 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.
_____________________________________

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 .
__________________________________________________ ___

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.
<!-- / message -->
  • #1,709
  • Nov 13, 2006 2:52am Nov 13, 2006 2:52am
Thanks for your comment, aicccia. The reason why I tell myself why I am doing my research is in order to learn how to trade the forex market. That is a skill that I want to develop in order that I can have a happy, balanced life and achieve financial greatness in order to accomplish magnificent deeds of philanthropy in the world. I am also very scientific, and my research has piqued my curiousity about the nature of reality in many different aspects. The challenge is very motivating also, due to the difficulty of this undertaking. I also would enjoy assisting others to liberate themselves from debt and galling poverty, but I don't want to facilitate people to become excessively greedy and materialistic.
  • #1,710
  • Nov 13, 2006 3:01am Nov 13, 2006 3:01am
Quoting itme
After buying GBP/CHF according to Trade Signal #233A Buy GBP/CHF at 2.3630 the price rose to 2.3729, and we advised a temporary exit at 2.3724 to capture 80 pips of profit. The price has since fallen 72 pips to 2.3652.


........

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.
_____________________________________
.............
<!-- / message -->
itme,

Congratulations. !!! It is good to see that you have modified your trading to incorporate a form of "trailing stop". This will increase your profits (or, reduce your losses marginally).

Your trading is now becoming more pragmatic and it is starting to show in your results. (Your win rate is still less than 15%, but your accumulated losses are not increasing exponentially any more).
It will also prevent your trades going from a small profit to a loss (which happened in many of your "experimental" trades.

However, this form of trading appears to be a divergence from your Elliott Wave trading. In the example above, Elliott Wave theory dictated that you remain in the trade until 2.3865 was achieved. Are you starting to have doubts about the veracity of the Elliott Wave theory?

Quote
Originally Posted by itme
I just learnt about the FX Street signal tracker, and noticed a couple of profitable looking signal service providers. I checked out one that looked pretty good. I was thinking about quitting my research and letting the Mexicans trade my capital. Does anyone here have any good reasons why this wouldn't be a good idea?

Again, I applaud you on your perseverance with Elliott Wave theory, but I thnk that you are finding (as most other long term traders have) that Elliott Wave is not sufficiently reliable as a trading model.
  • #1,711
  • Nov 13, 2006 3:08am Nov 13, 2006 3:08am
Itme,

Your intention to help others is very much appreciated and u have given a wonderful contribution. But, sometimes we have to learn how to "ignore". There people who will never satisfied and worst never know how to appreciate. Just ignore them and continue with your great objective and I believe many others would love to be on your side.


just my humble $0.02
Shah For every action there is an equal and opposite reaction.....
  • #1,712
  • Nov 13, 2006 3:13am Nov 13, 2006 3:13am
Sorry, Jacko, but though your intentions may be very noble, your comments seem to be quite disconnected from reality, as usual. I have neither introduced any form of "trailing stop", nor renounced my commitment to Elliott Wave theory. I am simply evolving my understanding of it, and constantly experimenting with new trading strategies. Exiting a trade at the end of the third wave in order to re-enter at the end of the fourth large corrective wave is a major refinement of my trading methodology, which has the potential to double my already incomparably high rate of return.

But please feel free to "assess" my research according to your highly prejudiced or delusional perspective from time to time. It is good to be truly open to all points of view in order to avoid missing any important perspectives.
  • #1,713
  • Nov 13, 2006 3:37am Nov 13, 2006 3:37am
Black Swan Theory by Nasem Nicolas Taleb,
http://www.gladwell.com/2002/2002_04_29_a_blowingup.htm

ITME, after reading the entire post, it seems to me that u want to be like Taleb, shooting for the eventual home-run(like catching a whale), whilst Neederhoffer is going for the small fish, opening himself to the great white shark's jaws. Victor's fund got clobbered in 1997 & Sept 11,2001.
CCI decipherer
  • #1,714
  • Nov 13, 2006 3:46am Nov 13, 2006 3:46am
[quote]
Quoting itme
Sorry, Jacko, but though your intentions may be very noble, your comments seem to be quite disconnected from reality, as usual. ...
... my trading methodology, which has the potential to double my already incomparably high rate of return.
QUOTE]

"my already incomparably high rate of return" .....

This statement is just TOTALLY incorrect.

1.Your win rate is much less than 15% (and nearer to 10%)

2.Your accumulated losses are staggering. Any impressionable newbie who was naive enough to follow your "experimental" trades would have busted within weeks of commencement of trading.

However, your real intention here has already been posted

Quote

Originally posted by itme (post 1306)

Depending on the results, I expect to implement this trading system (or a slightly modified and refined version), and make some money finally after all this work.

I am also planning to work with a team of people to develop a trading system and business plan to provide trading signals to people on a commercial basis.

and

Quote

Originally posted by itme (post 1316)<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

What we might do is pre-select who we make into millionaires. Only people in need, or people with good values. Then we will only make about 1,000 millionaires each year, to prevent our project from rocking the boat. The people could let us trade their accounts, so if their accounts got too large, we could set them free. We needn't provide a guarantee. No financial investments that offer the possibility of high returns are guaranteed to succeed.<o></o>
  • #1,715
  • Edited 4:57am Nov 13, 2006 3:55am | Edited 4:57am
Some people's malicious intent clouds their intellect quite severely. As I have made abundantly clear to all unprejudiced people since the inception of this thread, this thread is a personal trading journal that consists of a series of discreet experiments devoted to the development of a high performance trend reversal prediction trading system which, if successful, could be employed in a variety of ways, including to supply a high return signal service to people with special financial needs. The goal of the experiments is not to prove the performance of the as yet non-existent finalised trading system, but to generate data towards the creation and development of that trading system. The trading system has neither been explained, nor have its performance characteristics been discussed beyond saying that the goal is to achieve better than a 50% success rate at trades with a better than 5:1 reward : risk ratio.
  • #1,716
  • Nov 13, 2006 4:07am Nov 13, 2006 4:07am
[quote=jacko]
Quote

QUOTE]

"my already incomparably high rate of return" .....

This statement is just TOTALLY incorrect.

1.Your win rate is much less than 15% (and nearer to 10%)

2.Your accumulated losses are staggering. Any impressionable newbie who was naive enough to follow your "experimental" trades would have busted within weeks of commencement of trading.

However, your real intention here has already been posted



and

Dear jacko ,
From your comment I understand you never been a consistent winner.
you don't understand R/R and you are a complete newbie in forex and stocks .
hope not insult you . but you just started to trade and your lack of experience is obvious.


  • #1,717
  • Nov 13, 2006 4:07am Nov 13, 2006 4:07am
Itme keep up the great work, I follow your journey daily.
Although I have a very different trading methodology my goal is similar to yours.

Quoting itme
... the goal is to achieve better than a 50% success rate at trades with a better than 5:1 reward : risk ratio.
-soso
  • #1,718
  • Nov 13, 2006 4:16am Nov 13, 2006 4:16am
[quote=oedipean]
Quoting jacko
Dear jacko ,
From your comment I understand you never been a consistent winner.
you don't understand R/R and you are a complete newbie in forex and stocks .
hope not insult you . but you just started to trade and your lack of experience is obvious.




Is 30+ years as stock trader and 15+ years as futures trader sufficient???? Or am I still a newbie ???


  • #1,719
  • Nov 13, 2006 4:47am Nov 13, 2006 4:47am
Jacko / Wanda,

It would greatly help if u stop criticising others and intead post your own call signals on another thread JUST for 1 week. That is all. What's the reason u migrated from the FXCM forum?
CCI decipherer
  • #1,720
  • Nov 13, 2006 5:09am Nov 13, 2006 5:09am
Thanks, SOGT725 for pointing us to the Black Swan Theory article. I really enjoyed it. Although I'm not following statistical analysis in the same way the Taleb traders do, I am combining pattern analysis with statistical analysis. Also, my methodology limits losses and strives to make large gains when reversals occur according to criteria which have been statistically correlated with reversals in the past. So there are some major correspondences between my evolving system and that of the Taleb group of fund managers. I'm not sure that the analogy can be extended to assume that Jacko or other detractors or traders who trade in other ways deliberately expose themselves to a small probability risk of making huge losses. I don't know how many traders do that, but the conventional wisdom is that all traders should employ stop losses, and I assume that most institutional traders devote considerable energy to risk management. I would expect that Niederhoffer is a member of a minority who play such risky games that expose themselves to catastrophic losses in order to make consistent high returns.
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