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Low Risk, High Reward Trading Experiment

  • #1,961
  • Nov 28, 2006 4:25pm Nov 28, 2006 4:25pm
Quoting monarch
Itme,

If you look at the 1 Day 10 Year "Candle Chart" at the Wave 5 top you will see the High was 1.3666 on 12/30/04, and with the corrective A Wave the Low was 1.2730 on 2/8/05.

If you subtract the low from the high you will come up with 936 pips difference, divide that by two and you have the middle of the High/Low which is 468 pis. Add that to the Low - or subtract if from the high - and you will come up with the price of 1.3198 for the center of the High/Low. We just hit that mark in the past 15 minutes.

Would you consider this in any of your studying?

Monarch
The Opening Price on the EUR/USD on the 1 Day 10 Year Chart opened at 1.3198, we are now waiting for Wave "B" to make its appearance, then we should see the drop down for the Wave "C" Corrective Wave.

I expect EUR/USD to rise to 1.3220/30 area before making the pattern for Wave "B" that we are anticipating.

Monarch
  • #1,962
  • Nov 28, 2006 4:27pm Nov 28, 2006 4:27pm
are you saying that if price action does not reflect the theory, this is not reflective of shortcomings in the theory?

Quoting MuddBuddha
Any discrepency in price action Vs. current wave theory is not the fault of the theory;
  • #1,963
  • Nov 28, 2006 5:32pm Nov 28, 2006 5:32pm
Quoting clam61
are you saying that if price action does not reflect the theory, this is not reflective of shortcomings in the theory?
That is what X waves are for, LOL. Clam, no system or theory is foolproof. The holy grail does not exist. It has never been invented and will never be invented. The dynamics change from time to time, and what made you money before, will lose you money if you don't change when the dynamics change. From my experience, EW has been the best forecasting tool that I have ever seen. Will it forecast better than 85% accuracy? No. Show me one that can do better if you know. But if you are searching for the holy grail, I don't think you are going to find it. And if by a miracle you do, we won't be hearing from you, cause u will become a billionaire.
  • #1,964
  • Nov 28, 2006 5:37pm Nov 28, 2006 5:37pm
Clam61, I think that small wave you circled would be an "a" of a lesser degree a-b-c, forming the larger "A" - given the rest of the wave count is correct (always a moot point!)
  • #1,965
  • Nov 28, 2006 5:49pm Nov 28, 2006 5:49pm
What a great thread!
  • #1,966
  • Nov 28, 2006 5:53pm Nov 28, 2006 5:53pm
Tuesday November 28 at 19.00 ET

Trade Signal #261 Sell GBP/USD at 1.9540

Stop is 1.9571

Target is 1.9300

Risk is 35 pips

Reward is 236 pips

Reward : Risk ratio is 6.6 to 1

For research purposes only.
<!-- / message --><!-- sig -->
  • #1,967
  • Edited Nov 29, 2006 9:28am Nov 28, 2006 6:07pm | Edited Nov 29, 2006 9:28am
Tuesday November 28 at 19:00 ET

Trade Signal #257A Sell GBP/JPY at 226.74

Stop is 227.21

Target is 224.00

Risk is 56 pips

Reward is minimum 265 pips

Reward : risk ratio is 4.9 to 1

For research purposes only.

We are trading a Wave 4 down, following what we believe is a completed extended Third Wave.

The upwards wave three just completed (presumably) was larger than expected, because USD/JPY rose in tandem with the strong rise in GBP/USD, instead of falling as is the usual behavior of USD/JPY while GBP/USD rises.<!-- / message --><!-- sig -->

p.s. - an extended third wave carried the price up to 227.15, slightly short of our stop at 227.21, after which GBP/JPY fell to 226.20.
______________________________________________________________
______________________________________________________________

Previous trade signal:

Tuesday November 28 at 4:00 ET

Trade Signal #257 Sell GBP/JPY at 226.06
Stop is 226.51
Target is 224.00
Risk is 54 pips
Reward is minimum 197 pips
Reward : risk ratio is 3.6 to 1

For research purposes only.

This is not a system compliant trade because the R:R ratio is too small. But it is a good experiment to learn from. We are trading a Wave 4 down, following what we believe is a completed extended Third Wave.
<!-- / message --><!-- sig -->
  • #1,968
  • Nov 28, 2006 6:09pm Nov 28, 2006 6:09pm
thanks mr. elliot! yes i know there is no holy grail. just asking some questions as im studying!

Quoting wwwin
That is what X waves are for, LOL. Clam, no system or theory is foolproof. The holy grail does not exist. It has never been invented and will never be invented. The dynamics change from time to time, and what made you money before, will lose you money if you don't change when the dynamics change. From my experience, EW has been the best forecasting tool that I have ever seen. Will it forecast better than 85% accuracy? No. Show me one that can do better if you know. But if you are searching for the holy grail, I don't think you are going to find it. And if by a miracle you do, we won't be hearing from you, cause u will become a billionaire.
  • #1,969
  • Nov 28, 2006 6:43pm Nov 28, 2006 6:43pm
I think there is a holy grail. However, it doesn't matter, because if we can be right only 50% of the time we will do great! By trying our best and aiming high, we have a good chance of achieving greatness.
  • #1,970
  • Nov 28, 2006 6:45pm Nov 28, 2006 6:45pm
you're right, the holy grail is itme

Quoting itme
I think there is a holy grail. However, it doesn't matter, because if we can be right only 50% of the time we will do great! By trying our best and aiming high, we have a good chance of achieving greatness.
  • #1,971
  • Nov 28, 2006 6:55pm Nov 28, 2006 6:55pm
GPBUSD. This is my humble opinion. As I have stated, I think that we are on W3. Today W3 passed W1 in price amplitude but not in time amplitude. This in my mind strengthens my count belief, since one of the rules is that 3 is never the shortest. The question now, again in my humble opinion, is which will be the extended wave. I think 3 still has some legs. I do agree with itme that at some point there will be a drop, though we see it for different reasons. When it happens it will be W4 in my count. I dont think we are there yet, so I would not short here. When in fact w4 begins, I forecast the drop to be a little more than itme forecasts. I forecast no less than 300 pip drop and maybe a little more when 4 starts. As always, we shall see.
  • #1,972
  • Edited 7:54pm Nov 28, 2006 6:56pm | Edited 7:54pm
To discover whether something exists, one must assume (by way of a hypothesis) that it does exist, and then proceed accordingly. That is the experimental method.

So we assume that the Elliott Wave basic structure is always operating. So far, we have found few, if any exceptions. We can always expand the theory to embrace a few variations, but this is rarely necessary. By assuming that the basic theory is always true, then even if it is only adhered to 50% or 75% of the time by the market, then we can win at least that many trades. It is also possible, with good strategy, to win a trade even when one's wave count is incorrect. On the other hand, if one assumes that EW Theory is bunk, then one will never find out for sure whether it is, in fact, a valid theory.

Recognising the waves and thus being able to identify them properly is a complex science. It is not subjective, it is just complex. That is my opinion.

I just read this quote from Schaeffer's Investment Research which I think somewhat describes the system we are evolving here:

"At Schaeffer’s, our proprietary filters and sentiment tools look for stocks where fundamental and technical signs are counter to current investor sentiment. This creates a perfect contrarian buying opportunity."
  • #1,973
  • Nov 28, 2006 7:00pm Nov 28, 2006 7:00pm
WWWin, you make some good points. We will watch carefully the pattern formed by this retracement we now expect to happen, and bail out if necessary if it does not prove to be the Real Thing (Wave 4). As usual, after a significant move one must revisit the charts with a fresh mind and assess what one knows, what one does not know, the degree of certainty, and what the best strategy is for a low risk / high reward trade opportunity.
  • #1,974
  • Nov 28, 2006 7:02pm Nov 28, 2006 7:02pm
Quoting itme
to discover whether something exists, one must assume that it does exist, and then proceed accordingly. That is the experimental method. So we assume that the Elliott Wave basic structure is always operating. So far, we have found few, if any exceptions. We can always expand the theory to embrace a few variations, but this is rarely necessary. By assuming that the basic theory is always true, then even if it is only adhered to 50% or 75% of the time by the market, then we can win at least that many trades. It is also possible, with good strategy, to win a trade even when one's wave count is incorrect. On the other hand, if one assumes that EW Theory is bunk, then one will never find out for sure whether it is in fact a valid theory. Recognising the waves and thus being able to identify them properly is a complex science. It is not subjective, it is just complex. That is my opinion.
And the beauty of EW, is that you can profit from it, even when it does not do what it is supposed to do, such as a failure of W5, those are one of the best shorting opportunities. It seems that a lot of ellioticians would short at that time.
  • #1,975
  • Nov 28, 2006 7:13pm Nov 28, 2006 7:13pm
great points. i just want to make sure everyone knows that i am only asking these questions for my intellectual curiosity, as i have been reading "mastering elliot waves" by glen neely for the past week and a half

i do not mean to insult anyone
  • #1,976
  • Nov 28, 2006 7:24pm Nov 28, 2006 7:24pm
Quoting clam61
great points. i just want to make sure everyone knows that i am only asking these questions for my intellectual curiosity, as i have been reading "mastering elliot waves" by glen neely for the past week and a half

i do not mean to insult anyone
Clam, have you tried to do a little forecasting on pound with the rules in Ch. 3 of mastering?
  • #1,977
  • Nov 28, 2006 7:58pm Nov 28, 2006 7:58pm
Quoting wwwin
Clam, have you tried to do a little forecasting on pound with the rules in Ch. 3 of mastering?
not yet. i am in the process of writing a simple indicator for metatrader to gather data and draw the plots rather than do it by hand.

have you? i think i am going to start on the euro as i hear it behaves more
  • #1,978
  • Nov 28, 2006 8:00pm Nov 28, 2006 8:00pm
If you take the extent of the last retracement (1.9182 on 10 Nov, down to 1.8831 on 17 Nov) - 351 pips - and add it to that high, you get 1.9182 + 351 = 1.9533 - which was around the high as of yesterday's close. That is, 100% projection of that move. Moreover, we also have the Dec 2004 high at 1.9548 - which we have not quite reached as of now, but looks likely to be tested - likely to act as significant resistance. (Surely?) So this is more support for ITME's latest turning point (I am assuming that ITME is using other method's to get this point? i.e. the secret and amazingly accurate fibonacci-EW-Q-Mayan calendar method?)
However, time will tell... no signs of it stopping yet!
  • #1,979
  • Nov 28, 2006 8:08pm Nov 28, 2006 8:08pm
Quoting clam61
not yet. i am in the process of writing a simple indicator for metatrader to gather data and draw the plots rather than do it by hand.

have you? i think i am going to start on the euro as i hear it behaves more
I have not gotten into it either. Sounds great about the indicator. Let us know when u have it.
  • #1,980
  • Nov 28, 2006 8:12pm Nov 28, 2006 8:12pm
Quoting starfire
If you take the extent of the last retracement (1.9182 on 10 Nov, down to 1.8831 on 17 Nov) - 351 pips - and add it to that high, you get 1.9182 + 351 = 1.9533 - which was around the high as of yesterday's close. That is, 100% projection of that move. Moreover, we also have the Dec 2004 high at 1.9548 - which we have not quite reached as of now, but looks likely to be tested - likely to act as significant resistance. (Surely?) So this is more support for ITME's latest turning point (I am assuming that ITME is using other method's to get this point? i.e. the secret and amazingly accurate fibonacci-EW-Q-Mayan calendar method?)
However, time will tell... no signs of it stopping yet!
Could be, but if it breaks that resistance, then we are looking at an extended, I think I will wait and see. This thing is not showing much weakness yet.
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