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Low Risk, High Reward Trading Experiment

  • #1,981
  • Nov 28, 2006 9:56pm Nov 28, 2006 9:56pm
Quoting wwwin
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. .

What do you think is the accuracy rate of EW ??

85% ?
  • #1,982
  • Nov 28, 2006 10:27pm Nov 28, 2006 10:27pm
Quoting newbietrader101
What do you think is the accuracy rate of EW ??

85% ?
That was a reference to a guy that sells EW software who had to pay a hefty fine for pitching the software to forecast commodities prices with at least 85% accuracy, after an order had been entered to cease and desist
  • #1,983
  • Nov 29, 2006 5:48am Nov 29, 2006 5:48am
Dennis Gartman's Rules of Trading

Every year at this time, trading maven Dennis Gartman publishes his "Rules of Trading." This year they are more succinct than ever, and simple though they may be, they are also profound. Dennis has come by some of the rules the hard way, and it pays us to learn from his long and successful trading career.

DENNIS GARTMAN'S NOT-SO-SIMPLE RULES OF TRADING

1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; it is trading's driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.

6. "Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent." These are Keynes' words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!

11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! And when they are yellin', you should be sellin'!"

12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.

15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.

16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
  • #1,984
  • Nov 29, 2006 7:40am Nov 29, 2006 7:40am
This should help us with our pro-USD trades.
<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1"> 8:30am </td> <td class="alt1" align="center">USD</td> <td class="alt1">GDP Annualized q/q (f)</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">2.2%</td> <td class="alt1" align="center">1.8%</td> <td class="alt1" align="center">1.6%</td> <td class="alt1" id="collapsecal_eventanalysis_3147" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3147" style="display: none;"> <tr> <td class="alt1" style="background-color: rgb(240, 254, 237); padding-bottom: 11px;" colspan="9" width="100%">

<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Investica Analysis</legend>

Housing investment will be important

</fieldset> <fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Gross Domestic Product (GDP) measures the total value of all goods and services produced by the economy. A rising trend has a positive effect on the nation's currency. GDP is the broadest measure of economic activity and considered to be the primary gauge of an economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. A strong economy also persuades the central bank to raise interest rates in an attempt to control growth. All of this activity will increase demand for the nation's currency.

</fieldset>



</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 8:30am </td> <td class="alt1" align="center">USD</td> <td class="alt1">GDP Deflator Annualized q/q (f)</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">1.8%</td> <td class="alt1" align="center">1.8%</td> <td class="alt1" align="center">1.8%</td></tr></thead> </table>
  • #1,985
  • Nov 29, 2006 7:57am Nov 29, 2006 7:57am
Thank you Itme for the good trading advise from a seasoned trader.
I printed it out, good to have!!
Steve
  • #1,986
  • Nov 29, 2006 8:06am Nov 29, 2006 8:06am
Wednesday November 29 at 8:45 ET

The trade opportunity that has been predicted for some time is very near now:

Trade Signal #246 Sell AUD/CAD at .8930

Stop is .8961

Target is .8700

Risk is 41 pips

Reward is 220 pips

Reward : Risk ratio is 5.3 to 1

For research purposes only.<!-- / message --><!-- controls -->
___________________________________________________________
___________________________________________________________

Previous prediction trade signal:

Thursday November 23 at 21:00 ET

I will repost my previous AUD/CAD trade signal. This still looks like a fine opportunity to short at either .8880 or .8890 after a very long trend upwards that has been underway since September 28 and will have carried the price up 590 pips.

__________________________________________________ ___________
__________________________________________________ ___________

Monday November 20 at 17:00 ET

Trade Signal #246 Sell AUD/CAD at .8890
Stop is .8925
Target is .8660
Risk is 44 pips
Reward is 221 pips
Reward : Risk ratio is 5.0 to 1

For research purposes only.<!-- / message --><!-- controls -->

Note: the entry price should be reached in a few days, and as early as November 21.
  • #1,987
  • Nov 29, 2006 8:38am Nov 29, 2006 8:38am
Wednesday November 29 at 9:30 ET

Trade Signal #258A Sell GBP/CHF at 2.3570

 Stop is 2.3606

 Target is 2.3300 to 2.3265

 Risk is 48 pips

Reward is minimum 258 pips

Reward : risk ratio is minimum 5.4 to 1

For research purposes only.

____________________________________________________________
_____________________________________________________________

Tuesday November 28 at 4:00 ET

Trade Signal #258 Sell GBP/CHF at 2.3453
Stop is 2.3486
Target is 2.3300 to 2.3265
Risk is 45 pips
Reward is minimum 141 pips
Reward : risk ratio is minimum 3.1 to 1

For research purposes only.

Due to a substandard RRR, this trade is not system-compliant; it is simply an experiment. We are trading the fifth wave of the Fifth Wave of GBP/CHF down to the very bottom of this trend, which if it reaches our first target of 2.3300, will have travelled a total of 564 pips down.
  • #1,988
  • Nov 29, 2006 8:57am Nov 29, 2006 8:57am
Wednesday November 29 at 9:45 ET

Trade Signal #262 Sell EUR/CAD at 1.5000

 Stop is 1.5036

 Target is 1.4750

 Risk is 46 pips

Reward is minimum 240 pips

Reward : risk ratio is minimum 5.2 to 1

For research purposes only.

_________________________________________________________
_________________________________________________________

Earlier prediction of the ultimate high of EUR/CAD <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> I said, " But the wave pattern still does not yet resemble a complete 1-2-3-4-5 Wave 5 pattern. EUR/CAD is therefore likely to rise a final time to about 1.4950 after falling in an A-B-C corrective wave to about 1.4800. If it does this, then this will be a good short trade opportunity."

Monarch said, "I expect Wave 5 to hit around 1.5020 before turning down, 1.5009 is where I will place my Entry Short Position (which is the middle of the two resistant levels shown above) then I expect it will makes its first Corrective Wave A at the 1.4776 level, where my Exit Target is placed, I then expect it to rise in it's Wave B pattern."

After studying the one day chart some more I can see why EUR/CAD is doing a correction off of the recent high price, and then can anticipate a further high being reached of anywhere between 1.4975 and 1.5100, with 1.5100 being a high probability reversal point. 1.5100 is the 50% retracement approximately of the downtrend since 12/27/2004
  • #1,989
  • Nov 29, 2006 9:11am Nov 29, 2006 9:11am
More news that helps the USD, and our trades, released at 10:00 ET:

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 10:00am </td> <td class="alt2" align="center">USD</td> <td class="alt2">Existing Home Sales m/m</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">6.24M</td> <td class="alt2" align="center">6.20M</td> <td class="alt2" align="center">6.18M</td></tr></thead> </table>
  • #1,990
  • Nov 29, 2006 9:48am Nov 29, 2006 9:48am
Wednesday November 29 at 10:45 ET

Trade Signal #263 Sell NZD/USD at .6808

 Stop is .6841

 Target is .5780

 Risk is 38 pips

Reward is minimum 193 pips

Reward : risk ratio is minimum 5.0 to 1

For research purposes only.

Note: entry price was reached earlier before we noticed the opportunity, but our system puts the entry exactly at .6808.
  • #1,991
  • Nov 29, 2006 10:10am Nov 29, 2006 10:10am
itme,

Looking at the 1 Day 10 Year "Candle and Line Charts" there seems to be a possible top for the "B" Wave upwards at the 1.3200 point.

Do you think the EUR/USD has hit it's High for Wave B at the 1.3216 mark?

Thanks,

Monarch
  • #1,992
  • Nov 29, 2006 10:28am Nov 29, 2006 10:28am
Wednesday November 29 at 11:15 ET

Trade Signal #264 Sell USD/CHF at 1.2103

 Stop is 1.2126

 Target is 1.1974

 Risk is 27 pips

Reward is minimum 125 pips

Reward : risk ratio is minimum 4.6 to 1

For research purposes only.

Note: entry price was reached earlier before we could document this trade, but our system puts the entry exactly at 1.2103.
  • #1,993
  • Nov 29, 2006 11:53am Nov 29, 2006 11:53am
itme, i assume this trade is exited for a small profit?
Quote
Friday November 24 at 9:00 ET

Trade Signal #256 Buy USD/CHF at 1.2050

Stop is 1.1995

Target is 1.2325

Risk is 60 pips

Reward is 270 pips

Reward : Risk ratio is 4.5 to 1

For research purposes only.

We are trading what we believe is the first or A wave of a large Fourth Wave up.
  • #1,994
  • Nov 29, 2006 2:40pm Nov 29, 2006 2:40pm
itme

is the stop 1.5036 or 1.5046 because it says the risk is 46 pips

Quoting itme
Wednesday November 29 at 9:45 ET

Trade Signal #262 Sell EUR/CAD at 1.5000

 Stop is 1.5036

 Target is 1.4750

 Risk is 46 pips

Reward is minimum 240 pips

Reward : risk ratio is minimum 5.2 to 1

For research purposes only.

_________________________________________________________
_________________________________________________________

Earlier prediction of the ultimate high of EUR/CAD <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> I said, " But the wave pattern still does not yet resemble a complete 1-2-3-4-5 Wave 5 pattern. EUR/CAD is therefore likely to rise a final time to about 1.4950 after falling in an A-B-C corrective wave to about 1.4800. If it does this, then this will be a good short trade opportunity."

Monarch said, "I expect Wave 5 to hit around 1.5020 before turning down, 1.5009 is where I will place my Entry Short Position (which is the middle of the two resistant levels shown above) then I expect it will makes its first Corrective Wave A at the 1.4776 level, where my Exit Target is placed, I then expect it to rise in it's Wave B pattern."

After studying the one day chart some more I can see why EUR/CAD is doing a correction off of the recent high price, and then can anticipate a further high being reached of anywhere between 1.4975 and 1.5100, with 1.5100 being a high probability reversal point. 1.5100 is the 50% retracement approximately of the downtrend since 12/27/2004
  • #1,995
  • Nov 29, 2006 4:28pm Nov 29, 2006 4:28pm
itme you were right to the pip!

where do you see this going? i didnt trade this, but what wuold be a logical place for a stop

Quoting itme
Monday November 27 at 7:15 ET

As originally predicted, AUD/USD rose to .7815 today, and shows signs of rising one more time after completing an A-B-C corrective wave pattern to an ultimate high of about .7850. This would be a good short opportunity.
___________________________________________________________
___________________________________________________________

Previous analysis of AUD/USD:

AUD/USD analysis for Thursday November 23 at 10:45 ET <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Thursday November 23 at 10:45 ET

My most recent analysis of AUD/USD confirms my previous analysis. AUD/USD is heading up to an ultimate high of .7780 to .7800

It was incorrect for us to have exited our long AUD/USD trade at .7736 to make only 46 pips of profit. We sacrificed at least 44 pips of profit, and halved the rate of return on our trade by doing so. We were obviously not of a normal state of mind when we entered our trades yesterday.

p.s. - as of November 24 at 4:30 ET AUD/USD has risen to an interim high of .7776, and has only formed a 1-2-3 wave pattern of an expected 1-2-3-4-5 impulse wave pattern. The most recent prediction for an ultimate high is .7794

__________________________________________________ _____________-
__________________________________________________ _____________

Re-enter Trade Signal #244 Buy AUD/USD at .7686 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message --> Tuesday November 21 at 8:00 ET

I wasn't watching it at the time, but AUD/USD descended as predicted after our temporary exit signal at .7702 and fell 16 pips to .7686 at 3:20 ET this morning, comprising a 38.2% retracement exactly, and forming an obvious A-B-C pattern. It also met our exact high probability reversal number at this value. We should therefore have re-entered a long trade at .7702, and be holding for our target at about .7725 to .7800, and most likely .7800.
  • #1,996
  • Nov 29, 2006 5:54pm Nov 29, 2006 5:54pm
Thanks, Clam61. We are monitoring so many currency pairs that there is insufficient time to properly analyse some of them. As soon as I get on top of a few, another few slip through my fingers. We have two contradictory trades open on USD/CHF. Only one will work. Which one? Right now, I think the original trade is probably valid, but it may be a premature entry, so it might be good to cash out with a small profit of about 50 pips. Also, we must consider that the latest one could also be based on a wrong long term wave count. I will report back later when I get a chance to analyse it more.
  • #1,997
  • Nov 29, 2006 6:03pm Nov 29, 2006 6:03pm
Wednesday November 29 at 19:00 ET

The entry price for Trade Signal #246 Sell AUD/CAD at .8930 was missed by only 1 pip. Upon further analysis we feel that this was only the top of Wave 3, and that another rise is possible. Therefore adjust entry price to .8973, and stop to .9006.

Adjust entry price for Trade Signal #246 Sell AUD/CAD to .8973

 Adjust stop for Trade Signal #246 Sell AUD/CAD to .9006

 The target stays the same, so the reward : risk ratio will be increased to 6.1 : 1
_________________________________________________
_________________________________________________

Previous trade signals:

Wednesday November 29 at 8:45 ET

The trade opportunity that has been predicted for some time is very near now:

Trade Signal #246 Sell AUD/CAD at .8930

Stop is .8961

Target is .8700

Risk is 41 pips

Reward is 220 pips

Reward : Risk ratio is 5.3 to 1

For research purposes only.<!-- / message --><!-- controls -->
__________________________________________________ _________
__________________________________________________ _________

Thursday November 23 at 21:00 ET

I will repost my previous AUD/CAD trade signal. This still looks like a fine opportunity to short at either .8880 or .8890 after a very long trend upwards that has been underway since September 28 and will have carried the price up 590 pips.

__________________________________________________ ___________
__________________________________________________ ___________

Monday November 20 at 17:00 ET

Trade Signal #246 Sell AUD/CAD at .8890
Stop is .8925
Target is .8660
Risk is 44 pips
Reward is 221 pips
Reward : Risk ratio is 5.0 to 1

For research purposes only.<!-- / message --><!-- controls -->

Note: the entry price should be reached in a few days, and as early as November 21.
  • #1,998
  • Nov 29, 2006 6:12pm Nov 29, 2006 6:12pm
Wednesday November 29 at 19:00 ET

Based on my Elliott Wave count, I think it is probable that AUD/USD will rise one more time to .7855 to .7870

This would be an ideal short opportunity, with an interim target at about .7710. Stop is .7891
  • #1,999
  • Nov 29, 2006 6:22pm Nov 29, 2006 6:22pm
The EUR/CAD stop is correct. The risk is equal to the distance from the entry price to the stop, plus the spread.
  • #2,000
  • Nov 29, 2006 6:44pm Nov 29, 2006 6:44pm
Dear Itme, by any chance does the "Q" in your Q-E theory stand for quadratic?
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