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Low Risk, High Reward Trading Experiment

  • #2,321
  • Dec 19, 2006 11:08pm Dec 19, 2006 11:08pm
Hey, just curious. Do u have a system set up to trade the elliot wave theory? if not... does anyone have a system based on that theory?
  • #2,322
  • Edited 11:55pm Dec 19, 2006 11:17pm | Edited 11:55pm
Quoting nikim
Hey, just curious. Do u have a system set up to trade the elliot wave theory? if not... does anyone have a system based on that theory?
We employ our interpretation of EW Theory along with another theory called the Q model (personal, proprietary, in development). Northpro also employs Elliott Wave Theory in his trading journal called WaveTrade.

You can find alot of valuable ideas in the Beginners Forum under The Basics of Elliott Wave Theory thread.
  • #2,323
  • Edited 8:08am Dec 20, 2006 4:20am | Edited 8:08am
Wednesday December 20 at 5:15 ET

Exit Trade Experiment #292 Sell GBP/USD at 1.9693 to capture a small profit and re-enter at approximately 1.9760 to 1.9780
_____________________________________________________
_____________________________________________________

Previous trade experiment:

Tuesday December 19 at 19:45 ET
Trade Experiment #292 Sell GBP/USD at 1.9726
 Stop is 1.9771
Target is 1.9400
Risk is 49 pips
Reward is 322 pips
Reward : Risk ratio is 6.6 to 1

We are trading the "C" wave down.

p.s. - According to my micro-Elliott Wave analysis and Q analysis, 1.9737 is the precise top of this trend. The current price is 1.9735.
  • #2,324
  • Edited 5:04am Dec 20, 2006 4:46am | Edited 5:04am
Wednesday December 20 at 5:15 ET

Exit Trade Experiment #291 Sell GBP/JPY at 232.42 for a small profit. Re-enter at about 233.60 or above. One likely reversal value is 233.86
________________________________________________
_______________________________________________________

Tuesday December 19 at 19:45 ET
Trade Experiment #291 Sell GBP/JPY at 232.90
Stop is 233.21
Target is 231.00
Risk is 40 pips
Reward is 181 pips
Reward : Risk ratio is 4.5 to 1

We are trading the corrective fourth wave down.

p.s. - 1st of all, this isn't a great trade set-up. The entry price is not optimal. If we entered at 233.60, then it would be an optimal set-up.The RRR is less than 5.0, and the stop is small. The current high price is 233.18, only 3 pips from our stop. We are fighting a mighty upwards trend.

The price might rise for one more mini-wave before reversing. The stop on this trade should be adjusted to 233.76 to provide a better chance of this trade winning. Or exit at about 233.00 (or a bit lower) and re-enter if it rises one more time to above 233.30. Buying at the bottom of this upcoming downwards fourth corrective wave would be a much better trade in terms of reward : risk ratio and probability of success.
  • #2,325
  • Dec 20, 2006 4:57am Dec 20, 2006 4:57am
itme, did you exit the cable trade because of an zigzag at the smaller timeframes?
  • #2,326
  • Dec 20, 2006 5:15am Dec 20, 2006 5:15am
After study, thought and consultation, I decided that there is a significant probability that these pairs will rise a final time to a new high, and that the current small downtrend is a zigzag corrective wave 4 of the Wave 5.
  • #2,327
  • Dec 20, 2006 5:17am Dec 20, 2006 5:17am
Thanks.
  • #2,328
  • Dec 20, 2006 5:33am Dec 20, 2006 5:33am
Wednesday December 20 at 6:30 ET

Exit Trade Experiment #290 Buy USD/CHF at 1.2128

Re-enter long trade at 1.2070 if the micro downwards wave 5 is complete.
________________________________________________________
________________________________________________________

Tuesday December 19 at 19:00 ET

Trade Experiment #290 Buy USD/CHF at 1.2123
Stop is 1.2089
Target is 1.2400
Risk is 37 pips
Reward is 273 pips
Reward : risk ratio is minimum 7.4 to 1

For research purposes only.

This is trading Wave 5 upwards.

p.s. - According to my micro-Elliott Wave analysis and Q analysis, 1.2110 is the precise bottom of this trend. This is a high probabilitiy reversal value.
  • #2,329
  • Dec 20, 2006 12:34pm Dec 20, 2006 12:34pm
From the NeoWave site. Itme, what are your thoughts on this?

Quote
<table border="0" cellpadding="0" cellspacing="0" width="550"> <tbody><tr><td>Question:</td> </tr> <tr> <td style="color: rgb(0, 68, 119); font-weight: bold;">

Why is the NEoWave TRADING service separate from the NEoWave CHART service. Isn't the purpose of both to successfully trade markets?

</td> </tr> <tr> <td valign="top">Answer:

This is one of the most important questions ever asked on this forum, sent in anonymously from an email address most likely located in the United States.

For the first 15 years of my career, when my sole focus was super-detailed, accurate wave analysis, the WaveWatch service did not separate trading advice from wave analysis. The complex nature of that service prompted many customers to request I simplify all the "wave talk" and focus on "bottom line" trading tactics. At the same time, my more successful, professional customers were asking I provide my unique, NEoWave analysis without all the trading details to distract them from their own methodology. That is when I decided to separate NEoWave into two, distinct services - Trading advice and Chart analysis - which allowed me to address the needs of two, unique market participant categories.

In just the last 5 years, I realized the division of my service into two parts was the beginning of a paradigm shift in my thinking and approach to markets. It was slowly becoming clear to me that accurate market analysis had virtually no relation to successful trading and vice versa. That profound realization is the nucleus of what I'm confident will become a revolution in the field of technical analysis - NEELY RIVER THEORY.

In 1990, with the introduction of MASTERING ELLIOTT WAVE, I presented what eventually came to be known as NEoWave - a new, logical foundation for the field of wave analysis and forecasting, allowing for more objective, scientific and accurate results. Similar to what NEoWave did for the field of wave analysis, NEELY RIVER THEORY will do in the realm of real-time trading. It presents the first, logical, scientific, objective, step-by-step, non-forecasting, non-mathematical approach to trading and investing ever devised.

</td></tr></tbody> </table>
  • #2,330
  • Dec 20, 2006 3:46pm Dec 20, 2006 3:46pm
This is a great service you are providing to us all forex traders. I just wanted to say that I personally like what you are doing, i actually use your thread to confirm my already made strategies.

moving on, what are your thoughts on the gbp/usd?
  • #2,331
  • Dec 20, 2006 4:03pm Dec 20, 2006 4:03pm
Thanks +++ Itme for your analysis, signals, and teaching comments. Once again your projected reversal points for USD/CHF, GBP/USD, and GBP/JPY were spot on - and fortunately for me I decided to set trades and stops and not mess with them, so missed your later modifications.

GBP/CHF is struggling though - making net progress upwards - but it still looks in corrective mode? I feel a bit nervous about this one, given that GBP/USD has been going down...
  • #2,332
  • Dec 20, 2006 4:23pm Dec 20, 2006 4:23pm
Quoting itme
After study, thought and consultation, I decided that there is a significant probability that these pairs will rise a final time to a new high, and that the current small downtrend is a zigzag corrective wave 4 of the Wave 5.
I would agree with you on the GBP.

I believe there will be an increase in price the next few weeks, allowing the GBP to top itself out at the 2's mark.

We have seen GBP last week go above 1.9727 mark and this week above the 1.9747 area. Next week a little higher high,then by the end of the month a higher high. The Monthly Candle should Close right at 1.9700 which will be a large test for the 1.9700 resistance mark that has not seen a closed Candle above this mark since 1979.

Monarch
  • #2,333
  • Edited 10:24am Dec 21, 2006 1:13am | Edited 10:24am
Quoting starfire
Thanks +++ Itme for your analysis, signals, and teaching comments. Once again your projected reversal points for USD/CHF, GBP/USD, and GBP/JPY were spot on - and fortunately for me I decided to set trades and stops and not mess with them, so missed your later modifications.

GBP/CHF is struggling though - making net progress upwards - but it still looks in corrective mode? I feel a bit nervous about this one, given that GBP/USD has been going down...
Yes, yesterday I did a valid analysis on GBP/USD, USD/CHF, USD/CAD and GBP/JPY, at least for 100 to 150 pips of profit, but afterwards I started to count all the tiny waves and question my original hypothesis. From the perspective of Q theory as well as the macro Elliott Theory everything was in good order, but I developed some doubt, and decided to withdraw from the trades after they were already entered, partly based on the pattern that unfolded on the 1 minute chart after entering the trade.

When I look at the pattern today, after a good night's sleep, I can't understand why I saw any problem with them - the wave patterns are perfect, and the Q targets are good and strong. So in my fatigue and over-fussiness, I expected some level of standard of wave pattern that was over ideal, clear and obvious. The corrective fourth wave on the smallest scale was a zigzag, and not a flat as I would have preferred, and the final fifth wave lacked a clearly defined five wave pattern, but that's common on the one minute chart. Overall, the pattern was clear and as expected, and reached the exact reversal target we needed. In retrospect. we should have stayed in the trades.

I am trying to minimize the subjective aspect in my trading system, to eliminate or decrease these kinds of problems. Where a trading system isn't purely objective, the trader is subject to these problems:

1) missing a trading opportunity

2) mis-identifying a trading opportunity that isn't really one

3) identifying a trading opportunity, but then changing one's mind and pulling out before the target is hit. As I am becoming more conservative on purpose, that is happening to me more lately.

4) pulling out of a winning trade prematurely.
  • #2,334
  • Edited 9:36am Dec 21, 2006 7:52am | Edited 9:36am
Thursday December 21 at 8:45 ET

Trade Experiment #293 Buy GBP/USD at 1.9584

 Stop is 1.9548

Target is 1.9900

 Risk is 40 pips

Reward is 312 pips

Reward : Risk ratio is 7.8 to 1

For research purposes only.

 We are trading the Fifth Wave of GBP/USD up. The entry price is a very precise, highly confirmed, high probability reversal value from the Q system. The Elliott Wave count is fairly clear, and represents the bottom of an a-b-c corrective wave (wave 2 ) of what we think is a new impulse wave (Wave 5 of WAVE 3 of an extended Third Wave ) upwards. This large Wave 5 follows a large A-B-C corrective wave down (Wave 4 ) . In our second to last trade experiment we narrowly missed winning our long trade entering at the bottom of wave 1 of Wave 5 upwards by entering the trade a little too early as discussed above. We entered the short trade at the top of wave 1 yesterday at the correct price, but chickened out because we weren't convinced that the ultimate top had been reached, when in fact the evidence was clear and strong. Perhaps we got skittish from having entered prematurely on the previous trade.

p.s. - When we counted the Elliott Wave on the last small (fifth) wave down on the one minute chart we didn't take too much care. It turned out that it had only completed a 1-2-3 when we entered out trade. It subsequently went 4-5 and fell to 1.9557, missing our stop by 9 pips. We expect it not to go any further down, but the stop is in some jeopardy right now and could be adjusted slightly downwards.
_______________________________________________
_______________________________________________

Previous trade experiment:

Wednesday December 20 at 5:15 ET

Exit Trade Experiment #292 Sell GBP/USD at 1.9693 to capture a small profit and re-enter at approximately 1.9760 to 1.9780
__________________________________________________ ___
__________________________________________________ ___

Tuesday December 19 at 19:45 ET
Trade Experiment #292 Sell GBP/USD at 1.9726
 Stop is 1.9771
Target is 1.9400
Risk is 49 pips
Reward is 322 pips
Reward : Risk ratio is 6.6 to 1

We are trading the "C" wave down.

p.s. - According to my micro-Elliott Wave analysis and Q analysis, 1.9737 is the precise top of this trend. The current price is 1.9735.
  • #2,335
  • Edited Dec 22, 2006 1:17am Dec 21, 2006 9:33am | Edited Dec 22, 2006 1:17am
Thursday December 21 at 10:15 ET

Trade Experiment #294 Sell USD/CAD at 1.1560

 Stop is 1.1581

Target is 1.1450

 Risk is 26 pips

Reward is 105 pips

Reward : Risk ratio is 4.0 to 1

For research purposes only.

The entry price is the 6 day upper trendline. We are either trading the "c" wave of the fourth wave down preceding a fifth wave up to a final high, or the fifth internal wave down of a new impulsive First Wave down.

 Previous comments and trade experiment:

Thursday December 14 at 5:15 ET

As predicted, USD/CAD fell to 1.1545 and then shot up to 1.1577. It may ascend one more time to set a new high at 1.1580 or so. [ it actually rose to a high of 1.1588 on December 15, and then fell to a recent low of 1.1430 before rising today, December 21, to 1.1562 ]

Trade Experiment #279A Sell USD/CAD at 1.1578
Stop is 1.1611
Target #1 is 1.1300
Risk is 38 pips
Reward is 273 pips
Reward : Risk ratio is 7.2 to 1

For research purposes only.

This news is the reason why USD/CAD rose to a higher than expected high today, December 21:

 <table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"><thead><tr><td class="alt2" nowrap="nowrap">Thu. 12/21</td> <td class="alt2">
</td> <td class="alt2" align="center">
</td> <td class="alt2">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" id="collapsecal_eventanalysis_3359" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3359" 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>Definition</legend>

Measures the difference in value between imported and exported goods and services. A positive Trade Balance indicates that more goods and services were exported than imported over a given period. A rising trend has a positive effect on the nation's currency. When higher levels of exports are sold to the world, demand for the nation's currency is elevated as foreigners convert their native currency to purchase the exports. The Trade Balance also has a sizable impact on GDP because high demand for exports creates increased employment and production, as domestic factories work to fill this demand.

</fieldset>




</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2">
</td> <td class="alt2" align="center">
</td> <td class="alt2">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">
</td> <td class="alt2" id="collapsecal_eventanalysis_3374" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3374" 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>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 activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.

</fieldset>



</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 8:30am </td> <td class="alt2" align="center">CAD</td> <td class="alt2">GDP m/m</td> <td class="alt2" align="center">0.0%</td> <td class="alt2" align="center">0.2%</td> <td class="alt2" align="center">-0.3%</td> <td class="alt2" id="collapsecal_eventanalysis_3334" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3334" 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>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 activity and the primary gauge of the economy's health. To foreign investors, a strong economy is viewed favorably because it spurs investment opportunities in the domestic stock and bond markets. More importantly, the central bank is more likely to raise interest rates in the face of a strong and growing economy. The combination of these effects can have a large impact on the demand for the nation's currency.

</fieldset>



</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 8:30am </td> <td class="alt2" align="center">CAD</td> <td class="alt2">Retail Sales m/m</td> <td class="alt2" align="center">-0.7%</td> <td class="alt2" align="center">0.0%</td> <td class="alt2" align="center">-1.2%</td> <td class="alt2" id="collapsecal_eventanalysis_3335" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3335" 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>Definition</legend>

Measures the value of sales at the retail level. A rising trend has a positive effect on the nation's currency because Retail Sales make up a large portion of consumer spending, which is a major driver of the economy and has a sizable impact on GDP. Traders pay close attention to Retail Sales because it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises.

</fieldset>



</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 8:30am </td> <td class="alt2" align="center">CAD</td> <td class="alt2">Core Retail Sales m/m</td> <td class="alt2" align="center">-0.7%</td> <td class="alt2" align="center">-0.1%</td> <td class="alt2" align="center">-0.9%</td> <td class="alt2" id="collapsecal_eventanalysis_3336" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3336" 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>

Underlying sales should be firm

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

Derivative of Retail Sales that excludes the Automobile Sales component. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumer spending.

</fieldset>



</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">
</td> <td class="alt2"> 8:30am </td> <td class="alt2" align="center">USD</td> <td class="alt2">GDP Annualized q/q (f)</td> <td class="alt2" align="center">2.0%</td> <td class="alt2" align="center">2.2%</td> <td class="alt2" align="center">2.2%</td></tr></thead></table>
  • #2,336
  • Dec 21, 2006 9:59am Dec 21, 2006 9:59am
Thursday December 21 at 10:45 ET

Trade Experiment #295 Sell USD/JPY at 1.1854

 Stop is 1.1872

Target is 1.1800

 Risk is 21 pips

Reward is 51 pips

Reward : Risk ratio is 2.4 to 1

For research purposes only.

The entry price for this USD/JPY short trade is the 6 day upper trendline. We are trading the "C" wave down of the fourth corrective wave to a conservative target in preparation for the last and fifth wave upwards.
  • #2,337
  • Dec 21, 2006 10:04am Dec 21, 2006 10:04am
dear itme,

i need help over gbpgpy >>>>> i'm trying to know his trind but it make me confused ............ so if u plz help me know where its heden

thanks




" Gbpjpy this days make me think to change my name"
If you count on hope in any trade ……. Get out of it
  • #2,338
  • Dec 21, 2006 11:58pm Dec 21, 2006 11:58pm
Can you tell me why was the volume so high (see chart).
Crapy small picture though
Attached Image
  • #2,339
  • Edited 9:42am Dec 22, 2006 1:14am | Edited 9:42am
How many zeroes is that? I heard that the volume daily in forex is in the trillions, but I think that volume figure you show even surpasses that! Maybe there are people (or beings) from other planets investing in the Forex market, in an interplanetary contest to predict this challenging phenomenon. With thousands and billions of galaxies out there, if the Earth currency market is a favorite game all over the universe, then maybe we have gazillions of dollars trading in the forex market every day, which accounts for the fact that the volume figures are kept secret. And if I (or someone else) eventually figures out how to make money in this market, perhaps that person will win a contest for being The Most Clever Entity in the Universe!
  • #2,340
  • Dec 22, 2006 1:51am Dec 22, 2006 1:51am
Quoting mandoaddam
dear itme,

i need help over gbpgpy >>>>> i'm trying to know his trind but it make me confused ............ so if u plz help me know where its heden

thanks


" Gbpjpy this days make me think to change my name"
Hi Dragon Slayer,

Here is how I am seeing GBP/JPY right now.

But first of all, I want to make sure you and everyone else knows that if they want my past views on any pair they should put the pair ( ie - EUR/JPY ) into the "search thread" box below under "thread tools" to find all previous references to that currency pair.

I am trying to catch the very top of this upwards trend on GBP/JPY that started on January 31, 2005 that increased this pair by 18% - to trade it down for a big profit. I think this trend is the 1 - 2 - extended 3 of a huge upwards trend that is targeting 277.00 in about 9 months. The top of this smaller current trend will be, in my view, the top of the upwards extended third wave, and I estimate it to be at about 235.00.

What will follow, I believe, this extended third wave up is a sizeable fourth wave down to about 206.00 (a 12.3% decline) over about 9 months. The fourth wave could be much smaller also. This large drop in GBP/JPY will correspond with the anticipated large downwards correction in GBP/USD as soon as it completes its current upwards trend in the near future.

The short trade I entered on Wednesday was an attempt to catch the top of the current upwards swing, but then I questioned my wave count and pulled out. I now think it was the top, but only of the 1-2-3, and not the 1-2-3-4-5 of the fifth wave of this extended Third Wave, so we just witnessed the A-B-C fourth small wave down to a low of 231.55, which is a fairly high probability reversal point for a fourth wave in this situation, (if that is what it is).

According to my wave hypothesis, it will now climb from 231.55 to 235.00 (which is 345 pips or 1.5%).

The current price of GBP/JPY is 232.42 .
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