Low Risk, High Reward Trading Experiment

happy new year to all of you!!!!

it is still fascinating how some traders in here use itme´s trade siganls with closed eyes. itme is always referring to the fact that this a trade experiment and no free tradestation for entry signals.

itme, i think you´re doing a great job here and i never miss a post of yours cause i wanna compare my studies with the entry signals you offer us here.

ok, enough, back to the battlefield. i too believe that we are in wave 2 of a larger wave 5. my wave count was that itme´s flat b-wave was my wave-3 of a larger wave 3 in wave 5 cause i thought wave 2 with 61,8 % was over.

to sum up: i thinkg we are in wave-3 now of a larger wave-5, hopefully

I think we're on approximately the same wavelength, Wallboroff. Don't hesitate to give me a head's up if you notice me making a big blunder! Sometimes my brain gets overloaded with data and I miss something obvious! Thanks for your comment.

[quote=itme]Thanks,Ishak

"I have found from experience that not only am I learning from both my mistakes (failures) and successes, and my evolving trading system's successes and failures,....."


Very well put, itme.

Here is what Steenbarger wrote in his article "How to take a loss"
"If you put on a high probability trade and the trade fails to make money, you have just paid for an important piece of information: The market is not behaving as it normally does, historically does."

If anyone wants a trade signal service, there are dozens of them which claim extremely good performance. The trick is to determine which ones are honest, which ones are practical for your situation, and what the relative performance of them is. Check out the Classified Section of the Readers Lounge on this site for discussion of several promising signal service providers. There is also a professional performance review being conducted of some signal providers by Fleet Street. In addition, there is a new website for people to review forex services and products.

Wednesday January 3, 2007 at 3:00 ET

In case anyone exited their AUD/CAD short position according to our previous adjust target advise, they shouldn't have, as the price went up before hitting our adjusted target. We hoped to exit at the bottom of wave 4 at .9272, but it didn't fall quite that low, and then to re-enter at the top of wave 5 at about 1.9307 (it made it to 1.9304). If they want to be short AUD/CAD, then they should re-enter now at .9288

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Previous trade experiment:

Wednesday January 3, 2007 at 2:45 ET

We believe that the last upwards wave has only completed 1-2-3 and is now doing the fourth wave down. According to our current wave hypothesis, there is still the fifth wave up to go, so we will exit at the bottom of wave 4 at .9272 and re-enter at the top of wave 5 at about 1.9307.

Adjust target for Trade Experiment #298A Sell AUD/CAD to .9272
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Tuesday January 2, 2006 at 21:00 ET

Trade Experiment #298A Sell AUD/CAD at .9288
Stop should be .9321
The first target is .9000
The second target is .8840
Risk is 42 pips
Reward is 279 / 439 pips
Reward / Risk Ratio is 6.6 / 10.5 : 1

Confidence level: good
Accuracy: good
Reward / Risk Ratio : good

For research purposes only.

p.s. - recent high is .9298 (entry price met)
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Previous comments:

Tuesday January 2, 2006 at 11:00 ET

AUD/CAD keeps rising. .9265 was the top of a smaller wave, but another wave is carrying the price higher. The recent high is .9283. The estimated top of the entire swing trend is .9290 to .9300.
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AUD/CAD possible high here at .9263
Tuesday January 2, 2006 at 5:45 ET

It's possible that AUD/CAD will top out here at .9263. However, EUR/USD, GBP/USD and AUD/USD have the potential to go a bit higher. On the positive side, USD/CAD looks ready to drop, which will bring down AUD/CAD.

AUD/CAD has a potential reversal value at.9300 also, but I suspect that there will be a sizeable correction before this value is hit, if it is hit.
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Previous Comment:

AUD/CAD rose to a high probability reversal point - .9243, which I should have foreseen. This was our exact stop. The stop should have been higher than this. Raise stop. The wave pattern looks complete and all targets, save one at .9257 on uptrend have been met. Reversal at this price is probable. Also - AUD/USD has reached a high probability reversal price. This is positive, as it is likely to reverse at .7950 or thereabouts.

Adjust stop to .9271 from previous value of .9243
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Friday December 29 at 15:30 ET
Trade Experiment #298 Sell AUD/CAD at .9208
Stop should be .9243
The first target is .9000
The second target is .8840
Risk is 44 pips
Reward is 199 / 359 pips
Reward / Risk Ratio is 4.5 / 8.2
Confidence level: good
Accuracy: good
Reward / Risk Ratio : good

For research purposes only.

Wednesday January 3, 2007 at 3:30 ET

Adjusted target of 97.50 for Trade Experiment #289A Sell CHF/JPY was met. Profit of 18 pips is logged.

RRR = .28

The recent low is 97.27. Wave 4 has progressed A and now will do an upwards B and a downwards C, and then Wave 5 will go up to the target of 98.25 or higher. A possible short trade opportunity awaits us there.
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Tuesday January 2, 2006 at 4:45 ET

I have revised my wave count for Trade Experiment #289A Sell CHF/JPY at 97.77. We are approaching what I believe is the top of the third wave, not the top of the fifth wave. The interim high so far is 97.90, which is a probable reversal point. Adjust target for CHF/JPY short trade to the anticipated bottom of wave 4 at . Then we will re-enter our short position at the top of wave 5 at about 98.25.

Adjust target for Trade Experiment #289A Sell CHF/JPY to 97.50
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Previous trade experiment:

Thursday December 28 at 15:00 ET
Trade Experiment #289A Sell CHF/JPY at 97.77
Stop is 98.32
Target is 92.70
Risk is 64 pips
Reward is 498 pips
Reward : Risk ratio is 7.8 to 1
For research purposes only.

The entry point is the anticipated high of the upwards trend. The target is the bottom of Wave 1.

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Previous trade experiment:

Tuesday December 19 at 7:30 ET
Trade Experiment #289 Sell CHF/JPY at 97.05
Stop is 97.36
Target is 95.90
Risk is 39 pips
Reward is 107 pips
Reward : Risk ratio is 2.7 to 1
For research purposes only.

The target is the bottom of Wave 3.

The following trade was planned and recorded 6 days ago, on Thursday December 28 at 15:00 ET, when it could be said "The current high is 1.6102. The current price is 1.6060." which means the price at the time the trade was formulated was 100 pips lower than the entry price.

The entry price was reached at 12:30 ET today - Wednesday January 3, 2007.

A late stage analysis would have firmed up the entry price to 1.6163 according to our system. The high today was 1.6170, followed by a plunge to 1.6132. Thus the estimated entry price from 6 days ago was only 3 pips off target, which in turn was 7 pips short of the anticipated trend peak.

Trade Experiment #284A Sell EUR/CHF at 1.6160

Stop is 1.6226

Target #1 is 1.6000
Target #2 is 1.5775

Risk is 70 pips

Reward #1 is 155 pips
Reward #2 is 380 pips

Reward : risk ratio is minimum 2.2/5.4 to 1

For research purposes only

Our entry price is the estimated top of the upwards trend.
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Previous trade signals and comments:

Update for EUR/CHF for Tuesday December 19 at 18:30 ET

The current upwards target for EUR/CHF is 1.6060 to 1.6125.

Trade Experiment #284 Sell EUR/CHF at 1.5968 failed because of a wrong wave count. A Q target was at 1.5990, so this qualified as a possible short trade entry value, and there was a drop of 30 pips in a corrective wave from an interim high of 1.5991 to 1.5960, but the ultimate high of the trend was far from reached.

The current price of EUR/CHF is 1.6020
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Thursday December 14 at 3:45 ET

Since EUR/CHF rose to 1.5940 at the top of Wave A of Wave 4 on December 4, it descended 97 pips to 1.5853 in a Wave C on December 5th, then rose 122 pips in what could be a completed 5 wave set to the recent high of 1.5977, a possible reversal point. It may also go up to 1.5990 before it reverses. We interpret this as the top of the Wave C of an upwards Fourth Wave.

Trade Experiment #284 Sell EUR/CHF at 1.5968
Stop is 1.6005
Target #1 is 1.5835
Target #2 is 1.5775
Risk is 39 pips
Reward #1 is 128 minimum pips
Reward #2 is 189 minimum pips
Reward : risk ratio is minimum 3.3/4.8 to 1

For research purposes only
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Previous trade signals and comments:

EUR/CHF Update for Monday December 3 at 8:00 ET

EUR/CHF rose to our target of 1.6010 (actually, 1 pip short of our target, in a 100 pip move) which we consider to be the top of Wave 5, and thus the endpoint of a large upwards trend and beginning of a large downwards trend. The target for our short trade to the end of wave 3 of the First Downwards Impulse Wave according to our system is 1.5810, and the price progressed 2 pips past this to 1.5808.

The price then rose 132 pips recently in wave A of wave 4 to 159.40, the predicted conservative top of wave A.

We now expect a wave B down and a wave C up to about 1.5960, then an impulse fifth wave down to about 1.5770; trading this fifth wave down will be our next low risk / high reward trading opportunity.
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Previous comments:

EUR/CHF - correct wave count <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message --> Friday November 17 at 20:00 ET

EUR/CHF performed exactly as predicted yesterday, forming a clear A-B-C downwards corrective wave down to 1.5960, meeting precisely our most likely reversal price, and then rose 49 pips to 1.6009 at 8:00 ET on November 17, 2 pips higher than our short term adjusted most likely reversal price.The price for EUR/CHF then fell 60 pips precipitously to 1.5948.

We placed a note on our chart "Sell at about 160.10", but in all the business of our morning we forgot to issue a trade signal on this pair.
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EUR/CHF update for Thursday November 16 at 4:00 ET

EUR/CHF has risen to 1.5995 as predicted, and appears poised to rise once more to the top of the final fifth wave of the fifth wave at about 1.6010 or a bit higher.
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EUR/CHF update for Monday October 16 at 6:00 ET <hr style="color: rgb(209, 209, 225);" size="1">EUR/CHF rose to 1.5961 on October 13, coming within 9 pips of our predicted turnaround point. That would have been a good short opportunity. The EW pattern is somewhat strange right now, but our prediction for EUR/CHF of September 29 is seemingly still valid:

EUR/CHF prediction - finishing fifth wave <hr style="color: rgb(209, 209, 225);" size="1"> Friday September 29 at 4:30 ET

EUR/CHF is headed for 1.5970, 100 pips higher than its current price, which will complete a long uptrend that began on May 17. This would be an opportunity to short it and to hold a position trade from the very endpoint of a weekly trend.
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Who do you use??

Wednesday January 3 at 16:45 ET

Trade Experiment #304 Sell USD/CAD at 1.1730

Stop is 1.1781

Target is 1.1500

Risk is 55 pips

Reward is 225 pips

Reward / Risk Ratio is 4.1:1

Confidence level: good
Accuracy: fair
Reward / Risk Ratio : fair

For research purposes only.

This is an attempt to trade from the top of a long trend down.

If I was not close to perfecting a high performance trading system, then I would definitely test out a few signal service providers and give one a whirl. But there isn't any one that I can recommend, because I have insufficient data at this time. I tried one a long time ago, but they misrepresented their performance, and weren't that good. After a few months, they went out of business.

Its going down.great 200pips

Thursday January 4 at 5:15 ET

A rethink of the wave count and other factors leads us to the view that USD/CAD is engaged in a small fourth wave correction, and could head up for one more high before reversing. We should have exited when the price dropped earlier to 1.1714

Adjust target for Trade Experiment #304 Sell USD/CAD to 1.1720

We will short USD/CAD again when / if it rises to a new high at about 1.1770

p.s. - USD/CAD fell to exactly 1.1720, then rose to 1.1775 :
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Previous trade experiment:

Wednesday January 3 at 16:45 ET

Trade Experiment #304 Sell USD/CAD at 1.1730
Stop is 1.1781
Target is 1.1500
Risk is 55 pips
Reward is 225 pips
Reward / Risk Ratio is 4.1:1
Confidence level: good
Accuracy: fair
Reward / Risk Ratio : fair

For research purposes only.

This is an attempt to trade from the top of a long trend down.

Thursday January 4 at 6:00 ET

Yesterday we said " GBP/USD wave count uncertain <table border="0" cellpadding="6" cellspacing="0" width="100%"><tbody><tr><td class="alt2" style="border: 1px inset ;">
</td> </tr> </tbody></table>
My best guess at this moment is that the downwards move we just witnessed is the C Wave of a flat A-B-C downwards Wave 2 of a large upwards trend (upwards WAVE 5) that began at 12:00 ET on December 18, 2006."

GBP/USD did not form a clear and unequivocal complete 5 wave set on what we interpreted as the complete C wave down in the above interpretation. It wasn't complete, as indicated by the continuation today of the downtrend. It has descended another 85 pips to 1.9396. The anticipated bottom of this downtrend is approximately 1.9390. The wave pattern is difficult to count, making the confidence low. But it will have descended 350 pips in less than 36 hours, without any obvious, overt fundamental economic explanation.

My First wave hypothesis is that this downtrend we are now witnessing is the third wave of the large downwards Wave C of the A-B-C WAVE 4 flat downtrend since December 1, 2006. This third downwards wave began at 1.9749 and is heading for about 1.9385. The anticipated bottom of the downwards wave 5 of Wave C is at about 1.9310. There may be a trading opportunity, if this wave hypothesis is true, at the top of the small wave 4 preceding the downwards wave 5 with short entry at about 1.9600 with a target at about 1.9310.

Second wave hypothesis: Another interpretation, also not great, is that the WAVE 4 downwards finished at 11:00 ET on December 18, 2006 and since then the price has risen in a WAVE 1 upwards. This current downwards move would then be an A-B-C zigzag downwards WAVE 2. It is seemingly headed for a bottom at about 1.9385

Story of Wednesday January 3 releases:

EUR/USD The US dollar saw itself sharply higher against major counterparts, as a bullish ISM manufacturing report erased weakness through early morning ADP employment data. A shockingly poor ADP December Employment figure halved the Greenback’s overnight gains, as traders expect that the proprietary labor data may accurately predict a poor Non Farm Payroll report. This bearish turn proved transitory, however, as stronger ISM Manufacturing news rescued outlook on the US industrial sector and boosted the currency. Headline manufacturing growth moved back into positive territory for the month of December, with ISM showing an unexpectedly strong reading at 51.6. Given that the strong result came on a jump in demand for manufactured goods, the report was especially significant in reversing the recent trend of growing inventories and slower sales.

The ISM-related dollar rally continued into the late afternoon, when a relatively hawkish FOMC Minutes release seemingly encouraged traders to liquidate long USD positions. Though somewhat counterintuitive, traders were perhaps unmoved by the Fed’s continued threats of persistently high inflation.

<table class="tborder" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"><thead><tr><td class="alt1" nowrap="nowrap">Thu. 01/04</td> <td class="alt1"> 1:45am </td> <td class="alt1" align="center">CHF</td> <td class="alt1">CPI m/m</td> <td class="alt1" align="center">0.0%</td> <td class="alt1" align="center">0.1%</td> <td class="alt1" align="center">0.0%</td> <td class="alt1" id="collapsecal_eventanalysis_3439" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3439" 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>

The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> tentative </td> <td class="alt1" align="center">EUR</td> <td class="alt1">German Retail Sales m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">0.4%</td> <td class="alt1" align="center">-0.5%</td> <td class="alt1" id="collapsecal_eventanalysis_3434" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3434" 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="alt1" nowrap="nowrap">
</td> <td class="alt1"> 3:55am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">German Services PMI</td> <td class="alt1" align="center">57.6</td> <td class="alt1" align="center">56.9</td> <td class="alt1" align="center">56.8</td> <td class="alt1" id="collapsecal_eventanalysis_3440" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3440" 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>

The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 4:00am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">Services PMI</td> <td class="alt1" align="center">57.2</td> <td class="alt1" align="center">57.5</td> <td class="alt1" align="center">57.6</td> <td class="alt1" id="collapsecal_eventanalysis_3441" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3441" 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>

The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 4:30am </td> <td class="alt1" align="center">GBP</td> <td class="alt1">Services PMI</td> <td class="alt1" align="center">60.6</td> <td class="alt1" align="center">60.0</td> <td class="alt1" align="center">59.8</td> <td class="alt1" id="collapsecal_eventanalysis_3442" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3442" 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>

The Services Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the services sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 4:30am </td> <td class="alt1" align="center">GBP</td> <td class="alt1">Net Lending to Individuals m/m</td> <td class="alt1" align="center">10.9B</td> <td class="alt1" align="center">11.0B</td> <td class="alt1" align="center">10.9B</td> <td class="alt1" id="collapsecal_eventanalysis_3443" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3443" 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 total value of outstanding consumer installment debt, such as credit cards and auto loans. A rising trend has a positive effect on the nation's currency because historically consumer borrowing and spending have a high degree of correlation.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 5:00am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">CPI m/m (p)</td> <td class="alt1" align="center">1.9%</td> <td class="alt1" align="center">1.9%</td> <td class="alt1" align="center">1.8%</td> <td class="alt1" id="collapsecal_eventanalysis_3444" style="" align="center"> [read] </td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3444" 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>

The Consumer Price Index (CPI) measures the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus increasing demand for the nation's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.

</fieldset>

</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">
</td> <td class="alt1"> 5:30am </td> <td class="alt1" align="center">GBP</td> <td class="alt1">Consumer Confidence</td> <td class="alt1" align="center">-8</td> <td class="alt1" align="center">-6</td> <td class="alt1" align="center">-7</td></tr></thead></table>

Thursday January 4 at 7:30 ET

Exit Trade Experiment #298A Sell AUD/CAD at .9190

The highest point reached subsequent to entry was .9305, short of our Stop at .9321. We estimate that .9190 is the bottom of a wave 4, so we will exit and re-enter our short position at about .9350, at the top of wave 5.

Profit is 88 pips. RRR is 88/42=2.1
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Previous trade experiment:

Sell AUD/CAD at .9288 - Trade Experiment #298A

Wednesday January 3, 2007 at 3:00 ET

In case anyone exited their AUD/CAD short position according to our previous adjust target advise, they shouldn't have, as the price went up before hitting our adjusted target. We hoped to exit at the bottom of wave 4 at .9272, but it didn't fall quite that low, and then to re-enter at the top of wave 5 at about 1.9307 (it made it to 1.9305). If they want to be short AUD/CAD, then they should re-enter now at .9288

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Previous trade experiment:

Wednesday January 3, 2007 at 2:45 ET

We believe that the last upwards wave has only completed 1-2-3 and is now doing the fourth wave down. According to our current wave hypothesis, there is still the fifth wave up to go, so we will exit at the bottom of wave 4 at .9272 and re-enter at the top of wave 5 at about 1.9307.

Adjust target for Trade Experiment #298A Sell AUD/CAD to .9272
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Tuesday January 2, 2006 at 21:00 ET

Trade Experiment #298A Sell AUD/CAD at .9288
Stop should be .9321
The first target is .9000
The second target is .8840
Risk is 42 pips
Reward is 279 / 439 pips
Reward / Risk Ratio is 6.6 / 10.5 : 1

Confidence level: good
Accuracy: good
Reward / Risk Ratio : good

For research purposes only.

p.s. - recent high is .9298 (entry price met)
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Previous comments:

Tuesday January 2, 2006 at 11:00 ET

AUD/CAD keeps rising. .9265 was the top of a smaller wave, but another wave is carrying the price higher. The recent high is .9283. The estimated top of the entire swing trend is .9290 to .9300.
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AUD/CAD possible high here at .9263
Tuesday January 2, 2006 at 5:45 ET

It's possible that AUD/CAD will top out here at .9263. However, EUR/USD, GBP/USD and AUD/USD have the potential to go a bit higher. On the positive side, USD/CAD looks ready to drop, which will bring down AUD/CAD.

AUD/CAD has a potential reversal value at.9300 also, but I suspect that there will be a sizeable correction before this value is hit, if it is hit.
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Previous Comment:

AUD/CAD rose to a high probability reversal point - .9243, which I should have foreseen. This was our exact stop. The stop should have been higher than this. Raise stop. The wave pattern looks complete and all targets, save one at .9257 on uptrend have been met. Reversal at this price is probable. Also - AUD/USD has reached a high probability reversal price. This is positive, as it is likely to reverse at .7950 or thereabouts.

Adjust stop to .9271 from previous value of .9243
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Friday December 29 at 15:30 ET
Trade Experiment #298 Sell AUD/CAD at .9208
Stop should be .9243
The first target is .9000
The second target is .8840
Risk is 44 pips
Reward is 199 / 359 pips
Reward / Risk Ratio is 4.5 / 8.2
Confidence level: good
Accuracy: good
Reward / Risk Ratio : good

For research purposes only.

Previous trade signal:

Thursday January 4 at 5:15 ET

A rethink of the wave count and other factors leads us to the view that USD/CAD is engaged in a small fourth wave correction, and could head up for one more high before reversing. We should have exited when the price dropped earlier to 1.1714

Adjust target for Trade Experiment #304 Sell USD/CAD to 1.1720

We will short USD/CAD again when / if it rises to a new high at about 1.1770

p.s. - USD/CAD fell to exactly 1.1720, then rose to 1.1775

<TABLE class=tborder style="MARGIN-TOP: 12px" cellSpacing=0 cellPadding=3 width="100%" align=center border=0><THEAD><TR><TD class=alt2>3:30pm </TD><TD class=alt2 align=middle>CAD</TD><TD class=alt2>IPPI m/m</TD><TD class=alt2 align=middle>http://www.forexfactory.com/forexfor...isc/mi_med.gif</TD><TD class=alt2 align=middle></TD><TD class=alt2 align=middle>0.5%</TD><TD class=alt2 align=middle>-0.1%</TD></TR></THEAD><TBODY></TBODY></TABLE>

Thursday January 4 at 8:15 ET

Our last comment was "The recent low is 97.27. Wave 4 has progressed in A and now will do an upwards B and a downwards C, and then Wave 5 will go up to the target of 98.25 or higher. A possible short trade opportunity awaits us there."

Those who re-entered the short trade at the top of wave 4 at 97.44 should now exit at about 96.70 IMO, as we expect a reversal at about this value and a renewed trend upwards to a new high.
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Previous trade experiment:

Adjusted target for Trade Experiment #289A Sell CHF/JPY is met
Wednesday January 3, 2007 at 3:30 ET

Adjusted target of 97.50 for Trade Experiment #289A Sell CHF/JPY was met. Profit of 18 pips is logged.

RRR = .28

The recent low is 97.27. Wave 4 has progressed A and now will do an upwards B and a downwards C, and then Wave 5 will go up to the target of 98.25 or higher. A possible short trade opportunity awaits us there.
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Tuesday January 2, 2006 at 4:45 ET

I have revised my wave count for Trade Experiment #289A Sell CHF/JPY at 97.77. We are approaching what I believe is the top of the third wave, not the top of the fifth wave. The interim high so far is 97.90, which is a probable reversal point. Adjust target for CHF/JPY short trade to the anticipated bottom of wave 4 at . Then we will re-enter our short position at the top of wave 5 at about 98.25.

Adjust target for Trade Experiment #289A Sell CHF/JPY to 97.50
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Previous trade experiment:

Thursday December 28 at 15:00 ET
Trade Experiment #289A Sell CHF/JPY at 97.77
Stop is 98.32
Target is 92.70
Risk is 64 pips
Reward is 498 pips
Reward : Risk ratio is 7.8 to 1
For research purposes only.

The entry point is the anticipated high of the upwards trend. The target is the bottom of Wave 1.
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Previous trade experiment:

Tuesday December 19 at 7:30 ET
Trade Experiment #289 Sell CHF/JPY at 97.05
Stop is 97.36
Target is 95.90
Risk is 39 pips
Reward is 107 pips
Reward : Risk ratio is 2.7 to 1
For research purposes only.

The target is the bottom of Wave 3.

Update Trade Experiment #301 Sell GBP/JPY for Thursday January 4

We successfully entered a short on GBP/JPY (Trade Experiment #301 Sell GBP/JPY at 234.30 ) at the beginnning of a trend downwards, which is a superhuman achievement in our estimation, though we survived our stop by only 10 pips ( a very close call).

The conservative initial target of 232.60 was met today at 3:30 ET. However, we exited the trade at what we estimated to be the bottom of the Wave A of the A-B-C downwards Wave 4 at 233.00 - " Exit Trade Experiment #301 Sell GBP/JPY at 234.30 at market price, or at 233.00" to take 121 pips of profit.

After we exited temporarily, the price did reverse at 232.66, and did a 7 hour wave B a-b-c pattern lifting the price to 233.13. This would have been the correct re-entry price for the wave C continuation of the A-B-C downwards trade.The new conservative target according to our system at that point would have been 231.10.

The current low is 231.22, and the pattern suggests that a further continuation of the trend towards our lower trend reversal target of 231.10 is likely.
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Previous trade experiment:

Exit Trade Experiment #301 Sell GBP/JPY at market price of 233.00Wednesday January 3 at 11:30 ET

Entry review: We just missed hitting our stop on our short GBP/JPY trade (Trade Experiment #301 ) - by about 10 pips. We did a rather obvious Elliott Wave miscount, but it has been very difficult to count waves lately due to all the flat sections in our charts caused by the holidays, which we aren't accustomed to and interfere with our counting.

Exit strategy: The current price is at or near to a likely reversal point and we thus advise exit either at market price of about 233.10, or at 233.00 (which is likely to be hit). The recent low is 232.96

Exit Trade Experiment #301 Sell GBP/JPY at 234.30 at market price, or at 233.00

If there is a strong and clear upwards a-b-c wave now, then we can short it at the top and trade the C wave of the wave 4 down.

p.s. - GBP/JPY just fell to 232.76 as expected in a fifth wave of a fifth wave. It is now due to reverse and do an upwards corrective wave a-b-c.
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Previous trade experiment:

Tuesday January 2, 2006 at 5:45 ET
Trade Experiment #301 Sell GBP/JPY at 234.30
Stop is 234.91
Target is 232.60
Risk is 70 pips
Reward is 161 pips
Reward / Risk Ratio is 2.3 / 1
Confidence level: fair
Accuracy: good
Reward / Risk Ratio : poor

For research purposes only.

As in the last trade experiment, this is an attempt to enter at the top of the third wave and trade the fourth wave down - not a preferred wave configuration. Estimating the target is not reliable for this kind of trade with my current system.

p.s. - current high is 234.57

Thursday January 4 at 17:15 ET

Our last GBP/USD trade experiment going long was a shortlived disaster. Time for another one - hopefully successful this time. After a 370 pip slide, we have a much stronger chance of success. Hopefully this strategy will position us in the market prior to tomorrow's NFP report, and if the report is unfavorable for the USD, the target will be met, and possibly an even better target can be met.

Trade Experiment #303C Buy GBP/USD at 1.9380

Stop is 1.9324

Target is 1.9635

Risk is 60 pips

Reward is 251 pips

Reward / Risk Ratio is 4.2

Confidence level: good
Accuracy: fair
Reward / Risk Ratio : fair

For research purposes only.

This is an attempt to trade an upwards wave 3 of an upwards Wave 5 of the very large uptrend.

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"><thead><tr><td class="alt1" nowrap="nowrap">Fri. 01/05</td> <td class="alt1">
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<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Retail Purchasing Manager's Index (PMI) measures the activity level of purchasing managers in the retail sector, with a reading above 50 indicating expansion. A rising trend has a positive effect on the nation's currency. To produce the index, purchasing managers are surveyed on a number of subjects including employment, production, new orders, supplier deliveries, and inventories. Traders watch these surveys closely because purchasing managers, by virtue of their jobs, have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

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

The Producer Price Index (PPI) measures the rate of inflation (i.e., the rate of price changes) experienced by manufacturers when purchasing goods and services. A rising trend has a positive effect on the nation's currency. When manufactures pay more for goods and services, they are likely to pass the higher costs to the consumer, so PPI is thought to be a leading indicator of consumer inflation. PPI is highly regarded, and at extremes will have a market impact equal to that of its CPI counterpart.

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<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.

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

Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.

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

Measures the number of new jobs created in the previous month. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

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

Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.

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</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">Nonfarm Employment Change</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">115K</td> <td class="alt1" align="center">132K</td> <td class="alt1" id="collapsecal_eventanalysis_3426" style="" align="center">
</td> </tr> </thead> <tbody id="collapseobj_eventanalysis_3426" 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 number of new jobs created in the previous month, excluding the farming industry. A rising trend has a positive effect on the nation's currency. The number of new jobs being created is one of the most important indicators of the economy's health because consumer spending, which is highly correlated with labor conditions, makes up a large portion of GDP. This report is the first of the month that relates to labor conditions, making it susceptible to big surprises.

</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">Unemployment Rate</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">4.5%</td> <td class="alt1" align="center">4.5%</td> <td class="alt1" id="collapsecal_eventanalysis_3427" style="" align="center">
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<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Measures the percentage of the total work force that is unemployed and actively seeking employment. A falling trend has a positive effect on the nation's currency. Working people tend to spend more, and consumer spending is a major driver of the economy. However, unemployment usually draws little attention because traders view it as a lagging indicator.

</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">Average Hourly Earnings m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">0.3%</td> <td class="alt1" align="center">0.2%</td> <td class="alt1" id="collapsecal_eventanalysis_3428" style="" align="center">
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Previous trade experiments:

Thursday January 4 at 10:15 ET

Trade Experiment #303B Buy GBP/USD at 1.9500
Stop is 1.9469
Target is 1.9705
Risk is 35 pips
Reward is 201 pips
Reward / Risk Ratio is 5.7
Confidence level: good
Accuracy: fair
Reward / Risk Ratio : good

For research purposes only.

This is an attempt to trade an upwards Wave B of a downwards Wave 4 of an upwards extended Third Wave.
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Previous trade experiments:

This one got stopped out when the GBP/USD dropped like a stone 100 pips for no apparent reason. We expected the fifth wave down to be small, but it was huge!:

Wednesday January 3 at 9:15 ET
Trade Experiment #303A Buy GBP/USD at 1.9577
Stop is 1.9553
Target is 1.9705
Risk is 29 pips
Reward is 124 pips
Reward / Risk Ratio is 4.3
Confidence level: good
Accuracy: fair
Reward / Risk Ratio : fair

For research purposes only.

This is an attempt to trade an upwards Wave B of a downwards Wave 4 of an upwards extended Third Wave.
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Previous trade experiments:

Wednesday January 3 at 10:15 ET
Trade Experiment #303B Buy GBP/USD at 1.9500
Stop is 1.9469
Target is 1.9705
Risk is 35 pips
Reward is 201 pips
Reward / Risk Ratio is 5.7
Confidence level: good
Accuracy: fair
Reward / Risk Ratio : good

For research purposes only.

This is an attempt to trade an upwards Wave B of a downwards Wave 4 of an upwards extended Third Wave.
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Previous trade experiments:

This one got stopped out when the GBP/USD dropped like a stone 100 pips for no apparent reason. We expected the fifth wave down to be small, but it was huge!:

Wednesday January 3 at 9:15 ET
Trade Experiment #303A Buy GBP/USD at 1.9577
Stop is 1.9553
Target is 1.9705
Risk is 29 pips
Reward is 124 pips
Reward / Risk Ratio is 4.3
Confidence level: good
Accuracy: fair
Reward / Risk Ratio : fair

For research purposes only.

This is an attempt to trade an upwards Wave B of a downwards Wave 4 of an upwards extended Third Wave.
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Adjust target for Trade Experiment #303 Buy GBP/USD to 1.9617
Wednesday January 3 at 8:00 ET

After more analysis we believe that GBP/USD will descend to a new low at about 1.9580. Therefore adjust exit target to 1.9617 to claim 19 pips of profit and re-enter at the bottom of the next downwards small five wave pattern.

p.s. - GBP/USD went to an interim high of 1.9632 , thus hitting our adjusted exit target
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Previous trade experiments:

Wednesday January 3 at 6:45 ET
Trade Experiment #303 Buy GBP/USD at 1.9594
Enter Buy GBP/USD at 1.9594
Stop is 1.9569
Target is 1.9705
Risk is 29 pips
Reward is 107 pips
Reward / Risk Ratio is 3.7

Confidence level: good
Accuracy: good
Reward / Risk Ratio : fair

For research purposes only.

This is an attempt to trade an upwards Wave B of a downwards Wave 4 of an upwards extended Third Wave.
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Original, highly researched, highly successful trade plan:

Tuesday January 2, 2006 at 9:15 ET

Trade Experiment #302 Sell GBP/USD at 1.9749
Stop is 1.9782
Target is 1.9530
Risk is 37 pips
Reward is 215 pips
Reward / Risk Ratio is 5.8 / 1
Confidence level: fair
Accuracy: fair
Reward / Risk Ratio : good
For research purposes only.
This is an attempt to trade Wave C of Wave 4 down.

p.s. - recent high is 1.9749 (entry price met)
p.p.s. - recent low is 1.9482