Low Risk, High Reward Trading Experiment

Hi!

No, no my friend. I'm not sure. All I say is that it could not break down 230,68 and it could not break up 231,75 neither.

We are stuck here. If we want it down, it should break and hold below 230,68. If we want it up, it should break 231,75 and last highs.

If we have good Uk data in 21 minutes, it could break that 231,75.

And, of course, if we have bad data, it could break that 230,68.

Marc

Hi!

Bad UK data and gbpjpy went down to 230,75. Now is trading at 231.03.

We have something at 230,68, don't you think?

Marc

<table class="tborder" style="margin-top: 12px;" align="center" border="0" cellpadding="3" cellspacing="0" width="100%"> <thead><tr><td class="alt1" nowrap="nowrap">Mon. 01/08</td> <td class="alt1">
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<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

Japanese financial markets will be closed in observance of Coming of Age Day.

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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> <td class="alt1"> 2:00am </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">-0.3%</td> <td class="alt1" align="center">0.6%</td> <td class="alt1" align="center">-0.5%</td> <td class="alt1" id="collapsecal_eventanalysis_3455" 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 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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</td> <td class="alt1"> 6:00am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">German Factory Orders m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">1.5%</td> <td class="alt1" align="center">0.9%</td> <td class="alt1" align="center">-1.1%</td> <td class="alt1" id="collapsecal_eventanalysis_3456" 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 value of new purchase orders placed with domestic manufacturers for durable and non-durable goods.

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

Measures general business conditions through a quarterly survey, conducted by the Bank of Canada (BOC), that asks 100 firms to rate their company's 12 month forecast for items such as sales growth, investment in machinery, employment, inflation, and ability to meet demand. The 100 firms are selected in accordance with the composition of the nation's GDP.

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

Federal Reserve Governor Donald Kohn will speak about the economic outlook, in Atlanta Georgia. Audience questions expected.

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</td> <td class="alt1"> 3:00pm </td> <td class="alt1" align="center">USD</td> <td class="alt1">Consumer Credit m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">12.3B</td> <td class="alt1" align="center">5.4B</td> <td class="alt1" align="center">-1.2B</td> <td class="alt1" id="collapsecal_eventanalysis_3457" 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 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.

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</td> <td class="alt1"> 7:01pm </td> <td class="alt1" align="center">GBP</td> <td class="alt1">BRC Retail Sales y/y</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">2.5%</td> <td class="alt1" align="center">1.9%</td> <td class="alt1" align="center">2.5%</td> <td class="alt1" id="collapsecal_eventanalysis_3495" style="" align="center">
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<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The British Retail Consortium (BRC) Retail Monitor measures the change in value of sales at surveyed retailers.

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

Recent consumer data has been generally firm.

</fieldset> <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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</td> </tr> </tbody><thead> <tr> <td class="alt2" nowrap="nowrap">Tue. 01/09</td> <td class="alt2"> 2:00am </td> <td class="alt2" align="center">EUR</td> <td class="alt2">German Trade Balance</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">18.5B</td> <td class="alt2" align="center">15.3B</td> <td class="alt2" align="center">17.3B</td> <td class="alt2" id="collapsecal_eventanalysis_3458" 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 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.

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</td> <td class="alt2"> 6:00am </td> <td class="alt2" align="center">EUR</td> <td class="alt2">German Industrial Production m/m</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">1.8%</td> <td class="alt2" align="center">1.0%</td> <td class="alt2" align="center">-1.4%</td> <td class="alt2" id="collapsecal_eventanalysis_3459" 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 total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation's currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income. Traders pay special attention to Industrial Production because it's one of the few growth indicators that is produced directly by the Federal Reserve.

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

Measures the annualized number of new single-family homes or buildings constructed throughout the previous month.

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

The Westpac Melbourne Institute (WMI) Consumer Sentiment measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future.

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</td> <td class="alt2"> 7:01pm </td> <td class="alt2" align="center">GBP</td> <td class="alt2">Consumer Confidence Index</td> <td class="alt2" align="center">
</td> <td class="alt2" align="center">83</td> <td class="alt2" align="center">89</td> <td class="alt2" align="center">89</td> <td class="alt2" id="collapsecal_eventanalysis_3480" style="" align="center">
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<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Investica Analysis</legend>

Recent consumer evidence has been mixed.

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

The Nationwide Consumer Confidence Index (NCCI) measures the mood of consumers in regard to economic conditions. The reading is derived from a monthly survey that asks respondents to evaluate the prospects for the economy in the future.

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

There is liable to be a further drought impact.

</fieldset> <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.

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</td> </tr> </tbody><thead> <tr> <td class="alt1" nowrap="nowrap">Wed. 01/10</td> <td class="alt1"> 2:00am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">German Wholesale Price Index m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">0.0%</td> <td class="alt1" align="center">0.2%</td> <td class="alt1" align="center">0.1%</td> <td class="alt1" id="collapsecal_eventanalysis_3490" style="" align="center">
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<fieldset class="smallfont" style="padding: 4px 10px 2px; width: 70%; margin-bottom: 9px;"> <legend>Definition</legend>

The Wholesale Price Index (WPI) measures the rate of inflation experienced at the wholesale level. The reading represents the monthly change in the average price of a fixed basket of goods and services purchased at the wholesale level.

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</td> <td class="alt1"> 2:45am </td> <td class="alt1" align="center">EUR</td> <td class="alt1">French Industrial Production m/m</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">-0.2%</td> <td class="alt1" align="center">0.7%</td> <td class="alt1" align="center">-0.1%</td> <td class="alt1" id="collapsecal_eventanalysis_3491" 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 total value of output produced by factories, mines, and utilities. A rising trend has a positive effect on the nation's currency because high levels of production are a sign of a strong economy. Industrial Production reacts quickly to the ups and downs of the business cycle and can be a leading indicator of manufacturing employment, average earnings, and personal income. Traders pay special attention to Industrial Production because it's one of the few growth indicators that is produced directly by the Federal Reserve.

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</td> <td class="alt1"> 4:30am </td> <td class="alt1" align="center">GBP</td> <td class="alt1">Trade Balance</td> <td class="alt1" align="center">
</td> <td class="alt1" align="center">-7.2B</td> <td class="alt1" align="center">-6.45B</td> <td class="alt1" align="center">-6.33B</td></tr></thead> </table>

Successful trade experiment:

Trade Experiment #300A Sell EUR/CAD at 1.5320 reached its target of 1.5250, and surpassed it by 4 pips, on January 9th at 22:15 ET, completing a successful trade experiment involving a trade of 60 pips, and a Reward / Risk Ratio of 1.7:1.
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Previous trade experiment:

Monday January 8 at 9:45 ET
Trade Experiment #300A Sell EUR/CAD at 1.5320
Stop is 1.5346
Target is 1.5250
Risk is 36 pips
Reward is 60 pips
Reward / Risk Ratio is 1.7 : 1

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

For research purposes only.

This is an attempt to enter at the top of the a wave of the fourth wave and trade the b wave down - not a preferred wave configuration. Estimating the target is not reliable for this kind of trade with my current system.

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Previous successful trade experiment:

Adjust entry price for Trade Experiment #300 Sell EUR/CAD at 1.5510 <hr style="color: rgb(209, 209, 225);" size="1"> I just did a short term target analysis of EUR /CAD and found that the correct precise entry price according to our trading system is 1.5503, not 1.5510 as previously estimated. This price was recently met, so theoretically we should be in this short trade at the adjusted price.

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Tuesday January 2, 2006 at 5:45 ET

Trade Experiment #300 Sell EUR/CAD at 1.5510
Stop is 1.5561
Target is 1.5300
Risk is 51 pips
Reward is 200 pips
Reward / Risk Ratio is 4.0 : 1

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

For research purposes only.

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.
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Previous comment:

No smart long trade on EUR/CAD (yet)
EUR/CAD Update for Monday December 18 at 20:00 ET
When things get this far along in a trend, my preference shifts to the short trade at the very, very end of the uptrend. I feel that probabilities of success decrease the further we get towards the end of a trend. So we don't expect to go long unless a very clear pattern emerges indicating the bottom of the downwards corrective wave we are now on and good trend reversal values are met.

Generally, my prediction is for a fall to about 1.5020 to 1.5040, then a rise to 1.5530 to 1.5740. 1.5690 is a possible reversal value. When the price reaches the very top, as evidenced by an Elliott Wave completion pattern and the intersection with high probability reversal values, we will have a good low risk / high probability short trade opportunity. We expect a Fifth Wave upwards, with the top of its internal third wave at 1.5530, and the top of its internal fifth wave at 1.5740.

The current price is 1.5145. We are in a short term corrective downwards fourth wave A-B-C of an upwards third wave of an upwards extended Third Wave according to our current wave hypothesis. Alternatively, we could be in a short term corrective downwards fourth wave A-B-C of an upwards first wave of an upwards B Wave.
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Wednesday January 10 at 8:00 ET

The current price of CAD/JPY is 101.30.

I see CAD/JPY going up to 101.70 - 101.90, then down to 99.50

To me, October 3, 2006 is the beginning of wave C down. There is an extended third wave. Wave 4 up begins on Dec 7 and Wave 5 down on Dec 20.

Wave 5 down is not finished. It has done 1-2-3-4. Wave 5 of Wave 5 is still to come. Target is 99.50.

A short from 101.90 might be feasible.

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Previous trade experiments and comments:

Sunday December 17 at 15:30 ET

A wave recount necessitated by a new high for Trade Experiment #288 Sell CAD/JPY at 102.00 on the short term means that our stop is at risk of being hit. We narrowly missed being stopped out on Friday (missed by 2 pips).

The market is likely to fall slightly again then rise to a new high above our stop when completing its corrective Wave 4. The most advantageous move would be to exit at 101.70 and re-enter the short position if it rises to 102.90. In this case, adjust stop to 103.31 from 102.41.

The target remains the same.

p.s. - the price fell to 101.67 as expected to hit our adjusted target and allow about 20 pips of profit to be captured
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Trade Experiment #288 Sell CAD/JPY at 102.00 <hr style="color: rgb(209, 209, 225);" size="1"> Thursday December 14 at 21:00 ET
Trade Experiment #288 Sell CAD/JPY at 102.00
Stop is 102.41
Target is 99.50
Risk is 50 pips
Reward is 241 pips
Reward : Risk ratio is 4.8 to 1

For research purposes only.
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Previous trade experiments and comments:

Thursday December 14 at 21:00 ET
Since we recently entered a short trade on USD/JPY after a 1 week 370 pip strong uptrend I re-visited CAD/JPY and developed an entirely new wave hypothesis. I was unsettled with the previous wave hypothesis, and much prefer this one. I see a completed upwards (but downwards tilting) Wave 4 A-B-C pattern at 102.00. We now foresee a downwards impulsive Wave 5 to a target of 99.50 - 250 pips lower.

As consequence - Exit Trade Experiment #277 Buy CAD/JPY (at 100.13) at 102.00 to capture about 75 pips of profit.
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Previous trade experiments:

Wednesday December 6 at 10:00 ET
Re-entry opportunity on Trade Experiment #277 Buy CAD/JPY at 100.13 at 100.29

p.s. - CAD/JPY fell down further to 110.16 in the Wave A, is now bouncing in Wave B, and may come down even to a slightly lower low in Wave C later.
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Wednesday December 6 at 7:00 ET

Retroactive Trade Experiment:

Upon careful examination CAD/JPY reached a very clear fully system compliant entry price at exactly 100.13, just a few pips lower than our conservative target of 100.30 of our short trade Trade Signal #260 Sell CAD/JPY at 103.00

On a large scale, this is the very beginning of a large upwards Third Wave of an even larger upwards FIFTH WAVE.

Trade Experiment #277 Buy CAD/JPY at 100.13
Stop is 99.88
Target is 106.20
Risk is 35 pips
Reward is 597 pips
Reward : Risk ratio is 17.1 to 1

For research purposes only.

Wednesday January 10 at 8:40 ET

Due to the likelihood of a largish bounce, we recommend exiting Trade Experiment #307 Sell GBP/USD at 1.9350 to collect 95 pips of profit.

At 8:30 ET the US Trade balance was reported at -58.2, which is slightly less than expected. This caused a slightly enhanced wave b bounce down and provided a second opportunity to exit this short trade. The preferred interim exit opportunity occured earlier - at about 20:00 to 22:00 ET - at about the same price. This was followed by a 75 pip rise, and then the recent 75 pip fall to 1.9346. Short again at about 1.9425 to continue the downwards trade.

p.s.- after a 20 pip upwards bounce, GBP/USD continued its downtrend, and went down as far as 1.9321, our high probability reversal target for this Wave C of Wave 4 downwards
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Previous trade experiment:

Tuesday January 9 at 2:45 ET
Trade Experiment #307 Sell GBP/USD at 1.9450
Stop is 1.9481
Target is 1.9250
Risk is 35 pips
Reward is 196 pips
Reward / Risk Ratio is 5.6

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

For research purposes only.

This is an attempt to trade a downwards wave 5 of a very strong downtrend.
Alternatively, it could be the wave 4 of a Wave 1 of a new uptrend.

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Tuesday January 9 at 2:45 ET

Exit Trade Experiment #303D Buy GBP/USD at 1.9282 at 1.9450 if not already exited to accept 264 pips of profit

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Previous trade experiment:

Monday January 8 at 9:00 ET
Trade Experiment #303D Buy GBP/USD at 1.9282
Stop is 1.9258
Target is 1.9350
Risk is 28 pips
Reward is 64 pips
Reward / Risk Ratio is 2.3
Confidence level: good
Accuracy: good
Reward / Risk Ratio : poor

For research purposes only.

This is an attempt to trade an upwards wave c of an upwards Wave 4 of the very strong downtrend.
Alternatively, it could be the beginning of a wave 3 upwards of the first wave of a final large Wave 5 leading to a new high.

Wednesday January 10 at 10:15 ET

Trade Experiment #308 Buy GBP/USD at 1.9321

Stop is 1.9289

Target is 1.9450

Risk is 36 pips

Reward is 125 pips

Reward / Risk Ratio is 3.5 : 1

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

For research purposes only.

My first Elliott Wave hypothesis is that we are in an upwards corrective wave 4 and that wave-a has already completed, now we are in wave-b that is finding a bottom and the final c-wave of a larger wave-4 is coming soon. This hypothesis is viable.

Another hypothesis is that we are in a corrective upwards wave 4, but the first upwards a wave has only gone 1-2-3-4, so we are now anticipating a wave 5. In this second scenario the wave 4 has just descended more than usual, which makes this hypothesis less likely, but not impossible.

A third scenario is that we are in a corrective upwards wave 4, but we have only seen wave 1 and wave 2, and are now about to undergo wave 3 of the "a" wave upwards. This is my current favorite hypothesis, as it is consistent with typical Elliott Wave behavior.

Something is wrong here...itme.???

How's that?

Should be enter at 1.9321 for a target of 1.9400. Currently shows enter at 1.9421.

itme, how do you keep up with this journal, especially when it is formatted so elegantly. I'm pretty sure it takes quite a lot of time and you are definitely dedicated to the EW.


I always feel a pain in the ass trying to keep updating mine..

well, i dont know, i too think we are in wave 4 but i think that wave-a has already completed, now we are in wave-b that is finding a bottom and the final c-wave of a larger wave-4 or in my chart wave-b is coming soon.

that´s my opinion, any comments?

So are you saying the "final wave-c of a larger wave-4" should be a move up? Thank you for your analysis!

Aloha Itme,

First off I want to thank you for your dedication to this forum. I have learned a lot reading your posts and following your trades. I am very grateful for your efforts.

My question is this: What currency pair do you feel the most comfortable or have the best handle with?

Thanks again,

TY

Thanks, Wallboroff. I understand, and agree with your statement "i too think we are in wave 4 but i think that wave-a has already completed, now we are in wave-b that is finding a bottom and the final c-wave of a larger wave-4 [or in my chart wave-b] is coming soon." except for the part in square brackets, which I don't understand. Your hypothesis is viable.

Another hypothesis is that we are in a corrective upwards wave 4, but the first upwards a wave has only gone 1-2-3-4, so we are now anticipating a wave 5. In this second scenario the wave 4 has just descended more than usual, which makes this hypothesis less likely, but not impossible.

A third scenario is that we are in a corrective upwards wave 4, but we have only seen wave 1 and wave 2, and are now about to undergo wave 3 of the A wave upwards. This is my current favorite hypothesis, as it is consistent with typical Elliott Wave behavior.

We can probably all figure this out for ourselves by looking at the target price, stop price, and the risk and reward total pips. Add 125 pips (plus spread) to 1.9321 and you arrive at the target price. Add 125 pips to 1.9421 and you do not arrive at the target price. That's my personal observation, anyway.

As above noted, the correct price for entry is 1.9321. However, the best entry price to go long on GBP/USD could be a bit lower. The target is 1.9500

Wednesday January 10 at 22:00 ET

Revise target for Trade Experiment #308 Buy GBP/USD to 1.9340

Earn about 15 pips of profit.

We expect a decline to about 1.9300 where we will consider entering for the long trade with a target of about 1.9500 which will be the C Wave of a upwards Wave 4 corrective wave.

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Previous trade experiment:

Wednesday January 10 at 10:15 ET
Trade Experiment #308 Buy GBP/USD at 1.9321
Stop is 1.9289
Target is 1.9450
Risk is 36 pips
Reward is 125 pips
Reward / Risk Ratio is 3.5 : 1

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

For research purposes only.

My first Elliott Wave hypothesis is that we are in an upwards corrective wave 4 and that wave-a has already completed, now we are in wave-b that is finding a bottom and the final c-wave of a larger wave-4 is coming soon. This hypothesis is viable.

Another hypothesis is that we are in a corrective upwards wave 4, but the first upwards a wave has only gone 1-2-3-4, so we are now anticipating a wave 5. In this second scenario the wave 4 has just descended more than usual, which makes this hypothesis less likely, but not impossible.

A third scenario is that we are in a corrective upwards wave 4, but we have only seen wave 1 and wave 2, and are now about to undergo wave 3 of the "a" wave upwards. This is my current favorite hypothesis, as it is consistent with typical Elliott Wave behavior.

Hello, ITME I am a novis in Elliott Wave so it is hard for me to capture your view. Plz give a chart.

Thanks a lot

Hello ITME,

Below is my chart that I am thinking. Plz correct me.