Low Risk, High Reward Trading Experiment | Page 133 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

High Risk/Low Reward Ratio Trading System 108 replies

High risk reward experiment 0 replies

Low Risk/High Reward trading 4 replies

Good reward/risk ratio experiment 20 replies

Results for Low Risk,High Reward 11 replies

Attachments: Low Risk, High Reward Trading Experiment
Exit Attachments

Low Risk, High Reward Trading Experiment

  • #2,641
  • Jan 16, 2007 10:05am Jan 16, 2007 10:05am
Tuesday January 16 at 11:00 ET

Trade Experiment #313 Buy GBP/USD at 1.9602

Stop is 1.9558

Target is 1.9750

Risk is 48 pips

Reward is 144 pips

Reward / Risk Ratio is 3.0

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

For research purposes only.
  • #2,642
  • Edited 8:21pm Jan 16, 2007 10:34am | Edited 8:21pm
Tuesday January 16 at 11:30 ET

Upon further analysis I feel that entry at 1.9602 is not a high probability trade. It may be successful, but it is more risky than I would prefer at this time. Therefore,

Exit Trade Experiment #313 Buy GBP/USD at 1.9630

Re-Enter long position on notice at approx. 1.9525 - 1.9560

_____________________________________________________
_____________________________________________________

Tuesday January 16 at 11:00 ET
Trade Experiment #313 Buy GBP/USD at 1.9602
Stop is 1.9558
Target is 1.9750
Risk is 48 pips
Reward is 144 pips
Reward / Risk Ratio is 3.0

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

For research purposes only.
  • #2,643
  • Jan 16, 2007 11:26am Jan 16, 2007 11:26am
So do you have a outlook for the GBPJPY?
Quoting itme
Tuesday January 16 at 11:30 ET

Upon further analysis I feel that entry at 1.9602 is not a high probability trade. It may be successful, but it is more risky than I would prefer at this time. Therefore,

Exit Trade Experiment #313 Buy GBP/USD at 1.9630

Re-Enter long position on notice at approx. 1.9560

_____________________________________________________
_____________________________________________________

Tuesday January 16 at 11:00 ET
Trade Experiment #313 Buy GBP/USD at 1.9602
Stop is 1.9558
Target is 1.9750
Risk is 48 pips
Reward is 144 pips
Reward / Risk Ratio is 3.0

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

For research purposes only.
  • #2,644
  • Edited 1:50pm Jan 17, 2007 2:21am | Edited 1:50pm
Wednesday January 17 at 3:00 ET

Trade Experiment #314 Sell GBP/USD at 1.9660

Stop is 1.9685

Target is 1.9570

Risk is 29 pips

Reward is 86 pips

Reward / Risk Ratio is 3.0

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

For research purposes only.

p.s. - this trade experiment was not a strong trade, as the RRR was only 3.0, the entry was a bit premature (it should have been at 1.9675 instead of 1.9660 ), and the wave count was not particularly clear. In this case we hit our tight stop of 1.9685 when the rather poor U.S. TIC data ( 9:00 USD TIC Report 68.4B 82.5B 85.3B ) caused an increase in the price of GBP/USD which put us over our stop price. A news trader would have realised that this data had the chance of sending GBP/USD higher, but that would not have helped, because by then it was too late, as the stop was slightly higher than the price immediately prior to the data release, and the trade was immediately stopped out.
  • #2,645
  • Edited 3:55am Jan 17, 2007 3:17am | Edited 3:55am
Overview of Tuesday January 16 - US Session

4:30 GBP CPI m/m 0.6% 0.4% 0.3%
4:30 GBP Core CPI y/y 1.8% 1.7% 1.6%
4:30 GBP RPI m/m 0.8% 0.5% 0.3%
5:00 EUR German ZEW Economic Sentiment -3.6 -12.0 -19.0
5:00 EUR ZEW Economic Sentiment -1.8 -5.0 -3.0

8:30 USD Empire State Business Conditions Index 9.1 18.0 23.1

9:00 CAD Interest Rate Statement 4.25% 4.25% 4.25%

Although the economic news yesterday (see above) favored the European currencies and was negative towards the USD, the GBP, EUR, CHF and JPY all fell versus the USD during the US session, rebounding somewhat afterwards. The New York Federal Reserve reported Tuesday that its Empire State Manufacturing Index dropped to 9.1 in January from 22.2 in December.

A better-than-expected improvement in the ZEW index of investor sentiment in Germany, the euro zone's biggest economy, coincided with a contradictory 75 pip drop in EUR/USD.

The pound failed to benefit from a report showing that consumer prices in Britain rose at a year-on-year rate of 3 percent in December, up from 2.7 percent in November. The GBP/USD fell 110 pips. The figures appeared to bolster expectations that the Bank of England might follow a surprise interest rate rise last week with another increase.

The markets are looking ahead to a storm of government reports on Wednesday. The Federal Reserve releases a report on industrial production for December and a survey of regional economic conditions, while the Labor Department reports on producer prices for December, a key gauge of inflation that the central bank watches.

The yen continues to be subjected to weakness as a result of mixed sentiment over the Bank of Japan's monetary policy decision later in the week due to conflicting Japanese media reports about the BoJ's move. Government officials have issued opposing commentary with their views of what the Bank should do. Some news reports have suggested no change from the BoJ, while others continue to insist on a 25-bp rate hike. As a result of market indecisiveness on the outcome of this week's meeting, traders have sold off on the Japanese currency - hitting fresh multi-year lows against the sterling and 15-month lows versus the dollar.
  • #2,646
  • Edited 6:41pm Jan 17, 2007 12:49pm | Edited 6:41pm
GBP/USD Update for Wednesday January 17 at 13:00 ET

Upon retrospect, yesterday's Trade Experiment #313 Buy GBP/USD at 1.9602 has been successful so far, and seems likely to meet its original target of 1.9750. As I have done quite regularly lately, due to my intention to reduce the number of trades and increase the win percentage, I changed my mind after the trade was entered and signalled an exit with a small profit. The entry price was only 12 pips from the bottom of the trend, which is excellent accuracy, and the duration of the trade so far is quite short (which is good). My judgement to exit this trade was good, because there was a good chance it could have gone to a lower value before initiating the upwards Wave B of Wave 4. What happened, however, was that wave 5 of the downwards Wave A was truncated, so the trend did not go down as much as usual, due to the bullishness of the market.

My trade experiment from earlier today ( Trade Experiment #314 Sell GBP/USD at 1.9660 - also see below) was not a strong trade, as the RRR was only 3.0, the entry was a bit premature (it should have been at 1.9675 instead of 1.9660 ), and the wave count was not particularly clear. In this case we hit our tight stop of 1.9685 when the rather poor U.S. TIC data ( 9:00 USD TIC Report 68.4B 82.5B 85.3B ) caused an increase in the price of GBP/USD which put us over our stop price. A news trader would have realised that this data had the chance of sending GBP/USD higher, but that would not have helped, because by then it was too late, as the stop was slightly higher than the price immediately prior to the data release, and the trade was immediately stopped out.

Predictions:
GBP/USD is in a strong impulsive trend upwards.
I anticipate a sell opportunity at 1.9750 (or as high as 1.9800) down to about 1.9600 to 1.9550.
This could be a good trade. When GBP/USD is ready to reverse and start down, then EUR/GBP may be at .6550 or maybe .6480.
The subsequent anticipated buy from about 1.9600 (or 1.9550) to a higher target of about 1.9800 - 1.9900 will also be a good trade.
______________________________________________
______________________________________________

Previous trade experiments and early exit:

Tuesday January 16 at 11:30 ET

Upon further analysis I feel that entry at 1.9602 is not a high probability trade. It may be successful, but it is more risky than I would prefer at this time. Therefore,

Exit Trade Experiment #313 Buy GBP/USD at 1.9630

Re-Enter long position on notice at approx. 1.9525 - 1.9560

__________________________________________________ ___
__________________________________________________ ___

Tuesday January 16 at 11:00 ET
Trade Experiment #313 Buy GBP/USD at 1.9602
Stop is 1.9558
Target is 1.9750
Risk is 48 pips
Reward is 144 pips
Reward / Risk Ratio is 3.0

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

For research purposes only.

______________________________________________________________________

 Wednesday January 17 at 3:00 ET
Trade Experiment #314 Sell GBP/USD at 1.9660
Stop is 1.9685
Target is 1.9570
Risk is 29 pips
Reward is 86 pips
Reward / Risk Ratio is 3.0

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

For research purposes only.
  • #2,647
  • Jan 17, 2007 1:48pm Jan 17, 2007 1:48pm
EUR/CAD prediction for Wednesday January 17 at 13:00 ET

According to my interpretation of Wave Theory, etc., I expect EUR/CAD to rise from approximately its current value at 1.5160 (or it could go down a bit further to 1.5140 first) to about 1.5250 or higher, then fall to 1.5100 or lower, then rise strongly to 1.6000 to complete a very large WAVE C on the 1 month 30 year chart.

The strong rise from 1.5100 to 1.6000 could be a viable low risk / high reward trading opportunity.
  • #2,648
  • Jan 17, 2007 3:11pm Jan 17, 2007 3:11pm
Wednesday January 17 at 16:00 ET

Trade Experiment #315 Sell USD/CHF at 1.2580

Stop is 1.2626

Target is 1.1900

Risk is 50 pips

Reward is 676 pips

Reward / Risk Ratio is 13.5

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

For research purposes only.

This is an attempt to trade the Fifth Wave of USD/CHF down of a 14 month downtrend. The current price of USD/CHF is 1.2475.
__________________________________________________
__________________________________________________

Prediction for USD/CHF for Monday January 15 at 18:00 ET

USD/CHF descended from its previous price at 1.2455 to 1.2443 (not quite as far down as "about 1.2435 (or a bit lower)" as predicted) in the final fifth wave of a wave C of a downwards Wave 4 and then continued its long uptrend to an interim high of 1.2495, on its way presumably to our predicted target of "about 1.12550 to 1.2600".

__________________________________________________ ____
__________________________________________________ ____

Previous post:

Prediction for USD/CHF for Monday 4:00 ET

USD/CHF will likely descend from its current price at 1.2455 to about 1.2435 (or a bit lower) in the final fifth wave of a wave C of a downwards Wave 4 and then continue its long uptrend to a high of about 1.12550 to 1.2600.
  • #2,649
  • Jan 17, 2007 5:24pm Jan 17, 2007 5:24pm
I find it difficult to interpret your analysis, pls. post a chart
  • #2,650
  • Jan 17, 2007 6:38pm Jan 17, 2007 6:38pm
Quoting yftdxe
I find it difficult to interpret your analysis, pls. post a chart
Look in 1 day USD/CHF chart. Note decline since Nov 15, 2005. I hypothesise we are in the fifth wave down. If confusing, read the thread on The Basics of Elliott Wave Theory (link below). If you disagree, then that is not surprising, since most elliotticians have different wave counts, because they are approaching the task of counting employing different criteria and methodologies.
  • #2,651
  • Jan 17, 2007 7:51pm Jan 17, 2007 7:51pm
Quoting itme
Wednesday January 17 at 16:00 ET

Trade Experiment #315 Sell USD/CHF at 1.2580

Stop is 1.2626

Target is 1.1900

Risk is 50 pips

Reward is 676 pips

Reward / Risk Ratio is 13.5

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

For research purposes only.

This is an attempt to trade the Fifth Wave of USD/CHF down of a 14 month downtrend. The current price of USD/CHF is 1.2475.
Sorry, but this may be a stupid question. I see that you're entry price is 1.2580 and the price at the time of your post is at 1.2475. So are you waiting for this 105 pip rise before entry? If that's the case, why not have an entry for the ride up, or did I miss that?
  • #2,652
  • Jan 17, 2007 8:12pm Jan 17, 2007 8:12pm
1Sundevil,

I hope itme doesn't mind me answer this question but as you know he's doing low risk, high reward trades and he's only suggesting IF the USD/CHF goes to 1.2580 he'll be a seller. Buying here is not a high probability trade.


Regards
  • #2,653
  • Edited Jan 18, 2007 7:19am Jan 17, 2007 8:43pm | Edited Jan 18, 2007 7:19am
Quoting JimboFX
1Sundevil,

I hope itme doesn't mind me answer this question but as you know he's doing low risk, high reward trades and he's only suggesting IF the USD/CHF goes to 1.2580 he'll be a seller. Buying here is not a high probability trade. Regards
Thanks for the question,1SunDevil, and for the answer, JimboFX. You are correct. According to my system, it is not a certainty or a high probability that USD/CHF will rise from its current price of about 1.2450 to 1.2580. However, IF it does manage to shoot up there, then it will offer a high probability, low risk / high reward trade opportunity. When / if the price approaches the entry area, then we may modify or cancel the trade experiment, depending on both technicals and fundamentals at the time.

Similarly, according to my system, it is not a certainty or a high probability that EUR/JPY will rise from its current price of about 156.00 up to 157.74. However, IF it does manage to shoot up there, then it will offer a high probability, low risk / high reward trade opportunity. Once again, when / if the price approaches the entry area, then we may modify or cancel the trade experiment, depending on both technicals and fundamentals at the time.

p.s. - So far EUR/JPY made it up to an interim high of 157.35, 135 pips higher than our trade experiment was entered. The wave pattern suggests that it may make it as high as our entry price of 157.74.

Similarly, USD/CHF has risen so far to 1.2528. It may rise more later on, and may rise high enough to trigger our short entry price at 1.2580.
  • #2,654
  • Edited 9:18pm Jan 17, 2007 8:58pm | Edited 9:18pm
Wednesday January 17 at 22:00 ET

Trade Experiment #316 Sell EUR/JPY at 157.74

Stop is 158.21
Target is 154.50

Risk is 50 pips

Reward is 321 pips

Reward / Risk Ratio is 6.4

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

For research purposes only.

This is an attempt to trade the Third Wave of a large downwards First Wave that may be just beginning.The current price of EUR/JPY is 156.20.
  • #2,655
  • Jan 17, 2007 9:27pm Jan 17, 2007 9:27pm
Wednesday January 17 at 22:00 ET

Trade Experiment #317 Sell GBP/USD at 1.9760

Stop is 1.9821
Target is 1.9550

Risk is 65 pips

Reward is 206 pips

Reward / Risk Ratio is 3.2

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

For research purposes only.

This is an attempt to trade the Wave A down of a large Fourth Wave down of a large upwards trend.The current price of GBP/USD is 157.30.
  • #2,656
  • Jan 17, 2007 9:27pm Jan 17, 2007 9:27pm
Quoting itme
Thanks for the question,1SunDevil, and for the answer, JimboFX. You are correct. According to my system, it is not a certainty or a high probability that USD/CHF will rise from its current price of about 1.2450 to 1.2580. However, IF it does manage to shoot up there, then it will offer a high probability, low risk / high reward trade opportunity. When / if the price approaches the entry area, then we may modify or cancel the trade experiment, depending on both technicals and fundamentals at the time.

Similarly, according to my system, it is not a certainty or a high probability that EUR/JPY will rise from its current price of about 156.00 up to 157.74. However, IF it does manage to shoot up there, then it will offer a high probability, low risk / high reward trade opportunity. Once again, when / if the price approaches the entry area, then we may modify or cancel the trade experiment, depending on both technicals and fundamentals at the time.
Thanks, both of you, for the clarification. I like to follow along and compare your entries to what my system is telling me. Keep up the good work.
  • #2,657
  • Edited Jan 18, 2007 7:22am Jan 17, 2007 9:59pm | Edited Jan 18, 2007 7:22am
Wednesday January 17 at 23:00 ET

Trade Experiment #318 Sell GBP/JPY at 238.40

Stop is 239.15
Target #1 is 237.30

Risk is 84 pips

Reward is min 101 pips

Reward / Risk Ratio is min. 1.2

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

For research purposes only.

p.s. - The wave pulse we caught which we thought was the final pulse was not. The price has gone on to new highs, and the current price is 238.91, which is 24 pips from our stop. 24 pips isn't much for the GBP/JPY. We might squeek by, but it could be close.

p.p.s. - The high so far is 240.00, so our stop was surpassed by 85 pips. A later re-entry trade experiment managed to survive the rapid rise in this currency pair.
  • #2,658
  • Jan 17, 2007 10:13pm Jan 17, 2007 10:13pm
Alright, let's hope it works this time. It's about time in my count too.


Quoting itme
Wednesday January 17 at 23:00 ET

Trade Experiment #318 Sell GBP/JPY at 238.40

Stop is 239.15
Target #1 is 237.30

Risk is 84 pips

Reward is min 101 pips

Reward / Risk Ratio is min. 1.2

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

For research purposes only.
Tra-X
  • #2,659
  • Edited Jan 18, 2007 7:25am Jan 17, 2007 10:59pm | Edited Jan 18, 2007 7:25am
Wednesday January 17 at 23:45 ET

Trade Experiment #319 Buy USD/CHF at 1.2422

Stop is 1.2389

Target is 1.2560

Risk is 34 pips

Reward is 134 pips

Reward / Risk Ratio is 3.9

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

For research purposes only.

This is an attempt to trade the Fifth Wave of the Fifth Wave of a Wave C of a very large upwards Wave 4. The current price of USD/CHF is 1.2445.

p.s. - the lowest USD/CHF got was 1.2430, 8 pips short of our entry price. I knew that there was a good chance that the entry price would not be met. However, if it had been met, then we would had a quite probably successful trade. After reversing at 1.2430 the price then shot up 98 pips to 1.2528
__________________________________________________
__________________________________________________

Prediction for USD/CHF for Monday January 15 at 18:00 ET

USD/CHF descended from its previous price at 1.2455 to 1.2443 (not quite as far down as "about 1.2435 (or a bit lower)" as predicted) in the final fifth wave of a wave C of a downwards Wave 4 and then continued its long uptrend to an interim high of 1.2495, on its way presumably to our predicted target of "about 1.2550 to 1.2600".

__________________________________________________ ____
__________________________________________________ ____

Previous post:

Prediction for USD/CHF for Monday 4:00 ET

USD/CHF will likely descend from its current price at 1.2455 to about 1.2435 (or a bit lower) in the final fifth wave of a wave C of a downwards wave 4 and then continue its long uptrend to a high of about 1.12550 to 1.2600.
  • #2,660
  • Jan 17, 2007 11:42pm Jan 17, 2007 11:42pm
Quoting itme
Wednesday January 17 at 22:00 ET

Trade Experiment #317 Sell GBP/USD at 1.9760

Stop is 1.9821
Target is 1.9550

Risk is 65 pips

Reward is 206 pips

Reward / Risk Ratio is 3.2

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

For research purposes only.

This is an attempt to trade the Wave A down of a large Fourth Wave down of a large upwards trend.The current price of GBP/USD is 157.30.
I'm really confused...the price never got up to 1.9760. The highest it got was to around 1.9740....?
4 traders viewing now