Results for Low Risk,High Reward

Of course this is for you guys. I know that. There was just so much promise at the beginning, and I was hoping that had continued. Although I have rarely posted, I have watched your project with a lot of interest. I assumed you had those numbers, and really wanted to hear that you were thus far pleased with your results. The more I think abouty it though, the more I think you must consider that things are going well, or you would have stopped this long ago

I wish you all the best. It seems like you are really on to something.

Friday August 24 at 20:00 ET

TS #154 Sell USD/JPY at 116.74
Stop is 116.91
Target #1 is 115.30
Target #2 is 114.90

Risk is 20 pips
Reward is min 141 pips
Reward : Risk ratio is 7.0 to 1 or 9.0 to 1

For research purposes only
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First trade recorded by me, #154
Stopped out.

20 pips lost.

Friday August 24 12:00 ET

TS#156 Sell CAD/JPYat 105.30
Stop is 105.56
Target #1 is 103.50
Target #2 is 103.00

Risk is 35 pips
Reward is min. 170 pips
Reward : Risk Ratio is 4.9 to 1 or 6.3 to 1

For research purposes only.

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Second Trade recorded by me.
Stopped out

35 pips lost.

Total Pips- -55

This will be interesting to watch. I wonder how ITsme feel about it though?

2 things

1) He's given his blessings...along with a few blessings from seniors on the board.

2) Would anyone be able to stop J from posting the results anyway?

Keep on keeping on J.

How I feel is ultimately irrelevant to currency trading. Currency trading is for results - money, return on capital. How anyone feels is irrelevant. Our trade signals are the product of an evolving, experimental process. If someone wants to keep score - fine!

As far as we are concerned, what we learn from these hypothetical trades is what matters, not how they perform at this time. Of course, good performance is a sign of progress, which we would like to do. But we are, as explained, attempting the impossible - predicting the turning point of long trends. The benefit of success will be near infinite wealth. Can we succeed? Probably not. But by attempting the impossible or near impossible, we are likely to learn a thing or two. Things that can be applied to less ambitious trading systems that are satisfied with making 10% or 25% return on capital per week or month, not doubling capital every few days.

Note that success in this process may look a little unusual. Since the reward:risk level is higher than most trading systems, aiming for 5:1 to 20:1, the percentage of wins need not be too high to obtain high returns.

Measuring success in this trading system in terms of pips made or lost indicates that whoever does this has missed the entire point of the trading system, and perhaps does not know why they are currency trading.

I think most people are currency trading to make money - which means return on capital. In the looooong run. One person could earn many pips, but obtain little return on capital. Another person could earn few pips, but make huge return on capital. Keep this in mind.

For instance, the above two trades logged were losses. If the win:loss ratio and reward: risk ratio of the final trading system warrant it, the risk factor employed might be 20%. The correct risk factor should not be determined by emotions, but by the probability of success based on the three figures - reward : risk ratio, win : loss ratio, and distribution of wins and losses. Preliminary indications indicate that a 20% risk factor may be appropriate with the low risk / high reward trading system.

Most traders do not have a trading system. If they did, they could back test it and produce the above figures. But they can't. Most trading systems employ a reward : risk ratio close to 1:1, and a win : loss ratio not much better than 1:1. Thus they break even or make a small rate of return on capital if executed over a long time with great skill, discipline and dilligence. Due to their performance characteristics, the risk factor employed cannot be much more than 2% to 5%.

Therefore, using a system - capable risk factor of 20% to evaluate the performance of this trading system, assessing the two losing trades above would produce a diminution of capital by a factor of .8 times .8 = .64, which means a loss of 36% of capital.

If two such losing trades were followed by a winning trade with a 5:1 reward : risk ratio, then the capital would then increase as follows.

According to the Itme Theorem of Capital Multiplication, the return on capital from a winning trade in the Forex Market is equal to the reward : risk ratio times the risk factor times the starting capital. Thus a win in the above example would produce an increase in capital of 5 times .2 = 1 times the initial capital. So the capital would double in the trade. .64 times 2 = 1.28 times the starting capital after three trades

28% increase in capital - not bad performance for three trades, with a 1:2 win : loss ratio, or a 30% win rate.

If the win rate could be pushed up to 50%, then each loss would result in a 20% diminution of capital, and each win would produce a doubling of capital. Thus the capital would increase by a factor of .8 times 2 = 1.6 every two trades, on the average. That is the goal.

Does everyone understand the concept?

If not, please ask until you do.

At 9:45 ET CAD/JPY presented the perfect configuration for a short as a probable top of a long downtrend. The price then was 106.00. This was the second time it had risen to approximately this figure, thereby completing the Elliott Wave set. This completed another wave up that we had not accounted for in our previous short signal. There may be another short entry opportunity if it rises to about 105.80 to 105.90.

TS#156A Sell CAD/JPY at 105.80 to 105.90
Stop is 106.10
Target #1 is 103.50
Target #2 is 103.00
Risk is 40 to 50 pips
Reward is min. 170 to 220 pips

Reward : Risk Ratio is 3.4 to 1 or 5.5 to 1 , depending on the entry price and target met.

For research purposes only.
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105.80 achieved 12:30 CST, FRIDAY. Will likely have to judge this one next week..

Facts are, ITME, I don't follow that very well. I follow, but only my head understands...my heart doesn't yet. Its not second nature yet.

I have been in FX for around six months now, and was halfway through losing my first account ($20,000 down) before I called stop and began studying again
. I read and sorted through hundreds of posts here before finding yours, and becoming facinated by your description of Elliot wave.

I know some people must read about your early results, and simply want to "get rich quick". I honestly don't. I honestly want to understand what I am doing, and was in awe of your nigh-mystical explaination of elliot wave and the connectedness of all things.

I have more than a little Taoist in me.

But I'm not content to take your signals and trade them, as many a newb did, just to try and get ahead. I fully understand that the investment is not money, but time and knowledge, investing in and coming to understand the process.

Which I don't.

I thought I did, on the simulator. I would make 10k a week straddling, scalping, and then sleep at night being out of all trades. It made it seem easy, like a game.

Did you know, It's not? Funny thing.


I'm not posting itme's results because I want to steal his thunder or get rich off him. I just want to know what he's doing. I need help, pretty badly. So...here I am.

Hi Jason ,
It's wonderful that you verify the trading result of ITME 's system . Your effort will be very helpful for all newbies like me . With the blessing of ITME for your work , please continue analyse his trading call . You neutral bias and your keen mind are all we want from your effort.
We support you and appreciate your endeavor . Your result will help us greatly
in the trading process . Thanks again Jason .

I came here for the first time in many months to check how my experimental trade signals are performing, hoping to see a neat graph of my performance, only to be greeted by silence, emptiness....the Tao.

I am working on a spreadsheet to summarise my performance and to take notes about a variety of issues that I have been wondering about since I started this research project that can only be determined by collecting and assessing data over a large number of cases. It is very time consuming to study each trade in detail to garner all the valuable lessons and data. I hope to have some results within a week.

Hi,
Please continue your wonderful effort of producing the results of low risk, high
reward system . Itme has been so generous and so humble to approve your
excercise . Continue to track his trades and tabulate the result of ITME system will provide a good learning tool for newbies . We're rooting for you,
Jasonguillen.
Thanks for your work.

Hi Jason,
Your effort in bringing out the result of ITME's trading system is fabulous.
Please continue your work ..... Cheers.