Low Risk, High Reward Trading Experiment

You people who continue to scrutinize this trading journal obviously are not fully understanding what this man is trying to accomplish. He is trying to predict a turn in the trend and when the trend will eventually end. If you have somehow incorporated a successful trading experiment and can use elliot wave in the same way itme is you should be able to profit tremendously. I have been following different currencies from reading this journal because of the high success itme has had. When his recommendations meet my trading system i believe that the trade has a high probabilty for profit. I'm not as concerned with will it reach the take profit as itme maybe. Im more concerned if i can learn to spot trend reversals like itme. Im sure alot more people have made money than lost. If you are taking his trades verbatim and not incorporating your own stop lost, take profit, and so forth that is clearly your fault. I bet alot more traders would be upset if he closed the thread. Itme you are a true inspiration in reguard to the keep learning about the ever changing market.

Hi Jacko,

this is ITME thread and I hope I am not intruding here. I hope ITME does not mind this post since it relates to his method.

Jacko, I am quite aware that you do not believe in Elliott Wave Theory and principals and you have made it quite clear in several posts. I just wanted to clarify few points.

First of all, what ITME is doing here is not just EW and his goals/objectives/motives are different from EW. ITME used his other proprietary system prior to this experiment efficiently and wanted to add EW for some reasons to improve his prior results.

Secondly, the objective of EW trading is not necessary identify “end points” or “reversal points” to get into the trade early and gather all the potential profits in the process. That is ITME objective if I understand his experiment correctly. The objective of any method employed by a trader to make profit and EW method is not any different from any other in this respect.

Thirdly, you have stated that EW trading has not been “sufficiently reliable model to generate consistent profits”. This statement by itself has little meaning to me. How can anyone judge any method in the industry with over 90% failure? Has anyone conducted any research which method is “consistently profitable” and which one is “consistently failure”? And what constitutes the followers of EW theory, is it academics, purists, or practical traders utilizing it when appropriate? And what makes any value in proving of any system profitability? Do you think people who are profitable with any method come forward to show their edge?

My personal objective as any trader to generate profits and I do not care what I use as long as I can internalize it, make it comfortable and consistent for myself to accumulate profitable trades.

Having said that, I do not put any labels on myself. I do not consider myself EW trader but I do utilize “practical” EW when it is appropriate. I did learn practical way to apply EW from Robert Miner (I thought he is a proven trader) to apply EW when the counts are clear and according to him that only happens 50% of the time. I happen to agree with that. I do not look at “correct” counts for a sake of EW. I am looking for some form of market structure to help me determine what is taking place and where I want to be. But that is just a tool when it presents itself for a sake of profit and not for a sake of getting every pip from every move. Like anything else, I am using it only to help me trade profitably.

I do not use any indicators as my understanding of your trading system, you do not use them either. I do utilize trend lines, EW, Fibs (just because everybody uses them, so it helps me identify what people are looking for and where their stops and projections might be), volume (I know we have only tick volume, but it is still better than nothing), price patterns (mainly as defined by Wyckoff). I trade with trend and occasionally against the trend when the opportunity is favorable. That is all.

I would have not put this post together unless I had an example of a trade that within my trading plan that utilized EW principal. I wanted to show a trade against the trend so that you can see that occasionally trading against the trend can be profitable and safe, but not for everyone.

We know that market move in Waves as Elliott defined, impulsive and corrective. Those waves measure the mood of the market participants. It is not necessary to have all the counts for all the time frames to use it efficiently. For instance, we know that most likely wave 3 is most likely the longest time and price wise and wave 4 follows wave 3. Why? Because wave 4 represents profit taking stage and traders love taking profits at any time, no exception.

What are the signs for end of Wave 3? Big thrust with selling/buying climax, which will follow Wave 4 that might retest the extreme of the wave but generally since most people love Fibonacci, you can expect a very safe 35% correction (38 to 50 for those who follow Fibs so they place stops for the taking there).

So let’s take last Friday’s move down to 9450 (chart below). That was Wave 3 in my book and I am not concerned whether it is part of medium 2 which is part of supper 5 (no offense ITME) all I know this thrust is coming to the end based on the price action and volume. I am not looking to enter at 60. I am looking for next bar and other time frame, shorter and longer, to verify this view. Now, I see a good confirmation at 60 and knowing round numbers expectations and Fib traders, I know that there is a likelihood to get to 65. My risk if I am wrong is 15 pips, 10 to the lowest plus the spread.

Nothing fancy. Just a practical way to illustrate that EW can work to identify this edge and one can trade with EW without getting all the counts on the charts. I used M15 to illustrate this concept but one equally employ very same principals in larger time frames. I personally do Wave 4 (profit taking) trade on smaller time frames, intra day.

Hope this helps someone…

Best Regards and Success to all of us

Here is the chart to the previous post

The trend follower generally eschews any scientific theory of price patterns in favor of the "efficient market hypothesis" which asserts the absence of any predictable, repeating price pattern movements, and rests solely on probability theory. "The efficient market hypothesis states that it is not possible to consistently outperform the market — appropriately adjusted for risk — by using any information that the market already knows, except through luck. Information or news in the EMH is defined as anything that may affect stock prices that is unknowable in the present and thus appears randomly in the future. This random information will be the cause of future stock price changes....EMH allows that when faced with new information, some investors may overreact and some may underreact. All that is required by the EMH is that investors' reactions be random and follow a normal distribution pattern so that the net effect on market prices cannot be reliably exploited to make an abnormal profit, especially when considering transaction costs (including commissions and spreads)." As a result of adhering to this belief, from the perspective of the so-called "trend follower", the trend must first prove itself according to crude criteria. In addition, because repeating price patterns are ignored, the entry price is not scientifically determined, and occurs well into the trend, more or less randomly chosen from the perspective of a wave scientist.

As a result of the fact that Wave 2 sometimes retraces to the beginning of Wave 1, the trend trader knows that the stop must be placed past the theoretical beginning of the trend, which is far away from the entry price. Due to limitations of using probability theory, trailing stops and technical indicators to determine the probable end of the trend, the target is not usually the end of the trend, but often falls far short of the actual ultimate end of the trend. As a result the gains are not all that are possible. The end result of trend trading is a large risk for a relatively small potential gain - ie - a poor reward / risk ratio. A low RRR combined with a mediocre win/loss ratio and clustering of losses during range bound market conditions means a low risk factor and thus low returns on the trading program. Thus trend followers cannot make very high returns on their capital without being reckless by making their risk factor much larger than their system of trading can tolerate.

Consider now for a moment the potential performance of a trading program based on wave science. Take, for example, my last trade above shorting GBP/USD. With a 50% success rate at trades with a 5:1 RRR the Risk Factor should be 40%. With a 40% risk factor the two part GBP/USD trade I gave in this forum this week, with the end of wave 3 exit and re-entry 30 pips higher to trade wave 5 down to complete the trade at the original target, extended 35 pips due to the wave pattern at the time, produced the following results for us, which is a quadrupling of capital in 2 days:

key to numbers:
initial capital / 40% of capital (capital at risk) / size of stop / # minilots in first trade (waves 1-3) ( rounded up) / pips profit / $ profit / new capital / 40% of new capital (capital at risk in 2nd trade)/ 2nd stop / # lots second trade (wave 5) / pips profit / $ profit in 2nd trade / final capital / capital multiplier of entire process

$1000 / $400 / 55 / 8 / 150 / $1200 / $2200 / $880 / 55 / 16 / 125 / $2000 / $4200 / 4.2

Two such trades per week on average is a realistic ambition, each with an average RRR of 5:1, and a success rate of 60%, will produce a return of 55,055 times in 12 weeks, so $100 will grow to $5.5 m in 12 weeks. That represents a multiplying of capital by 2.5 times per week.

If a wave scientist managed to achieve an 80% success rate, which is my personal goal, then the return will be 125 million times the initial capital, which means that $100 will grow to $12.5 billion in 3 months. That's multiplying capital by 5.7 times per week.

With a RRR of 5:1, the break even performance level is 31% winning trades. Already at 33% win rate the program is very profitable. Any level of performance above 33% winning trades becomes extremely profitable. In terms of opportunities, there are literally dozens of opportunities each day to enter trades with a 5:1 RRR over the 20 or so currency pairs most people have access to trading. In terms of duration of trade, the trades can last from about 1 hour to several days.

Overall, the wave trader has a far higher chance of being a high performance trader than a "trend follower", who must settle for small, incremental gains over a long period of time, owing to their scientific bigotry or lack of knowledge.

I am not putting all this on a silver platter and making it easy for anyone. I am not putting up charts of wave counts, and I'm not giving any hints about my reversal point prediction system. I'm not offering an endless series of winning "trade signals". Even if I could, I wouldn't. By doing any of the above, I don't believe I would be doing anyone any favors. You have to learn a great deal in order to be a masterful high performance trader. You have to be a good scientist as well as a very disciplined, resourceful human being. I'm giving people general principles and general knowledge which might enable or somehow assist a few people who put in the necessary time, effort, study and ingenuity to develop a scientific high performance trading system. My trading system worked extremely well before I began studying Elliott Wave Theory, so Elliott Wave Theory isn't essential to anything. But it is a well developed, powerful model of market analysis. There are many, many other analytical systems that identify repeatable behavior of the market. I also spent two months last year studying how the market responds to data releases.

Science is the process of discovering repeatable behavior in the world through empirical observation and inductive reasoning. Creative thinking can develop explanatory hypotheses or descriptive mathematical formulae which can be tested and verified through experimental science. Where laws or regular repeating behavior is identified, causative factors or coincidental factors can be investigated. In the end, one of the practical values of good science is that one can employ deductive reasoning to navigate in the world with open eyes instead of blindness to the order implicit in all creation. Blindness to order is ignorance. Refusal to acknowledge order when it is pointed out is prejudice and bigotry, which is the enemy of science and progress.

As I approach the quarter million mark of readers, I am also approaching a watershed in my trading education and research. Many or all of my objectives have been reached, even if close minded skeptics such as Jacko cannot see that. The perceptive know what I'm talking about. I cannot over-estimate the value of maintaining a trading journal. It is extremely helpful. Also, we must study from people who have greater knowledge and wisdom than ourselves. If necessary, we have to be prepared to make new discoveries or create new inventions, thus being pioneers of knowledge. Regretably, I could not share with forum participants here many aspects of my process for a variety of reasons. We are talking here about matters of significant import. If I assist people without love, wisdom, and good ethics to gain great wealth, then I will be responsible for the greatly enhanced harm they will do in the world. This I must avoid. For those with eyes to see, and ears to hear, the message will be clear. For the blind, there is nothing of merit that can be found. There is always peace on earth, but only to the men and women of goodwill. To those who have not made peace with all living beings, there will always be discord, disagreement and conflict. He who lives by the sword, dies by the sword.

Itme, you've been posting these theoretical trades for over half a year now, why don't you try doing this for real with a small bit of money start learning abut the psychology of trading? I've noticed that many times you'll say, "IF I had entered at this price, I would have made this much by now", but thats means nothing when you're really trading. There's more to trading than just the analytical, mathematical side but that seems to be all you focus on.

Swingtum - A Computational Theory

A long-standing conventional view of the mainstream economists to the financial markets is expressed in an Efficient Market Hypothesis (EMH), which views asset prices and their associated returns from the perspective of the speculator, and assumes the market is almost always efficient, meaning that the prices already reflected all current information that could help anticipating future events.

Under the EMH, the stochastic process of market returns is modeled as uncorrelated random walk, so any profitable prediction of the market returns would be considered impossible. Although the strong form of EMH has been shown not true by many studies as reviewed by Pan (2003), EMH does provide a perfect reference with which more realistic market views can be developed.

We consider that the market is driven by various forces of different origins, wave lengths and magnitudes, as well as different durations. Each force only has one dimension: either positive for upwards or negative for downwards. At any given time, all the effective forces combine to form a joint force which has a joint market impact leading to changes in price (or index).

For generality, we will just talk about the dynamics of the price of a market. If the market is a stock, the price of the market is just the price of that stock. If the market is the whole stock market for a national economy, the price of the market refers to a benchmark index such as ASX S&P 200 index for the Australian stock market.

Following Mandelbrot’s discovery of fractals in the financial markets, Peters (1994) proposed a Fractal Market Hypothesis (FMH) which basically says that the market is stable when it consists of investor covering a large number of investment horizons, and information is valued according to the investment horizon of the investor. Because the different investment horizons value information differently, the diffusion of information will also be uneven. At any one time, prices may not reflect all available information, but only the information important to that investment horizon (or time frame in our terms). The FHM owes much to the Coherent Market Hypothesis (CMH) of Vaga (1991) and the K-Z model of Larrain (1991).

Like the FMH and CMH, our view to the market, which we call the Swing Market Hypothesis (SMH), is also based on the premise that the market assumes different states and can shift between stable and unstable regimes. However, we take one step further in considering the dynamic structure of the market. The Swing Market Hypothesis (SMH) proposes the following:

(1) The market always consists of investors or traders with all possible different capitals, different time frames, different information conditions, and different skills. The everlasting and ever-evolving differences in investors or traders are the permanent drivers of market dynamics.
(2) The market is sometimes efficient and other times inefficient, and the market tends to swing between these two modes intermittently. Each mode, efficient or inefficient, may comprise multiple regimes such as trending, cycling, spiking, consolidation, etc.
(3) The market movement is driven mainly by three types of forces: business dynamics, mass psychological dynamics, and new impacts.
(4) The market movement can be decomposed into four types of components: dynamical swings, physical cycles, abrupt momentums and random walks.

Business dynamics include global and national business cycles, intramarket dynamics and intermarket dynamics, which usually refer to the fundamental economic and business conditions. Mass psychological dynamics include the greed and fear dynamics of investors and traders defined by human nature and also forged by existing popular knowledge, methodologies and technologies of technical analysis and fundamental analysis.

For example, the appearance of a certain chart pattern may trigger similar trading decisions made by many different technical traders because they have all acquired similar technical analysis education. Both business dynamics and mass psychological dynamics can produce similar dynamical swings which can be characterized by mathematical fractal models such as log-periodic power laws. Elliott waves of different levels are the visual and qualitative description of dynamical swings by technical analysts. Although not as strong as dynamical swings, physical cycles do exist in the market, which includes anniversary days, seasonality cycles and weekly cycles.

For example, statistical studies show that Thursday of a week is often the reversal if the first three days have trended in the same direction. There are even intraday dynamical patterns given the daily market situation. Physical cycles have relatively constant periodicity. Abrupt momentums refer to drastic price movement which cannot be expressed in continuous analytical forms. Momentums may be caused by exogenous forces such as news shocks or impacts, or as critical points or singularities caused by endogenous dynamics. Random walks in the context of SMH correspond to remaining randomness not explicable by any systematic force.

The next section derives a simple but fundamental price impact model of the stock market returns driven by market forces.

Prof. Heping Pan

http://www.performancetrading.it/Documents/HpSwingtum/HpS_Swing.htm

A Fundamental Price Impact Model of The Stock Market

Assume the market operates in the continuous time t , i.e. all trading occurs in a continuous flow, so we shall not need to distinguish between each individual order. We will only consider the price (or index ) of the market p(t) as a continuous function of time. At any time t , the joint market force f (t) acts upon the market and drives the price p(t) up or down in a continuous flux of movement. Note that the market force f(t) may include all kinds of supply or demand, greed or fear, rational decisions or emotional reactions, etc.

But it must realize its impact to the market price through all kinds of orders and transactions. We shall not concern ourselves with all the order details unlike the agent-based models such as one proposed by Farmer (1998). However, we shall follow some part of Farmer’s path in model building but our development is rather going into a direction quite different from his agent-based model.

Let p(t) be the price (or index) at time , the relative return Rt (t)is defined as
http://www.performancetrading.it/Doc...ges/HpS_01.gif
where t is the time scale. In general, it is more common to use the log-return rt (t) defined as
http://www.performancetrading.it/Doc...ges/HpS_02.gif
For small changes in p(t) , the log-return rt (t) and the relative return Rt (t) are approximately equal.
Suppose at time t the price p(t) is changed to http://www.performancetrading.it/Doc...ges/HpS_03.gif immediately after the force f (t) acts upon the market, and this process can be expressed as
http://www.performancetrading.it/Doc...ges/HpS_04.gif
where is the abstract mass of the market, which reflects how much the price will change relative to the magnitude of the force, and which may depend on the capitalization of the market and the past trading history.

The price change should satisfy the following basic conditions
1) The price is always positive but finite
http://www.performancetrading.it/Doc...ges/HpS_05.gif
....etc.

http://www.performancetrading.it/Doc...undamental.htm

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http://i119.photobucket.com/albums/o...py12020702.gif

http://i119.photobucket.com/albums/o...py12020702.gif

Hi, I'm really newbie on Elliot, just looking for comment if I got it wrong or not. on H4, I also did a Fib, which is telling me to go long on GJ up to 240.50 as TP2.

Any comment?

PS: Btw, really appreciate your effort to run this thread so far.

Hi Aicccia, Thanks for your comments. My live trades are my own business, which I'm not willing to comment on in this public forum. But here are my thoughts on an issue your comment raises.

If a person can't trade on paper, how can one expect them to trade in real life?

Before one ventures onto the battlefield, one must master the art of war. To throw oneself onto a battlefield before one is prepared, is the height of folly. One will likely be slaughtered. How does one prepare? Through study from masters, through thousands of hours of practise, and through friendly competitions.

Before entering a battle one should have a battle plan, and prepare oneself in all manner of ways. Education, internship, vocational training, apprenticeship, etc. and various other forms of preparation are a key to success in all fields - business, medicine, law, athletics, military, trades, the arts. Why should it be difference in the field of investments?

Only in investments do people have the arrogance to assume that they can succeed without any substantial education, training, practise or planning. Is it any wonder that so few people succeed? Unprepared traders are merely sheep preparing to be sheared. I have been there. I have been mislead by dilletante traders offering superficial education at a high price. I have done thousands of live trades in various markets when I didn't fully understand what I was doing. I have learnt alot about the psychology of trading.

But I don't agree that all systems work. I don't agree that one just has to master the psychology of trading. I don't agree that the only important thing is risk management and patience. I think that as in all other fields of endeavor - knowledge, understanding, and planning are key factors.

Hi im7i4z, I have alot of trouble with discussing EW counts for reasons illustrated by this example. First, I can't comment or presume to know anything about a wave count by looking at only one timeframe. Everything, up to the 30 year chart, has to be examined. It's like showing me a toe and asking me the condition of a patient. Second, your chart is configured a certain way, including the form of the candlesticks, the lines, technical indicators, colors, etc. in a way that suits you and totally doesn't suit me. I can usually make no sense of the elliott waves looking at other peoples' charts. I am amazed that other people can understand charts the way they set them up. From my point of view, I like to look only at colored candlesticks of the appropriate duration(s) without any other information obscuring the patterns. Thirdly, I have my own approach to EW Theory which may be very different from you. My count could be very different from yours, but your count could be correct in terms of your methodology, and my count could also be correct in terms of my methodology. Fourthly, even if we both looked at the same naked charts and were using the same methodology, we could come up with two very different interpretations of the wave count, and we would both have good cause to believe our wave counts. Fifthly, even if I had an opinion about the wave count on GBP/JPY, that is only one part of my approach. Just as important to know is the degree of certainty about the wave count, the strategic merit of the set-up, alternative counts, and anticipated impending configurations which could have much higher strategic merit, upcoming exogenous market forces such as data releases, conference reports, news shocks or world events, etc.

Personally, I hypothesise that we have completed a larger A-B-C downwards corrective wave, not a 1-2-3-4-5 on GBPJPY as you have shown. Since then we have gone 1-2.... of a new upwards Wave 1.

Your wave count looks, on the face of it, very implausible according to the fundamentals of EWT. Also, in context of the larger pattern it is inappropriate imho to call it 1-2-3-4-5 when it is a Wave 4 correction which is an A-B-C. I don't want to criticize the wave counts of other people, because generally I think they are absurd and totally ridiculous. On the other hand, I am often mistaken, so I can't offer my opinion as an infallible authority. Do you see the problem here?

EWT is a difficult task unless one is well educated and has practised quite a bit. The most expert elliotticians look for the occasional pattern which is clear, unambiguous, and highly strategically advantageous. These are the trading opportunities. The other patterns are opportunities to practise and learn.

Sunday February 9 at 15:00 ET

The wave pattern isn't totally clear to me, but I surmise that the third impulse wave down - Wave 5 of GBPUSD is incomplete. I think a short trade with an entry at 1.9550 and a target at 1.9460 would be a good trading strategy. The stop could be at about 1.9585, which would give a fair RRR. There is a chance this trend could continue on down to 1.9400 and even to 1.9300, if fundamentals supported such a big fall.

This isn't an optimum trade, just a theoretical concept I'm fooling around with until the price gets into a better configuration in the future for a genuine low risk / high reward trade opportunity, or until I get the time to analyse the wave count and other factors more thoroughly.

p.s. - GBPUSD rose to 1.9564 and then dropped so far to 1.9436, which is 24 pips past our target. The trade concept was successful.

Today 04:30am
*(UK) JAN PPI INPUT: MOM -2.0% V -0.8%E; YOY -1.6% V -0.3%E

- M/M is lowest since December of 2004
- Y/Y is lowest since November of 2002
- Prior M/M revised to 0.3% from 0.1%
- Prior Y/Y revised to 2.4% from 2.0%

That's it, I am convinced, you are Stephen Hawking aren't you?

Keep them coming itme..thanks for all the great info.

Cheers,
Northpro

Thanks for posting this, its a good read.

You're welcome, zawodowiec. As you might infer, I am something of a dissenter on this forum. I assert that it is possible to predict the future movements of the market with great precision and consistency. I think that it is futile for most people to try to become forex traders, and that they should avail themselves of a quality signal service. I think that considerable education and research is necessary to become an effective trader, or a lengthy apprenticeship with a competent trader. I think that pips are unimportant, and that all that matters are reward/risk ratio and win/loss ratio.

Monday 2/12
4:30 GBP PPI Input m/m http://www.forexfactory.com/images/m...act_medium.gif......-2.0% -0.8% 0.1%
4:30 GBP PPI Output m/m http://www.forexfactory.com/images/m...act_medium.gif ....0.3% 0.2% 0.2%
10:30 GBP Leading Index m/m ...0.1%...........0.1%
16:45 NZD PPI Input q/q http://www.forexfactory.com/images/m...act_medium.gif ....-0.3%.............2.0%
16:45 NZD PPI Output q/q http://www.forexfactory.com/images/m...act_medium.gif ...-0.5%...........0.7%
18:50 JPY CGPI m/m .................-0.2% 0.1% 0.0%
18:50 JPY Import Price Index m/m 2.80%......._.2%
19:30 AUD NAB Business Confidence http://www.forexfactory.com/images/m...impact_low.gif 7........4

The pound was at its lowest in one month against the dollar after today's soft PPI UK data. Figures released this morning showed UK raw materials prices slumped by 1.7 pct year-on-year in January, the biggest annual fall since November 2002, mainly due to sharp falls in oil prices and other commodities. Market watchers are now focusing on tomorrow's UK inflation figures and the Bank of England's latest quarterly inflation report on Wednesday. Some analysts believe that the hawkish view on interest rates currently priced into the pound is unlikely to be supported by tomorrow's inflation data.

Monday February 12 at 5:45 ET

We advised temporary exit of EURCAD at about 1.5250 to lock in 190 pips of profit, pending re-entry at the top of a Wave 4 consolidation channel. EUR/CAD subsequently bounced off of 1.5232 (18 pips lower) and travelled up 62 pips to 1.5294, which is the second time to the top of the consolidation channel (A-B-C structure). This is where the short re-entry should have been taken by the wary trader. Not only consolidation wave pattern, which is recurring and fairly consistent, but time of day is also a good indication, as well as cycle duration. The price has subsequently fallen 122 pips to 1.5172. There is still wave 5 to go down. The original target is 1.5100.

p.s. - As of February 12 at 8:30 ET the price has formed a possible 3 wave pattern or complete 5 wave pattern now, with a low at 1.5164. This would have been a strategic exit point. The price then bounced up strongly to 1.5245. If EUR/CAD goes to a lower price, which is likely, then 1.5150 is the next probable reversal value. USD/CAD looks quite bearish, so this major may pull down EUR/CAD while EUR/USD consolidates further.
___________________________________________________
___________________________________________________

Previous Trade Experiment:

Temporarily exit Trade Experiment #339 Sell EUR/CAD at 1.5444

Friday February 9 at 12:30 ET

EUR/CAD fell strongly as predicted, as both EUR/USD and USD/CAD fell at the same time. The wave pattern and time of day suggests that there will be a sizeable bounce at about this time. USD/CAD fell strongly today 150 pips today in a 1-2-3 pattern, and is now due for a largish Wave 4 correction upwards, which will cause EUR/CAD to rise also.

Therefore exit Trade Experiment #339 Sell EUR/CAD at 1.5444 at the present price of about 1.5250 to consolidate about 190 pips of profit.

Re-enter EURCAD at the top of an A-B-C Wave 4 upwards correction.
__________________________________________________ _________
__________________________________________________ _________

Previous Trade Experiment:

Thursday February 8 at 9:00 ET

Re-entry opportunity for Trade Experiment #339 Sell EUR/CAD at 1.5444

Stop is 1.5484
Target is 1.5100
Risk is 49 pips
Reward is 335 pips
RRR is 6.8 to 1

Wave hypothesis : This is the top of a large Wave B or a large Wave 2, and thus the beginning of a new large 5 wave trend.

p.s. - bring stop down to 1.5471 from 1.5484. The price could rise to 1.5500 later. The current price is 1.5440. The highest price reached today is 1.5470.
__________________________________________________ _
__________________________________________________ _

Wednesday February 7 at 11:00 ET

Trade Experiment #339 Sell EUR/CAD at 1.5420
Stop is 1.5461
Target is 1.5100
Risk is 50 pips
Reward is 310 pips
RRR is 6.0 to 1

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

For research purposes only.

Wave hypothesis : This is the top of a large Wave B or a large Wave 2, and thus the beginning of a new large 5 wave trend.

Nope he's not Hawking, Northpro, but definitely Itme is his follower.

At 4:30 ET the UK CPI figures will be released. This could cause GBP/USD to spike up to about 1.9550, which could be a good short trade opportunity, assuming the A-B-C wave pattern is complete at that point, with a target of 1.9400 or lower.

Tuesday February 13
0:00 JPY Consumer Confidence ______ 48.4 .........46.3
2:00 EUR German GDP q/q (p) _______ 0.9% 0.6% 0.8%
2:45 EUR French GDP q/q (p) _______ 0.6% 0.5% 0.0%
4:00 EUR Italian GDP q/q (p) ________ 0.4% 0.3%
4:30 GBP CPI m/m http://www.forexfactory.com/images/m...act_medium.gif _____________ -0.8% -0.5% 0.6%
4:30 GBP Core CPI y/y http://www.forexfactory.com/images/m...mpact_high.gif _________ -1.6% 1.8% 1.8%
4:30 GBP RPI m/m_________________ -0.5% -0.2% 0.8%
5:00 EUR Industrial Production m/m __ 1.0% 0.4% 0.2%
5:00 EUR German ZEW Economic Sentiment 2.9 5.2 -3.6
5:00 EUR GDP q/q (p) http://www.forexfactory.com/images/m...act_medium.gif ___________0.9% 0.6% 0.2%
8:30 USD Trade Balance http://www.forexfactory.com/images/m...mpact_high.gif _________-61.2B -59.5B -58.2B
8:30 CAD Trade Balance ____________5.0B 4.7B 4.7B
16:45 NZD FPI m/m ________________ -0.5%
18:30 AUD WMI Consumer Sentiment m/m 7.3%
18:50 JPY Trade Balance (r) ___________ 1.18T 1.03T
23:30 JPY Industrial Production m/m (f) ___ 0.7% 0.7%

p.s. - At 4:30 ET the UK CPI figures came out very negative. Instead of sending GBP/USD up to 1.9550 as hoped, it caused a strong downwards move of GBPUSD. The announcement trader would have sold immediately upon registering this news. The price at the time of the data release was 1.9508, just off of the recent then high of 1.9522. The news caused a fall to 1.9400, a 122 pip fall, as both technicals and fundamentals were pointing downwards.

p.p.s. - EZ GDP (YoY) (4QA) posted stellar results printing at 3.3% versus 3.0% expected significantly better than 2.7% the quarter prior. The positive news on the GDP front offset the slightly lower results from the ZEW survey and helped rally the EUR/USD up 100 pips from yesterday's low to 1.3045. Although GDP is generally considered to be a backward looking indicator, the surprising strength of the release suggests that economic growth in the EZ remains quite vibrant and its momentum may carry over into this year. Indeed in the past 6 months EZ GDP growth has exceeded US GDP performance expanding at 3.0% vs. 2.75%.

In UK, the inflation data printed much cooler than market expectations with CPI rising only 2.7% vs. 2.9% forecast and far below the critical threshold of 3.1% that would have prompted a warning action from BOE chief Mervyn King to UK parliament. The CPI report quelled any speculation of additional rate hikes from the BOE certainly for this quarter and perhaps as far out as the first half of this year.

Meanwhile the antithetical turn of events between EZ and UK pushed the EUR/GBP up 50 pips to a two week high of .6702.

8:30 USD Trade Balance http://www.forexfactory.com/images/m...mpact_high.gif -61.2B -59.5B -58.1Bhttp://www.forexfactory.com/images/m...us_revised.gif http://www.forexfactory.com/images/m...l_analysis.gif

DEC TRADE BALANCE: -$61.2B V -$59.7BE

- prior revised to -$58.1B from -$58.2B

Year To Date
DEC. NOV. 2006 2005

DEFICIT 61.18 58.12 763.59 716.73
PREVIOUS REPORT 58.23
TOTAL IMPORTS 186.72 182.92 2201.43 1991.98
PERCENT CHANGE 2.1 0.3 10.5 13.0
TOTAL EXPORTS 125.54 124.80 1437.84 1275.25
PERCENT CHANGE 0.6 1.1 12.8 10.7
MERCHANDISE TRADE 66.40 62.86 818.10 767.48
DEFICIT % CHANGE 5.6 -0.9 6.6 17.9