Low Risk, High Reward Trading Experiment

Thursday March 22 at 13:30 ET

Re-enter Trade Experiment #362A Sell GBP/JPY at 232.13

Stop is 232.86

(Move stop to Break Even when price moves to 231.83)

Target is min. 229.00

Risk is 82 pips

Reward is min. 304 pips

RRR is min. 3.7

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

Wave hypothesis: Wave 5 down
_______________________________________________________
_______________________________________________________
Previous Trade Experiment

(Stop was moved to Break Even when price moved to 231.15. Interim low was 230.65)
Trade Experiment #362 Sell GBP/JPY at 231.45
Stop is 232.15
(Move stop to Break Even when price moves to 231.15)
Target is min. 229.00
Risk is 89 pips
Reward is min. 236 pips
RRR is min. 2.7
Confidence level: fair
Accuracy: good
Reward / Risk Ratio : fair
Wave hypothesis: Wave 5 down

I like this entry.

I think if we get above 232.20s, so >= 232.30 ; then hitting the stop may be inevitable.

As far as target, you know what, 229 isn't that far away as I look at my 4 Hour chart. Seems reasonable.

I saw it going down earlier, so I got in at 231,97. If we hit ~232,16 again, I'll addon, but will close that addon above 232,30s.

Seems like we're at oversold levels with the usual oscillators, but we've been that way since 227'ish.

Good luck I'm using real $ to back you

I lost a bit on GBP/CHF one, but such is life

[quote=itme;251410]Re-enter Trade Experiment #362A Sell GBP/JPY at 232.13

Stop is 232.86

(Move stop to Break Even when price moves to 231.83)

Target is min. 229.00

Risk is 82 pips

Reward is min. 304 pips

RRR is min. 3.7

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

Wave hypothesis: Wave 5 down
_______________________________________________________

it looks to me like there may still be more to the upside,we have a weekly low at 232.54 perhaps a short from a bit higher?

i thank gbpjpy will move up to 233.91/23400 +

ok,I'm not sure where I got 232.54 I swear I saw that on my chart,honest! just for the record let me retract that last statement 232.17 it is. do your thing itme,and I'll just shut up

Thanks for the comments and opinions on GBP/JPY. Since the last entry attempt the price fell to 231.51, which allowed our stop to move to B/E. This adjusted stop was triggered to cause a break even exit of our trade.

I agree, it could go up higher before it reverses the larger upward trend (234.00 is a good estimate), but then it's possible for a significant reversal to occur at this level, of at least 300 pips. If we enter now again at about 232.15, then there is likely to be a drop to below a level where we can bring our stop to B/E and then have a no risk, high reward trade opportunity, because of the strong resistance level here.

Re-enter Trade Experiment #362B Sell GBP/JPY at 232.15

Stop is 232.85

(Move stop to Break Even when price moves to 231.85)

Target is min. 229.00

Risk is 82 pips

Reward is min. 304 pips

RRR is min. 3.7

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

Wave hypothesis: Wave 5 down
_______________________________________________________
_______________________________________________________

Previous trade experiment:

Re-enter Trade Experiment #362A Sell GBP/JPY at 232.13
Stop is 232.86
(Move stop to Break Even when price moves to 231.83)
Target is min. 229.00
Risk is 82 pips
Reward is min. 304 pips
RRR is min. 3.7
Confidence level: fair
Accuracy: good
Reward / Risk Ratio : fair
Wave hypothesis: Wave 5 down

Friday 3/23

3:00 EUR German Import Price Index m/m 0.5% 0.4% -0.7%
3:45 EUR French Consumer Spending m/m -0.4% -0.6% 1.2%
5:00 EUR Italian Retail Sales m/m -0.4% 0.2% 0.0%
5:00 EUR Current Account 2.7B 2.5B 2.0Br
5:30 GBP Total Car Production 3m/3m http://www.forexfactory.com/images/m...act_medium.gif -.2% 1.4%
10:00 USD Existing Home Sales http://www.forexfactory.com/images/m...act_medium.gif 6.69M 6.34M 6.46M
11:30 USD New York Fed President Geithner Speaks http://www.forexfactory.com/images/m...act_medium.gif
22:15 USD Fed Governor Mishkin Speaks http://www.forexfactory.com/images/m...act_medium.gif

The major currency pairs consolidated in a narrow range in Tokyo trading. With little fresh news out, we interpret this dollar bounce as merely a retracement in the major currencies, which climbed against psychological barriers at 1.3400 and 1.9700 for the euro and sterling, respectively. Trading will likely remain in a consolidative tone for the coming session given the light economic calendar.

According to Felix Homogratus, if U.S. Existing Home Sales come out at 6.9 million or higher, it would be the highest reading in almost a year, and we may possibly see GBP/USD go down by 50 pips or more. If Existing Home Sales come out at 5.90 million or lower, we may possibly see GBP/USD go up by 50 pips or more. The dollar staged a modest rally after higher-than-expected homes sales data in the US.

Existing home sales were up 3.9 pct to reach 6.69 mln units in February. The rise was the biggest since March 2004, while markets had been predicting a fall to 6.30 mln units. House prices fell, by 1.3 pct on month, the seventh decline in a row. This caused a fall in GBP/USD and EUR/USD, and a rise in USD/CAD.

Key reports are slated for release next week, including GDP data from the US and UK, unemployment from Germany, and inflation data from Japan. The data will provide traders additional insight into the outlook and direction of global interest rate differentials. The Bank of England and European Central Bank are both likely to continue tightening interest rates, while the Bank of Japan is seen leaving policy unchanged following the hike earlier in the year. Meanwhile, following yesterday's shift in tone by the FOMC in its accompanying policy statement, markets are now anticipating a reduction in the Fed's benchmark lending rate as early as its June 27-28th meeting.

Today 10:00am
*FEB EXISTING HOME SALES: 6.69M V 6.30ME

- prior revised to 6.44M from 6.46M
- highest reading since May 2006
- median home price was $212,800 v 210,900 in Jan and $215,700 year ago
- inventories rose 5.9% to 3.75M which represent 6.7-month supply up slightly from Jan 6.6-month supply
- Regionally, existing-home sales were mixed. Sales rose 3.9% in the Midwest, 14.2% in the Northeast, and 1.6% in the South. Demand in the West was flat

Impact: EUR/USD fell from 1.3325 to 1.3284 (39 pips)

GBP/USD fell from 1.9659 to 1.9587 (72 pips)

Independent of US existing home sales:

GBP/JPY peaked at 232.34 at 3:00 ET, and then fell from there to 230.44 (190 pips), then bounced up (retraced) about 65%

Trade Experiment #363 Buy EUR/USD at 1.3295

Stop is 1.3264

Move stop to Break Even at 1.3325.

Target is 1.3450

Risk is 33 pips

Reward is 152 pips

RRR is 4.6

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

Wave hypothesis: Wave 5 up.
_____________________________________________________
_____________________________________________________

Previous Trade Experiments:

Trade Experiment #361A Sell EUR/USD at 1.3382
Stop is 1.3416
Move stop to Break Even at 1.3360.
Target is 1.3100
Risk is 36 pips
Reward is 280 pips
RRR is 7.8

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

Wave hypothesis: Wave C down
Because of the one minute wave count, it is advisable to exit Trade Experiment #361A Sell EUR/USD at 1.3385 and re-enter the short position at 1.3420. There isn't a clear and unequivocal 5 wave pattern, so there is a chance of a rise to a new high which could take out our stop.

Trade Experiment #364 Buy GBP/USD at 1.9581 (Limit Order)

Stop is 1.9547

Move stop to Break Even at 1.9611.

Target is 1.9750

Risk is 38 pips

Reward is 165 pips

RRR is 4.3

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

Wave hypothesis: Wave 5 up.

Trade Experiment #365 Sell USD/CAD at 1.1610

Stop is 1.1653

Move stop to Break Even at 1.1579

Target is 1.1500

Risk is 48 pips

Reward is 105 pips

RRR is 2.1

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

Wave hypothesis: Wave 5 down.

My new super-conservative approach managed to exit us from a trade that would have been successful so far, as EUR/USD rose to 1.3410, short of our stop (the stop was at 1.3416), and then fell 150 pips to 1.3260 (the target is 1.3100). My trading partner and I have both observed over the past months that there is often a missing wavelet on the one minute chart at the extremity of a trend. We are considering discounting our normal requirement to witness a viable 5 wave pattern on all time scales as a condition of entry, and placing a higher priority on our trend reversal value calculations, which are generally a better predictor of the terminus of a trend than the one minute Elliott Wave count.

Sunday 3/25

6:45pm NZD Trade Balance http://www.forexfactory.com/images/m...mpact_high.gif -0.13B -0.25B -0.83B

Monday 3/26

0:00 JPY BOJ Meeting Minutes http://www.forexfactory.com/images/m...impact_low.gif
10:00 USD New Home Sales http://www.forexfactory.com/images/m...mpact_high.gif 0.99M 0.94M
19:50 JPY CSPI m/m http://www.forexfactory.com/images/m...impact_low.gif 0.4% -0.3%

The G7 reports slated for release this week include from the US: new home sales, consumer confidence, durable goods orders, Q4 final GDP, PCE, Chicago PMI and the University of Michigan sentiment survey; from the UK: Q4 current account balance, GDP, and consumer credit. The key highlights from the Eurozone will be reports from Germany, including the Ifo sentiment survey, the March labor report, and inflation report. Also slated for release will be the Eurozone unemployment report and sentiment surveys.

According to Felix Homogratus, "We have US New Home Sales coming out for the month of February. Remember, New Home Sales are only about 12.5% of all housing sales in the US, but some economists care more about this indicator than the much bigger existing home sales, because a lot goes into building a new home, and building new homes supports a lot of other parts of the economy. This particular number is expected to rebound a bit from 937K last month to around 990K in February. Remember, last month the number came out way worse than expected, and all we saw was a quick spike up on GBP/USD by about 18 pips, and then the price went the opposite direction by over 50 pips. Okay, so generally speaking, if the number comes out higher than 1,000K, we may have positive US dollar bias, and GBP/USD may possibly go down short term. If the number comes out lower than 970K, we may have negative US dollar bias, and GBP/USD may possibly go up short term... In my opinion, if the number comes out at 850K or lower, it would be the lowest reading since September of 2001, when US went into short term recession, and GBP/USD may possibly go up by 50 pips or more in the first hour of the report. If on the other hand, the new homes comes out at 1175 or higher, it would be the highest reading since December of 2005, and we may see GBP/USD go down by 50 pips or more in the first hour of the report, since it would be good for the US dollar."

Trading with a system will dramatically increase your chances to succeed in trading, because it eliminates five of the top six reasons why unprepared traders fail.

Let’s take a look at the reasons why traders lose money:

1. Lack of a Trading Plan
2. Lack of Discipline to Follow the Plan
3. Failure to Control Emotions
4. Failure to Accept and Limit Losses
5. Lack of Commitment
6. Over-Trading

Here’s how in my experience a trading system eliminates 5 of the 6 top reasons why traders fail:

Solution #1: Having a trading plan

Having a trading system means having a pre-defined set of rules you have developed to guide your trading. Therefore you HAVE a trading plan, eliminating the No.1 cause for failure.

Solution #2: Following the trading plan

The easiest way to follow a trading plan is to automate it. Almost every trading system can be automated, and you could let the computer trade for you. You won’t have to worry about your discipline any longer, as the computer mechanically trades every setup for you.

Solution #3: Controlling emotions

Trading with a system removes emotions from trading. If you don’t have a strategy and you try to make decisions when the market is moving, you are liable to become emotionally attached to positions. You may experience panic and indecision when the market does not move in your favour, as you do not have a prepared response. That’s when most traders lose their money. If you follow a system you will know what to do no matter what the market does.

Solution #4: Controlling your losses

You probably have heard the saying “Let your profits run”. Unfortunately most traders let their losses run. A trading system will get you out of a position when the predefined stop is hit. Unless you override the system to “give the trade a little bit more room” it will stop the loss and therefore limit your losses.

Solution #5: Commitment

By "lack of commitment" I mean that traders stop trading the system after the first loss and don’t give their system a chance to make back the money they lost. Trading is not a one-way street, and losses are part of our business. If you can’t accept the fact that there will be losses, you shouldn’t trade. Fortunately a trading system can help you to overcome this problem; an automated trading system continues trading according to the rules, and therefore adds much more consistency to your trading.

As you can see, five of the six top reasons why traders lose money in the markets are simply eliminated when you start trading with a system.

Markus

Whereas I believe that I may have learnt enough about my Q Theory, Elliott Wave Theory, Announcement Science, Fibonacci Projections and Fundamental Macroeconomics to manage a high performance subjective trading system, I am interested to learn what is possible with a 100% objective or semi-objective (mechanised) trading system.

I have spent the last few weeks reading various forums and websites on this topic, but the volume of information seems to be sufficient to keep a person fully occupied for several decades. If anyone knows of a solid performing objective trading system that I could examine and extract ideas from or simply employ in its finished form, please post it here or PM me.

What I would like to see is a system that has a 40% or better Win% with a 3:1 or better Reward/Risk ratio, or a 75% Win% with a .5 or better Reward/Risk ratio. Or something in between these two extremes. The greater the frequency of trades, the better, of course.

Thank you in advance for your help. It's time to put a good system together and give it a whirl!

Trade Experiment #364 Buy GBP/USD at 1.9581 (Limit Order) hit our entry price exactly and then rose to 1.9640, allowing our stop to be raised to break even. According to our best EW hypothesis, there will be one more downwards wave to possibly a new low, so it would be best to exit this long GBP/USD trade at about 1.9640 and re-enter at a lower price.

Trade Experiment #365 Sell GBP/USD at 1.9650 (Limit Order)

Stop is 1.9705

Move stop to Break Even at 1.9620

Target is 1.9550 - 1.9500

Risk is 59 pips

Reward is 96 - 146 pips

RRR is 1.6 - 2.5 to 1

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

Wave hypothesis: There is a possibility, but by no means a certainty, that the price of GBP/USD will rise to 1.9650 to reach our entry price. There is a also a chance that the Fifth Wave could descend to about 1.9500 or even lower. We are trying to trade Wave 5 of a larger Wave C of a Larger Wave 4 down. (Similarly, there is a chance that EUR/USD will rise to 1.3285.)

For experimental purposes only.

Monday March 25 at 3:00 ET

Exit Trade Experiment #365 Sell USD/CAD at 1.1620 for 15 pips of loss. The wave count was not complete when this trade was entered. This trade is not system compliant. The drop was only 11 pips to 1.1595. The expected reversal point is about 1.1690 (61.8% retracement of recent downtrend), not 1.1610.
______________________________________________
______________________________________________

Previous Trade Experiment:

Trade Experiment #365 Sell USD/CAD at 1.1610
Stop is 1.1653
Move stop to Break Even at 1.1579
Target is 1.1500
Risk is 48 pips
Reward is 105 pips
RRR is 2.1
Confidence level: good
Accuracy: good
Reward / Risk Ratio : fair
Wave hypothesis: Wave 5 down.

Our Trade Experiment #361A Sell EUR/USD at 1.3382 was basically sound, except that the entry was a little early. However, the stop was not hit. The trade has progressed very well, but I decided to exit this trade because the wave pattern on the 1 minute chart was ambiguous. This criteria is not necessary to be met, however, for a reversal to take place. The actual target could be about 1.3200 rather than 1.3100, but the trade would still be very profitable.

When the price reached 1.3295 I generated Trade Experiment #363 Buy EUR/USD at 1.3295. This trade does not make sense from an Elliott Wave point of view, however. The entry price is a possible reversal value from the Q Theory perspective, but that is not a sufficient condition to qualify as a system compliant trade for the most basic of Q-E-F System in development. In addition, Trade Experiment #363 Buy EUR/USD at 1.3295 contradicts the previous Trade Experiment #361A Sell EUR/USD at 1.3382, which was a sound trade concept.

The price of EUR/USD continued down to a recent low at 1.3254, past the stop of the long trade at 1.3264, and is now likely to bounce up to about 1.3290 before the downwards trend resumes.
_________________________________________________________
_________________________________________________________

Previous Trade Experiments:

Trade Experiment #363 Buy EUR/USD at 1.3295
Stop is 1.3264
Move stop to Break Even at 1.3325.
Target is 1.3450
Risk is 33 pips
Reward is 152 pips
RRR is 4.6
Confidence level: good
Accuracy: good
Reward / Risk Ratio : fair
Wave hypothesis: Wave 5 up.
__________________________________________________ ___
__________________________________________________ ___

Previous Trade Experiments:

Trade Experiment #361A Sell EUR/USD at 1.3382
Stop is 1.3416
Move stop to Break Even at 1.3360.
Target is 1.3100
Risk is 36 pips
Reward is 280 pips
RRR is 7.8

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

Wave hypothesis: Wave C down
Because of the one minute wave count, it is advisable to exit Trade Experiment #361A Sell EUR/USD at 1.3385 and re-enter the short position at 1.3420. There isn't a clear and unequivocal 5 wave pattern, so there is a chance of a rise to a new high which could take out our stop.
__________________

he itme is it possible for a wave-3 to be the shortest in a correction, or not possible?