Low Risk, High Reward Trading Experiment

Friday July 14 at 13:30 ET

TS #128 Sell USD/CHF at 1.2400

Stop is 1.2436

Target is 1.2125

Risk is 40 pips

Reward is 271 pips

Reward : Risk ratio is 6.8 to 1

For research purposes only.

Friday July 14 at 14:30 ET

TS #129 Sell NZD/USD at .6213

Stop is .6246

Target #1 is .6050

Risk is 37 pips

Reward is 159 pips

Reward : Risk ratio is 4.3 to 1

For research purposes only.

Update as of 20:15 ET Tuesday July 18:

Following our short trade below, USD/CHF descended 30 pips to 1.2444, but a much better than expected US TIC report at 9:00 ET sent the price spiralling to 1.2556, taking out our stop at 1.2511 in the process.

We think that the top is near, and that USD/CHF should be shorted the next time it rises to about 1.2575 - 1.2600.
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Monday, July 17 at 20:15 ET

TS #128A Sell USD/CHF at 1.2475 - 1.2480

Stop is 1.2511

Target is 1.2215

Risk is 40 pips
Reward is 256 pips
Reward : Risk ratio is 6.4 to 1

For research purposes only.

_______________________________________________

Previous trade signal:

<!-- / icon and title -->Friday July 14 at 13:30 ET
TS #128 Sell USD/CHF at 1.2400
Stop is 1.2436
Target is 1.2125
Risk is 40 pips
Reward is 271 pips
Reward : Risk ratio is 6.8 to 1

For research purposes only.

Update as of 9:00 ET Tuesday July 18:

Since our last trade signal, USD/JPY descended 54 pips to 116.66, but a much better than expected US TIC report at 9:00 ET sent the price spiralling to 117.42, taking out our stop at 117.36 in the process. Our stop adjustment procedure would have moved the stop to 117.43, so we just scraped through by 1 pip.

We think that the top is near, and that if necessary USD/JPY should be shorted the next time it rises to about 117.50 - 118.00. The price 117.80 is an important resistance line. This may be the turning point, or slightly higher.

Stop should be adjusted to 117.61

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Trade signal (recorded after the fact)

Our last trade signal to short USD/JPY was stopped out when this pair went upwards for one more component wave in the upwards swing. The chance of the upwards swing wave being finished is much higher now. We shorted this pair at 117.20, so we will record this as a system compliant trade as follows:

Monday July 17 at 21:00 ET

TS #126B Sell USD/JPY at 117.20

Stop is 117.36

Target is 113.13

Risk is 18 pips

Reward is 405 pips

Reward : Risk ratio is 22.5 to 1

For research purposes only.

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Previous trade signals:

Friday July 14 at 10:45 ET

USD/JPY dropped 55 pips from our entry price to 115.59, then bounced up to 116.38, two pips higher than our stop.

Of course, our stop would have been raised 4 pips higher, to 116.40, according to our methodology, so we wouldn't be stopped out according to our system as it just came up to the short term trend line plus 8 pips.

USD/JPY apparently needed one more component wave up to complete the upwards swing wave. If necessary, we would recommend re-entering the short position at about 116.30 to 116.40, and place the stop at 116.66.

Re-enter TS #126 Sell USD/JPY at 116.30 to 116.40 if necessary
Stop is 116.66
Target is 113.13

An alternative, safer approach is to sell USD/JPY at 116.56 if it gets there, and keep the stop at about 116.66. This trade would have a much better reward : risk ratio if it materialises.

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Friday July 14 at 2:30 ET

TS #126 Sell USD/JPY at 116.14
Stop is 116.36
Target is 113.13Risk is 24 pips
Reward is 299 pips
Reward : Risk ratio is 12.5 to 1
For research purposes only.

Comment at time of posting: USD/JPY just rose as expected by Elliot Wave analysis and our other developmental model to the top trend line formed by the two highs on June 27 and June 28 at exactly 116.14, forming a triple top, plus a few pips of overshoot. This is a high probability turnaround point.

Update as of 20:30 ET Tuesday July 18:

Further study produces the view that the previous assessment is basically correct, however, there will be one more component wave upwards before the real trend reversal occurs. We recommend exiting at market price of 146.57, taking a profit of about 25 pips, and re-enter at about 147.00 for a short position.

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Update as of 13:00 ET Tuesday July 18:

Re-entry opportunity TS# 114 Sell EUR/JPY at 146.85

Since the short signal was issued on Friday to short EUR/JPY at 147.17, it went straight down 94 pips to 146.23 this morning, then bounced up to 146.97.

We see the current price of 146.85 as being close to the top of a corrective wave, so for those not already shorting this pair, we think that shorting here with a stop of 147.13 is a good low risk, high gain trade. Target #1 is 144.80, for a risk of 31 and a reward potential of 202 pips, which gives a reward : risk ratio of 6.5 to 1.

______________________________________

Previous comments and trade signals:

Friday July 14 at 11:30 ET

Update on TS# 114 Sell EUR/JPY at 147.30 to 147.50

Since we made the comment " Now that several days have been spent in this 75 pip range, EUR/JPY is probably nearing the time for a big break either up or down. Our bets are on down, drawn down by a big fall in EUR/USD" on July 6th, EUR/JPY plummeted 218 pips to 145.00 on July 10th, then bounced up to 147.17.

For those not in a short position, we recommend shorting EUR/JPY at 147.17

The stop is 147.42
<hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message -->
Sunday, July 9 at 23:30 ET
Since we made the following comment on Thursday, EUR/JPY has fallen rapidly about 225 pips to 145.44. Its fall was driven not by a fall in EUR/USD, however, as this pair went up and back down. The cross was pulled down instead by a strong drop in USD/JPY starting at 15:00 ET on July 5th. We think EUR/JPY is due for a bounce about now before it carries on with its downward trend.

Thursday, July 6 at 13:30 ET

Since selling at 147.40, EUR/JPY has fallen 80 pips to 146.62 and then bounced up 55 pips to 147.18. Now that several days have been spent in this 75 pip range, EUR/JPY is probably nearing the time for a big break either up or down. Our bets are on down, drawn down by a big fall in EUR/USD.

More details can be found here:

http://www.forexfactory.com/forexfo...2FJPY#post72416

Update as of 14:00 ET Tuesday July 18:

Following the last attempt to short USD/CAD at 1.1329, it fell quickly 69 pips to 1.1256, then corrected all the way up 119 pips to 1.1375.

We think that 1.1375 is the top of the upwards corrective swing trend, and since then it has completed a Wave 1 down and a complex Wave 2 up. It is in an excellent position to short now, at the top of the corrective wave.

TS #127A Sell USD/CAD at 1.1370

Stop is 1.1391

Target #1 is 1.1175

Risk is 25 pips

Reward is 191 pips

Reward : Risk ratio is 7.6 to 1

For research purposes only.

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Previous trade signal and comments:

Friday July 14 at 3:00 ET

TS #127 Sell USD/CAD at 1.1329
Stop is 1.1346
Target #1 is 1.1125
Risk is 22 pips
Reward is 199 pips
Reward : Risk ratio is 9.0 to 1
For research purposes only.

Comment at time of posting: USD/CAD just rose in an ABC corrective wave, which we expect to rise a little higher, to about 1.1130 to 1.1135, before it reverses and continues with its downwards trend.

Follow-up Comment at 10:40 ET on Friday: USD/CAD only rose to 1.1125, 4 pips short of our entry price. (We missed the entry price on our previous trade also.) USD/CAD is so bearish that it isn't bouncing as much as usual, so our entry prices are being missed. It did fall so far by 130 pips to 1.1255, and seems on its way to descend further.

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itme what you think of AUD/JPY?

It has formed a pin bar at top for past two days, and has bounced back several times rapidly in past from current level.

Update as of 20:00 ET Tuesday July 18:

Upon further analysis we believe that GBP/CHF will rise in one more upwards pulse before the trend reversal will occur. Therefore revise target to 2.2850.

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Update as of 14:30 ET Tuesday July 18:

GBP/CHF has shot up to 2.2904, 190 pips higher than our last attempt to short it. It is in a good short position now, we believe. The price has risen to touch the top trendline going back to June 29, 2005.
TS #113D Re-Enter Sell GBP/CHF at 2.2875
Stop is 2.2921
Target #1 is 2.2675
Target #2 is 2.2570
Target #3 is 2.2350
Risk is 61 pips
Reward is 185 / 290 / 510 pips
Reward : Risk ratio is 3.0 / 4.75 / 8.3 to 1
________________________________________

Previous signals and comments:

TS #113C Re-Enter Sell GBP/CHF at 2.2715 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> According to the following signals, our system advised selling GBP/CHF on July 10 at 2.2660, a bit too early. We narrowly missed being stopped out on July 12. The price has gone down and up twice, and has finally come to what we believe is the end of the upwards swing trend, or near to the end. On July 12 we stated "Re-enter short position if necessary if it rises again to close to 2.2690. New stop should be 2.2711." This morning the price rose to 1.2710.

For safety, we recommend shorting GBP/CHF only if it rises once more to 2.2715. Place stop at 2.2736. This will be an excellent trade if it materialises.

TS #113C Re-Enter Sell GBP/CHF at 2.2715
Stop is 2.2736
Target #1 is 2.2175
Risk is only 36 pips
Reward is 525 pips
Reward : Risk ratio is 14.6 to 1

For research purposes only.

_____________________________________


Update on TS #113B Sell GBP/CHF at 2.2660 <hr style="color: rgb(209, 209, 225);" size="1"> Wednesday July 12, 2006 2:45 ET

The following trade signal to short GBP/CHF was triggered, when the price rose to 2.2678, missing the stop by 8 pips. The price then fell quickly 85 pips to 2.2593. The price then bounced back up to 2.2660. We think it will be heading south again now.

We interpret this downwards and upwards move to be Wave 1 down (impulse) and Wave 2 up (corrective) of the beginning of a new downwards trend.

Wednesday July 12, 2006 at 7:00 ET

GBP/CHF rose to 2.2690, 4 pips past our stop. According to our stop adjusting procedure, the stop should have been adjusted to 2.2698, which is 8 pips above the new high. GBP/CHF then fell quickly to 2.2645. Re-enter short position if necessary if it rises again to close to 2.2690. New stop should be 2.2711. It was due to an error in executing our analysis that the original entry was too soon.
_______________________________________________ ___

Monday July 10, 2006 12:45 ET
TS #113B Sell GBP/CHF at 2.2660
Stop is 2.2686
Target #1 is 2.2175
Risk is 40 pips
Reward is 470 pips
Reward : Risk ratio is 11.8

http://www.forexfactory.com/forexfo...2FCHF#post73024

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Hi Itme, I'd just like to ask you a question about your trading strategy. What percentage of your trades are you winning?

We haven't done a performance review for quite a while, because the trading model is still in flux. I would guess approx. 20 - 25 % success rate over the past few weeks. With an average Reward : risk ratio of over 4: 1, that would be an approx. break even performance.

<hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message -->Tuesday, July 18, 19:15

To Purple,

"itme what you think of AUD/JPY?

It has formed a pin bar at top for past two days, and has bounced back several times rapidly in past from current level."

AUD/JPY, at 87.55, looks like a great opportunity on the 1 day charts. As far as the entry strategy is concerned, we expect another pulse upwards before the big reversal of the trend.

If it makes it up to about 88.25 again, it would be a low risk, high reward trade.

Tuesday July 18 at 20:30 ET

Re-entry Opportunity TS #127B Buy GBP/USD at 1.8235

Stop is 1.8218

Target is 1.8350

Risk is 21 pips

Reward is 111

Reward : Risk ratio is 5.3 to 1

For research purposes only.

_________________________________________

Previous trade signals and comments:

Re-entry Opportunity TS #127A Buy GBP/USD at 1.8340
<hr style="color: rgb(209, 209, 225);" size="1"><!-- / icon and title --><!-- message --> Friday July 14 at 10:30 ET

GBP/USD rose 92 pips from our entry point to reach 1.8447, then seems to have dropped quickly in an unusually strong corrective wave on the uptrend. This would be unusual, as the corrective wave has gone lower than the starting point. This is possible, but not likely. Or, the previous downwards swing wave hadn't finished and neeeded another component wave down. In this case, the downwards wave isn't finished yet, and we will be entering early if we enter now at 1.8340. Since we are not really sure what is going on, to be somewhat safe, we will place the stop a little lower at 1.8312

Re-entry Opportunity TS #127A Buy GBP/USD at 1.8340
Stop is 1.8312
Target is 1.8490

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Friday July 14 at 3:30 ET
TS #127 Buy GBP/USD at 1.8355
Stop is 1.8334
Target is 1.8490
Risk is 25 pips
Reward is 131 pips
Reward : Risk ratio is 5.4 to 1

Comment at time of posting:Current update as of Friday July 14 at 3:30 ET:

The trade signal above is delivered late, and is purely for academic purposes. This trade is against the medium term trend, which we don't prefer, and the reward : risk and certainty level are not as high as the trades shorting USD/CAD and USD/JPY. The expected downwards movement of GBP/JPY indicates that the downwards movement of USD/JPY should exceed the upwards movement of GBP/USD.

The upwards corrective wave refered to below was larger than expected, carrying GBP/USD a few pips higher to 1.8445, which formed a double top, before continuing with the downtrend a distance of 90 pips to 1.8356. This is the bottom of the "B" of the ABC Wave 4 upwards corrective wave. The next movement is an upwards "C" wave. The price will now head upwards about 134 pips (.73%) , with a likely target of 1.8490.

Update as of 21:00 ET Tuesday July 18:

TS #128B Sell USD/CHF at 1.2548

Stop is 1.2561

Target is 1.2360

For research purposes only.

_______________________________________

Previous trade signals and comments:

Update as of 20:15 ET Tuesday July 18:

Following our short trade below, USD/CHF descended 30 pips to 1.2444, but a much better than expected US TIC report at 9:00 ET sent the price spiralling to 1.2556, taking out our stop at 1.2511 in the process.

We think that the top is near, and that USD/CHF should be shorted the next time it rises to about 1.2575 - 1.2600.
_____________________________________

Monday, July 17 at 20:15 ET

TS #128A Sell USD/CHF at 1.2475 - 1.2480
Stop is 1.2511
Target is 1.2215
Risk is 40 pips
Reward is 256 pips
Reward : Risk ratio is 6.4 to 1
_______________________________________________

<!-- / icon and title -->Friday July 14 at 13:30 ET
TS #128 Sell USD/CHF at 1.2400
Stop is 1.2436
Target is 1.2125
Risk is 40 pips
Reward is 271 pips
Reward : Risk ratio is 6.8 to 1

For research purposes only.

thanx a lot for the reply itme, keep up the good work with your strategy.

Thanks for your reply itme.

Wednesday July 19 @ 5:15 ET

TS #125B 3nd Entry Opportunity - Sell GBP/JPY at 215.08 <hr style="color: rgb(209, 209, 225);" size="1"> Stop is 215.21

Target is 209.50

Risk is 22 pips

Reward is 549 pips

Reward : Risk ratio is 25 to 1

For research purposes only.

Comment: reliability of this trade concept is quite high.
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Previous trade signals and comments:

Friday July 14 at 8:15 ET

Since the trade signal was issued a few hours earlier, GBP/JPY descended 110 pips quickly to 212.60, then bounced most of the way back to where it started. Thus a re-entry opportunity has now presented itself.

TS #125A 2nd Entry Opportunity - Sell GBP/JPY at 213.58
Stop is 213.87
Target is 209.50Risk is 38 pips
Reward is 399 pips
Reward : Risk ratio is 10.5 to 1
<hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> Friday July 14 at 2:15 ET

TS #125 Sell GBP/JPY at 213.66
Stop is 214.12
Target is 209.50
Risk is 55 pips
Reward is 407 pips
Reward : Risk ratio is 7.4 to 1

Comment at time of posting: This trade signal is issued after the fact, but our system predicted this exactly as presented. This trade signal is as perfect as it can get. All of our system criteria are met perfectly.
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Wow that GBPJPY pair seems to have taken a life of its own. It is at multiyear highs.

Update as of 5:30 ET Wednesday July 19:

As recommended earlier, sell EUR/JPY at 147.00

Re-entry opportunity TS# 114B Sell EUR/JPY at 147.00

Stop is 147.11

Target #1 is 145.00

Risk is 14 pips

Reward is 197 pips

Reward : risk ratio is 14.0 to 1

_________________________________________

Previous trade signals and comments:

Re-entry opportunity TS# 114 Sell EUR/JPY at 146.85 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Update as of 20:30 ET Tuesday July 18:

Further study produces the view that the previous assessment is basically correct, however, there will be one more component wave upwards before the real trend reversal occurs. We recommend exiting at market price of 146.57, taking a profit of about 25 pips, and re-enter at about 147.00 for a short position.

__________________________________________________

Update as of 13:00 ET Tuesday July 18:

Re-entry opportunity TS# 114 Sell EUR/JPY at 146.85

Since the short signal was issued on Friday to short EUR/JPY at 147.17, it went straight down 94 pips to 146.23 this morning, then bounced up to 146.97.

We see the current price of 146.85 as being close to the top of a corrective wave, so for those not already shorting this pair, we think that shorting here with a stop of 147.13 is a good low risk, high gain trade. Target #1 is 144.80, for a risk of 31 and a reward potential of 202 pips, which gives a reward : risk ratio of 6.5 to 1.

______________________________________

Friday July 14 at 11:30 ET

Update on TS# 114 Sell EUR/JPY at 147.30 to 147.50

Since we made the comment " Now that several days have been spent in this 75 pip range, EUR/JPY is probably nearing the time for a big break either up or down. Our bets are on down, drawn down by a big fall in EUR/USD" on July 6th, EUR/JPY plummeted 218 pips to 145.00 on July 10th, then bounced up to 147.17.

For those not in a short position, we recommend shorting EUR/JPY at 147.17

The stop is 147.42
<hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message -->
Sunday, July 9 at 23:30 ET
Since we made the following comment on Thursday, EUR/JPY has fallen rapidly about 225 pips to 145.44. Its fall was driven not by a fall in EUR/USD, however, as this pair went up and back down. The cross was pulled down instead by a strong drop in USD/JPY starting at 15:00 ET on July 5th. We think EUR/JPY is due for a bounce about now before it carries on with its downward trend.

Thursday, July 6 at 13:30 ET

Since selling at 147.40, EUR/JPY has fallen 80 pips to 146.62 and then bounced up 55 pips to 147.18. Now that several days have been spent in this 75 pip range, EUR/JPY is probably nearing the time for a big break either up or down. Our bets are on down, drawn down by a big fall in EUR/USD.

More details can be found here:

http://www.forexfactory.com/forexfo...2FJPY#post72416

Update as of 6:00 ET Wednesday July 19:

TS #113E Sell GBP/CHF at 2.2957

Stop is 2.2974

Target #1 is 2.2710
Target #2 is 2.2570
Target #3 is 2.2350

For research purposes only.
__________________________________________

Previous trade signals and comments:

TS #113D Revise target on Short GBP/CHF at 2.2875 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Update as of 20:00 ET Tuesday July 18:

Upon further analysis we believe that GBP/CHF will rise in one more upwards pulse before the trend reversal will occur. Therefore revise target to 2.2850. (In other words, exit at an opportune time)
_______________________________-

Update as of 14:30 ET Tuesday July 18:

GBP/CHF has shot up to 2.2904, 190 pips higher than our last attempt to short it. It is in a good short position now, we believe. The price has risen to touch the top trendline going back to June 29, 2005.
TS #113D Re-Enter Sell GBP/CHF at 2.2875
Stop is 2.2921
Target #1 is 2.2675
Target #2 is 2.2570
Target #3 is 2.2350
Risk is 61 pips
Reward is 185 / 290 / 510 pips
Reward : Risk ratio is 3.0 / 4.75 / 8.3 to 1
________________________________________
TS #113C Re-Enter Sell GBP/CHF at 2.2715 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> According to the following signals, our system advised selling GBP/CHF on July 10 at 2.2660, a bit too early. We narrowly missed being stopped out on July 12. The price has gone down and up twice, and has finally come to what we believe is the end of the upwards swing trend, or near to the end. On July 12 we stated "Re-enter short position if necessary if it rises again to close to 2.2690. New stop should be 2.2711." This morning the price rose to 1.2710.

For safety, we recommend shorting GBP/CHF only if it rises once more to 2.2715. Place stop at 2.2736. This will be an excellent trade if it materialises.

TS #113C Re-Enter Sell GBP/CHF at 2.2715
Stop is 2.2736
Target #1 is 2.2175
Risk is only 36 pips
Reward is 525 pips
Reward : Risk ratio is 14.6 to 1
_____________________________________

Update on TS #113B Sell GBP/CHF at 2.2660 <hr style="color: rgb(209, 209, 225);" size="1"> Wednesday July 12, 2006 2:45 ET

The following trade signal to short GBP/CHF was triggered, when the price rose to 2.2678, missing the stop by 8 pips. The price then fell quickly 85 pips to 2.2593. The price then bounced back up to 2.2660. We think it will be heading south again now.

We interpret this downwards and upwards move to be Wave 1 down (impulse) and Wave 2 up (corrective) of the beginning of a new downwards trend.

Wednesday July 12, 2006 at 7:00 ET

GBP/CHF rose to 2.2690, 4 pips past our stop. According to our stop adjusting procedure, the stop should have been adjusted to 2.2698, which is 8 pips above the new high. GBP/CHF then fell quickly to 2.2645. Re-enter short position if necessary if it rises again to close to 2.2690. New stop should be 2.2711. It was due to an error in executing our analysis that the original entry was too soon.
_______________________________________________ ___

Monday July 10, 2006 12:45 ET
TS #113B Sell GBP/CHF at 2.2660
Stop is 2.2686
Target #1 is 2.2175
Risk is 40 pips
Reward is 470 pips
Reward : Risk ratio is 11.8

http://www.forexfactory.com/forexfo...2FCHF#post73024

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Wednesday July 19 at 8:30 ET

TS #128B Sell USD/CHF at 1.2594

Stop is 1.2614

Target #1 is 1.2360

Risk is 24 pips

Reward is 230 pips

Reward : Risk ratio is 9.6 to 1

For research purposes only.

__________________________________________________

Previous trade signals and comments:
<hr style="color: rgb(209, 209, 225);" size="1"><!-- / icon and title --><!-- message -->
Update as of 21:00 ET Tuesday July 18

TS #128B Sell USD/CHF at 1.2548
Stop is 1.2561
Target is 1.2360
_______________________________________

Update as of 20:15 ET Tuesday July 18:

Following our short trade below, USD/CHF descended 30 pips to 1.2444, but a much better than expected US TIC report at 9:00 ET sent the price spiralling to 1.2556, taking out our stop at 1.2511 in the process.

We think that the top is near, and that USD/CHF should be shorted the next time it rises to about 1.2575 - 1.2600.
_____________________________________

Monday, July 17 at 20:15 ET

TS #128A Sell USD/CHF at 1.2475 - 1.2480
Stop is 1.2511
Target is 1.2215
Risk is 40 pips
Reward is 256 pips
Reward : Risk ratio is 6.4 to 1
_______________________________________________

<!-- / icon and title -->Friday July 14 at 13:30 ET
TS #128 Sell USD/CHF at 1.2400
Stop is 1.2436
Target is 1.2125
Risk is 40 pips
Reward is 271 pips
Reward : Risk ratio is 6.8 to 1

For research purposes only.