Low Risk, High Reward Trading Experiment

Friday August 4 at 14:00 ET

TS #140 Sell GBP/JPY at 218.20

We believe that this morning's high for GBP/JPY is the final high for the uptrend since April 26 and even before. Since this morning's high of 218.50 at 8:15 ET GBP/JPY has been ratcheting its way slowly downwards, staying below a downward sloping trendline. Today's non-farm payroll figures sent GBP/USD rising about 200 pips, and sent GBP/JPY up only about 65 pips. A downwards trade taken off this trendline could be the beginning of a new downwards trend, and give us a low risk : high reward entry point.

Stop is 218.68

Target #1 is 212.50

Risk is 57 pips
Reward is 561 pips
Reward : Risk ratio is 9.8 to 1

For research purposes only

Friday August 4 at 16:00 ET

GBP/CHF has been trending upwards since July 3, and has gained 840 pips during that time, gaining an average of over 30 pips per day. Today's non-farm payroll figures sent GBP/CHF rising about 80 pips. Since this morning's high of 2.3360 at 8:35 ET GBP/CHF has been ratcheting its way slowly downwards, staying below a downward sloping trendline. A downwards trade taken off this trendline could be the beginning of a new downwards trend, and give us a low risk : high reward entry point.

TS #141 Sell GBP/CHF at 2.3330

Stop is 2.3375

Target #1 is 2.2600

Risk is 60 pips
Reward is 715 pips
Reward : Risk ratio is 11.9 to 1

For research purposes only

ITME,

I'm shocked by your call. What's your analysis for shorting CABLE with a target of 1.8280? That is a rundown to the 7/19 levels. That seems like an extreme pull-back from the current levels. What do you believe the causes will be of such a pull-back?

Alan

I don't know why they oscillate the way they do, Sleuth, but I observe that they do it. I think that maybe someone is playing with the world economy in order to keep it going and to maintain their money and power.

Notice on the attached image how the EUR/GBP has trended downwards over the past 30 days. Typically, when it does something like this, then it reverses and goes the other way.

Also, notice the pattern of the GBP/USD over the past 10 years. Note how it oscillates up and down in a regular fashion for some unknown reason.

Monday August 7 at 10:30 ET

GBP/JPY has gone up 150 pips since our short signal, hitting our stop. It has reached a probable reversal point. It has risen 1020 pips since July 10, over 40 pips per day.

TS #140A Sell GBP/JPY at 219.70

Stop is 220.11

Target #1 is 212.50

Risk is 50 pips
Reward is 711 pips
Reward : Risk ratio is 14.2 to 1

_____________________________________

Previous trade signal:

Friday August 4 at 14:00 ET

TS #140 Sell GBP/JPY at 218.20

We believe that this morning's high for GBP/JPY is the final high for the uptrend since April 26 and even before. Since this morning's high of 218.50 at 8:15 ET GBP/JPY has been ratcheting its way slowly downwards, staying below a downward sloping trendline. Today's non-farm payroll figures sent GBP/USD rising about 200 pips, and sent GBP/JPY up only about 65 pips. A downwards trade taken off this trendline could be the beginning of a new downwards trend, and give us a low risk : high reward entry point.

Stop is 218.68

Target #1 is 212.50

Risk is 57 pips
Reward is 561 pips
Reward : Risk ratio is 9.8 to 1

For research purposes only
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Target hit.

Wednesday July 19 at 9:00 ET

TS #126C Sell USD/JPY at 117.85
As predicted, USD/JPY rose to slightly higher than 117.85 ("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 is 118.08
Target is 114.00
Risk is 25 pips
Reward is 383 pips
Reward : Risk ratio is 15.3 to 1

For research purposes only.

Target hit exactly Friday morning in response to the USD negative GDP non-farm payrolls.

Money management pointer : in accordance with the Itme Theorem of Rate of Return ( capital earned in a trade = Initial trading capital times reward : risk ratio times risk factor), with a 20% risk factor the above trade would earn TC * 15.3 * .20 = 3.06 * TC. Thus the trading capital at the end of the trade would be 1 + 3.06 = 4.06 TC, which represents a fourfold increase in trading capital. Now we just have to figure out how to consistently and accurately predict these trend reversal points!<!-- / message --><!-- edit note -->

ITSME it seems only the GBPJPY and EURJPY pairs are giving you a hard time.

Monday August 7 at 18:30 ET

TS #141 Sell CAD/JPY at 103.00

Stop is 103.28

Target is 100.60

Risk is 38 pips

Reward is 230 pips

Reward : Risk is 6.0 to 1


For research purposes only.
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Itme, was your stop on GBP/CHF hit?

Monday August 7, 21:00 ET

Twinchell, GBP/CHF went up another time, but only slightly higher than the previous high on August 4th. The stop we gave was met, when the price reached 2.3380, however a line drawn between the two highs on August 4th, carried into the future would have brought about an adjustment to the stop up to about 2.3388, so technically we are still in the trade.

_______________________________

Previous trade signal:

Friday August 4 at 16:00 ET

GBP/CHF has been trending upwards since July 3, and has gained 840 pips during that time, gaining an average of over 30 pips per day. Today's non-farm payroll figures sent GBP/CHF rising about 80 pips. Since this morning's high of 2.3360 at 8:35 ET GBP/CHF has been ratcheting its way slowly downwards, staying below a downward sloping trendline. A downwards trade taken off this trendline could be the beginning of a new downwards trend, and give us a low risk : high reward entry point.

TS #141 Sell GBP/CHF at 2.3330

Stop is 2.3375

Target #1 is 2.2600

Risk is 60 pips
Reward is 715 pips
Reward : Risk ratio is 11.9 to 1

For research purposes only
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I see. Im still in the trade as well, as I see a reversal of the uptrend imminent. Thanks for the quick response. Keep up the good work!

<table width="600"> <tbody><tr><td> http://www.federalreserve.gov/gifjpg/press.gif
Release Date: August 8, 2006


For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.


Last update: August 8, 2006

http://www.federalreserve.gov/boardd...08/default.htm
</td> </tr> </tbody> </table>

Tuesday August 9, 21:15 ET

As predicted, GBP/USD rose one more time, by about 70 pips, this time a little higher than the last high of 1.4126, to about 1.9143, after the FOMC report failed to announce an interest rate hike for the USD. GBP/USD then fell about 170 pips to a recent low of 1.8970. We expect another rise to 1.9145 or higher before GBP/USD starts on its downwards journey in earnest

For research purposes only.
_____________________________

Previous trade signals:

Friday August 4 at 10:00 ET

Friday's non-farm payroll figures sent GBP/USD rising about 210 pips, from 1.8914 to 1.9124. The current price is 1.9060. We are nearing the turnaround point.

TS #138 Sell GBP/USD at 1.9073
Stop is 1.9118
Target #1 is 1.8280
Risk is 48 pips
Reward is 790 pips
Reward : Risk ratio is 16.4 to 1

Note: this trade was stopped out when GBP/USD rose to 1.9124. The continuation of this trend at least until 13:00 ET was predictable. The high was reached at 11:00 ET this morning, and it appears that GBP/USD will rise again one more time to reach the same high a second time, or make a higher top.

Does anyone have the performance stats for these signals other than the first report at the beginning of the thread? Preferably including the trades that were stopped out by just a few pips? Anyone that traded them with a demo account should be able to just print out a broker's statement.

It seems like a good system, but because it's black box, you can't have a computer backtest it, and my data provider does not go back far enough to manually backtest everything.

Please read the comment at the beginning of this thread. This isn't a trading system - it's an ever - changing experiment. Please just use these trade signals as a blackboard to get some ideas from and to learn from, not to trade from. The performance is a non-issue at this time, as we are still at the beginning stages of sorting out many, many issues, as we are employing two very complex analytical models which are still in development stages, and the trading strategy is still unformed. We are formulating our trade proposals in the format of trade signals in order to provide a structure to force us to be brutally honest and to provide a structure for evaluating the performance of our trading strategy.

Loki, these are not signals. DO NOT TRADE THEM! This has been stated several times through out this thread. This is a journal of Itme's for his use and for his edification... I suppose you could go through each of them and determine some stats,
but that was not the purpose of this journal.

BTW, no journal in this froum is a signal service... Siganl services are a form of self promotion and cannot be here...

Thanks Scott

I'm well aware of this as I have read the disclaimer at the start of the thread as well as every single trade signal after that. I was merely curious as to the results of this "experiment" and was trying to find out from the dozens of others who have been trading this system live.

Also, Itme, do you have an ultimate plan for this system you're developing? Is it going to be a private in-house program for your team, turned into a subscription based signal service, used with managed accounts, etc? Just curious as you seem to be putting a lot of time and effor into it.

Hi Loki,

Thanks for your question.

There is still a long way to go. Our system, when research is more complete, would ideally involve a team of about 5 to 10 people scanning and constantly analysing a total of 20 to 26 currency pairs. There would be a few people who are doing intermarket analysis as well. Where there is a high confidence of a trend showing on a few pairs, then this data would be inputted into a comprehensive market model. Where intermarket analysis confirms an active or imminent strong trend, the strategic team would decide which currency pair would provide the most likely best trade opportunity, and then develop a trading strategy customised for the particular circumstances, factoring in both fundamentals and technicals, with emphasis on boundaries, reversal point identification and timing, market openings and closings, daily cycles, weekly cycles, economic data announcements, related market trends and world events.

When a low risk, high reward trade opportunity with a high probability of sucess emerges, then a trading implementation specialist team would execute the entry with high precision, and monitor the trade to completion, with ongoing analysis to minimise risk and maximize gain.

When the scanning and analysing team and comprehensive market analysis team identify a better trade opportunity, then the capital would be re-allocated at any time by the trade management team.

The goal would be to keep the capital working maximally all the time in high return, low risk trades. Total market analysis would generate a constant stream of opportunities with upside potential of from 50 pips to 250 pips, with a daily pip earnings of about 100 pips per day. Ideally, win : loss ratio would be 3 :1 or better, and reward : risk ratio would be 3:1 or better. With statistics like that, the risk factor could be about 20%, so return on capital would be about 50% per day. If the capital was $100,000, then initial earnings would be $50,000 per day. If capital was re-invested, then it would grow to $750 million in just one month of trading. That type of trading would be our initial goal.

After that, we could offer a signal service to the public and accept institutional capital to manage, with a scaled down, high confidence, low intensity trading model.

Wednesday August 9 12:00 ET

This trade shorting GBP/JPY missed being stopped out by only 1 pip. The market is rising again, to test the previous high one more time. Stop should be raised to 220.21 from the original value of 220.11.

For research purposes only
_____________________________________

Previous trade signals:

Monday August 7 at 10:30 ET
GBP/JPY has gone up 150 pips since our short signal, hitting our stop. It has reached a probable reversal point. It has risen 1020 pips since July 10, over 40 pips per day.
TS #140A Sell GBP/JPY at 219.70
Stop is 220.11
Target #1 is 212.50
Risk is 50 pips
Reward is 711 pips
Reward : Risk ratio is 14.2 to 1
_____________________________________

Friday August 4 at 14:00 ET
TS #140 Sell GBP/JPY at 218.20
We believe that this morning's high for GBP/JPY is the final high for the uptrend since April 26 and even before. Since this morning's high of 218.50 at 8:15 ET GBP/JPY has been ratcheting its way slowly downwards, staying below a downward sloping trendline. Today's non-farm payroll figures sent GBP/USD rising about 200 pips, and sent GBP/JPY up only about 65 pips. A downwards trade taken off this trendline could be the beginning of a new downwards trend, and give us a low risk : high reward entry point.
Stop is 218.68
Target #1 is 212.50
Risk is 57 pips
Reward is 561 pips
Reward : Risk ratio is 9.8 to 1


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