Low Risk, High Reward Trading Experiment

Wednesday August 30 3:30 ET

The original trade signal was not correct. It should have advised shorting GBP/JPY at 222.60.

TS #161A Re-enter short GBP/JPY at 222.60

Stop is 222.95

Target is 220.10

Risk is 44 pips
Reward is 241 pips
Reward : Risk Ratio is 5.5 to 1

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Previous trade signal:

Tuesday August 29 23:00 ET
TS #161 Sell GBP/JPY at 222.20
Stop is 222.61
Target is 220.10
Risk is 50 pips
Reward is 201 pips
Reward : Risk Ratio is 4.0 to 1

For research purposes only.

Wednesday August 30 6:30 ET

On August 30 at 6:10 ET the actual target of 1.9040 was met by GBP/USD. We named 1.9030 as a conservative target, whereas our system gave us the slightly higher number of 1.9040 as the most likely turnaround point. As of the time of writing, 1.9043 is the highest price yet reached, just three pips past our target. GBP/USD still may yet proceed on to 1.9060 or higher.
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Previous trade signal:

Tuesday August 29 11:45 ET
TS#158 Buy GBP/USD at 1.8900 or lower
Stop is 1.8865
Target is 1.9030
Risk is 38 pips
Reward is 127 pips
Reward : Risk ratio is 3.3 to 1

For research purposes only.

Wednesday August 30 12:00 ET

According to our stop adjustment procedure, adjust stop to 117.31 for TS #162 Sell USD/JPY at 116.90
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Previous trade signal:

TS #162 Sell USD/JPY at 116.90
Stop is 117.17
Target is 115.90
Risk is 30 pips
Reward is 97 pips
Reward : Risk Ratio is 3.2 to 1

For research purposes only.

Wednesday August 30 12:45 ET

TS #161B Re-enter short GBP/JPY at 223.10

Stop is 223.43

Target is 220.10

Risk is 42 pips
Reward is 291 pips
Reward : Risk Ratio is 6.9 to 1
_________________________________________________

Previous trade signals:
Wednesday August 30 3:30 ET

The original trade signal was not correct. It should have advised shorting GBP/JPY at 222.60.
TS #161A Re-enter short GBP/JPY at 222.60
Stop is 222.95
Target is 220.10
Risk is 44 pips
Reward is 241 pips
Reward : Risk Ratio is 5.5 to 1

_____________________________________

Tuesday August 29 23:00 ET
TS #161 Sell GBP/JPY at 222.20
Stop is 222.61
Target is 220.10
Risk is 50 pips
Reward is 201 pips
Reward : Risk Ratio is 4.0 to 1

For research purposes only.

Wednesday August 30 20:15 ET

TS #161C Re-enter short GBP/JPY at 223.50

Stop is 223.71
Target is 220.10
Risk is 30 pips
Reward is 331 pips
Reward : Risk Ratio is 11.0 to 1

__________________________________________________________________

Previous trade signals:

Wednesday August 30 12:45 ET

TS #161B Re-enter short GBP/JPY at 223.10
Stop is 223.43
Target is 220.10
Risk is 42 pips
Reward is 291 pips
Reward : Risk Ratio is 6.9 to 1
_________________________________________________

Wednesday August 30 3:30 ET

The original trade signal was not correct. It should have advised shorting GBP/JPY at 222.60.
TS #161A Re-enter short GBP/JPY at 222.60
Stop is 222.95
Target is 220.10
Risk is 44 pips
Reward is 241 pips
Reward : Risk Ratio is 5.5 to 1

_____________________________________

Tuesday August 29 23:00 ET
TS #161 Sell GBP/JPY at 222.20
Stop is 222.61
Target is 220.10
Risk is 50 pips
Reward is 201 pips
Reward : Risk Ratio is 4.0 to 1

For research purposes only.

Wednesday August 30 20:00 ET

According to our stop adjustment procedure, adjust stop to 117.41 for TS #162 Sell USD/JPY at 116.90
__________________________________________________ ___

Previous trade signal:

TS #162 Sell USD/JPY at 116.90
Stop is 117.17
Target is 115.90
Risk is 30 pips
Reward is 97 pips
Reward : Risk Ratio is 3.2 to 1

For research purposes only.

Wednesday August 30 20:15 ET

TS #163 Sell EUR/CAD at 1.4249

Stop is 1.4266
Target #1 is 1.4070
Target #2 is 1.3950
Risk is 27 pips
Reward is 169 / 289 pips
Reward : Risk ratio is 6.2 / 10.7 to 1

For research purposes only
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Thursday, August 31 12:15 ET

EUR/CAD rose one more time than expected to 1.4275 this morning, passing our stop by 9 pips. However, our stop adjusting procedure would have moved the stop up to 142.78, so the trade would have survived by 3 pips - a close call.

The fact that EUR/CAD rose to 1.4275 could have been predicted by our system, if we had added on a test that we had neglected to perform. We shall be more careful in the future, and perform this important test on the one day chart .

EUR/CAD then dropped 135 pips quickly to 1.4140. It will probably bounce substantially before continuing towards the prescribed targets.
____________________________________________________

Previous trade signal:

Wednesday August 30 20:15 ET

TS #163 Sell EUR/CAD at 1.4249

Stop is 1.4266
Target #1 is 1.4070
Target #2 is 1.3950
Risk is 27 pips
Reward is 169 / 289 pips
Reward : Risk ratio is 6.2 / 10.7 to 1

For research purposes only

The price of USD/JPY rose to 117.46 during the night, which would not have triggered our stop if the stop had been adjusted properly. It then fell 57 pips to 116.89, which would have been an excellent interim exit price. For those that were stopped out, or who took profit at 116.89, a re-entry opportunity presented itself when the price rose again to 117.38 the third time.

Thursday, August 31 12:00 ET

TS #162A Sell USD/JPY at 117.38

Stop is 117.51
Target is 115.90
Risk is 16 pips
Reward is 158 pips
Reward : Risk Ratio is 9.9 to 1

For research purposes only.

Thursday, August 31 12:00 ET

Subsequent to the following quoted comment advising exiting of the short CAD/JPY trade to collect 75 pips of profit, the pair rose to a new high of 106.13 as predicted. This presents a better entry position for a long swing trade.

Trade Signal #164 Sell CAD/JPY at 106.10

Stop is 106.31

Target #1 is 103.50

Target #2 is 103.00

Risk is 31 pips

Reward is 240 / 290 pips

Reward : Risk Ratio is 7.7 / 9.3 to 1
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Previous comment and trade signal:

<table class="tborder" id="post91612" align="center" border="0" cellpadding="6" cellspacing="1" width="100%"> <tbody><tr><td class="thead" id="currentPost">08-29-2006, 16:20 <!-- / status icon and date -->
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</td> </tr> </tbody></table> <!-- / user info --> </td> </tr> <tr> <td class="alt1"><!-- message, attachments, sig --><!-- icon and title --> Adjust target on TS#156A Sell CAD/JPY at 105.80 to 105.90
<hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --> <!-- message --> Long and thoughful consideration and study of the movement has lead us to the view that the current CAD/JPY downtrend is most likely a corrective wave, not the beginning of a new downtrend. Therefore revise target to 104.94, which still gives a healthy profit of about 75 pips if this target is met.
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Previous trade signal:

TS#156A Sell CAD/JPY at 105.80 to 105.90 <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message --> Friday August 25 13:00 ET

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

TS#156A Sell CAD/JPY at 105.80 to 105.90
Stop is 106.10
Target #1 is 103.50
Target #2 is 103.00
Risk is 40 to 50 pips
Reward is min. 170 to 220 pips
Reward : Risk Ratio is 3.4 to 1 or 5.5 to 1 , depending on the entry price and target met.

For research purposes only.
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Thursday, August 31 13:00 ET

According to our system of analysis, EUR/JPY was likely to reverse direction at either 150.40 or 150.70. We therefore shorted it at 150.40, and placed the stop at 150.86. (The Elliott Wave count in this case was very challenging.) It rose during the night to 150.70, then fell 65 pips to 150.05. We are therefore still in this short EUR/JPY trade, and hopefully progressing towards our target at 148.00.

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Tuesday August 29 23:00 ET

EUR/JPY has been engaged in a very lengthy and grand corrective wave, or an upwards impulse wave, depending on one's interpretation of it, since we made the following comment on August 24th:

Quote:

EUR/JPY rose and fell, and will now rise again <hr style="color: rgb(209, 209, 225);" size="1"> <!-- / icon and title --><!-- message --> Friday August 24 11:00 ET

EUR/JPY rose as predicted to 149.45, then fell 74 pips this morning to 148.71. We expect it to do a corrective complex upwards wave now for the rest of the day before resuming its downwards trend, with a topside target of between 1.4915 and 149.40.

Unquote

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We now expect it to reverse at 150.40, which will be the beginning of a new downwards trend.

TS #160 Sell EUR/JPY at 150.40
Stop is 150.86
Target is 148.00
Risk is 50 pips
Reward is 236 pips
Reward : Risk Ratio is 4.7 to 1

For research purposes only.

Thursday, August 31 13:30 ET

Proper analysis of the Elliott Wave leading up to this trade shorting USD/CHF would have recognised that the downwards swing trend starting at 1.2422 is a corrective wave 4 targetting 1.2244. Our analysis employing our two models allowed us to predict a reversal of an internal corrective wave, constituting an entry opportunity, at slightly above 1.2295 many hours before it happened, which was correct, as the actual reversal point was at 123.08 - slightly lower than our stop at 124.14, indicating the potential accuracy of our system even at predicting reversal points ahead of time.

But instead of this being an entry point on a long swing trend, it was an entry point in a corrective wave targetting 1.2244, at a point three quarters of the way along the trend, with a theoretical target which is only 50 pips below the entry price.

So it was not a system compliant trade, as the reward : risk ratio is too small with the proper target. The price did proceed past the target price of 1.2244 by 15 pips to a low of 1.2229, which is accounted for by the "overshoot factor". The total downwards movement after the entry price is 67 pips. Then the downwards corrective wave was over, and an upwards impulse wave began, carrying the price up 115 pips very quickly to 1.2343, stopping us out of the improperly calculated short trade - TS#159 Sell USD/CHF at 1.2295
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Previous trade signal:

Tuesday August 29 22:30 ET

TS#159 Sell USD/CHF at 1.2295

Stop is 1.2314

Target is 1.2075

Risk is 23 pips

Reward is 216 pips

Reward : Risk ratio is 9.4 to 1

For research purposes only.

Thursday, August 31 13:30 ET

Without going into the errors which caused the three failed entry attempts to short GBP/JPY, we believe a fairly high probability entry opportunity is now available as follows:

TS #161D Re-enter short GBP/JPY at 223.55

Stop is 223.91
Target is 220.10
Risk is 45 pips
Reward is 336 pips
Reward : Risk Ratio is 7.5 to 1

___________________________________________

Previous trade signals:

Wednesday August 30 20:15 ET

TS #161C Re-enter short GBP/JPY at 223.50

Stop is 223.71
Target is 220.10
Risk is 30 pips
Reward is 331 pips
Reward : Risk Ratio is 11.0 to 1

__________________________________________________ ________________
Wednesday August 30 12:45 ET

TS #161B Re-enter short GBP/JPY at 223.10
Stop is 223.43
Target is 220.10
Risk is 42 pips
Reward is 291 pips
Reward : Risk Ratio is 6.9 to 1
_________________________________________________

Wednesday August 30 3:30 ET

The original trade signal was not correct. It should have advised shorting GBP/JPY at 222.60.
TS #161A Re-enter short GBP/JPY at 222.60
Stop is 222.95
Target is 220.10
Risk is 44 pips
Reward is 241 pips
Reward : Risk Ratio is 5.5 to 1

_____________________________________

Tuesday August 29 23:00 ET
TS #161 Sell GBP/JPY at 222.20
Stop is 222.61
Target is 220.10
Risk is 50 pips
Reward is 201 pips
Reward : Risk Ratio is 4.0 to 1

For research purposes only.

Friday September 1 at 9:30 ET

To continue the analysis of the USD/CHF begun above, we stated "The price did proceed past the target price of 1.2244 by 15 pips to a low of 1.2229, which is accounted for by the "overshoot factor". The total downwards movement after the entry price is 67 pips. Then the downwards corrective wave was over, and an upwards impulse wave began, carrying the price up 115 pips very quickly to 1.2343, stopping us out of the improperly calculated short trade - TS#159 Sell USD/CHF at 1.2295 " .

Following the first upwards impulse yesterday, USD/CHF consolidated down to 1.2297, dropping 46 pips during the corrrective phase, and then jumped up following the release of this morning's 8:30 ET US Non-farm payrolls data (which the market interpreted to be somewhat USD positive) to an interim high of 1.2387, a rise of 90 pips so far.

Our target for the rise in the second upwards impulse swing wave of USD/CHF is 1.2433, for a total rise of 136 pips.

Note: Elliottician is also long USD/CHF, with a target area between 1.2585 and 1.2895.

Exit TS #162A Sell USD/JPY at 117.38 at market price approximately 117.10 to 117.30

Since the inception of this trade, the lowest price reached has been 117.10. The market direction favors a mild upwards momentum on this pair at this time. If the U.S. non-farm payrolls report had been unfavorable for the USD, then this trade would have borne fruit, but it wasn't - the report was interpreted as favorable for the USD.

___________________________________________________________

Previous trade signal:

The price of USD/JPY rose to 117.46 during the night, which would not have triggered our stop if the stop had been adjusted properly. It then fell 57 pips to 116.89, which would have been an excellent interim exit price. For those that were stopped out, or who took profit at 116.89, a re-entry opportunity presented itself when the price rose again to 117.38 the third time.

Thursday, August 31 12:00 ET

TS #162A Sell USD/JPY at 117.38

Stop is 117.51
Target is 115.90
Risk is 16 pips
Reward is 158 pips
Reward : Risk Ratio is 9.9 to 1

For research purposes only.

Friday September 1 at 11:45 ET

TS#165 Sell GBP/USD at 1.9030

Stop is 1.9061

Target is 1.8900

Risk is 34 pips
Reward is 127 pips
Reward : Risk ratio is 3.7 to 1

For research purposes only.<!-- / message --><!-- controls -->

When I look at the trade concept TS #162A Sell USD/JPY at 117.38 it seems to have fundamental merit as a probable reversal point. Not only that, but the reward : risk ratio is particularly good at 9.9 : 1, because of the accuracy possible when the price bounced off a resistance level for the third time.

My studies of fundamentals of late, and news announcement trading, however, made me doubt the trade concept, thinking that somehow the nonfarm payrolls data undermined the validity of the trade. This was obviously an error, as the USD/JPY performed exactly as expected, proceeding directly to the target of 115.90. This is an example of an unwarranted doubt influencing a trader after a valid analysis has uncovered a good trade opportunity.

We started off working exclusively with technical analysis. Recently we have added news announcement analysis. We are still integrating these two models with each other . When they agree, a trade concept is particularly strong, but when they appear to disagree, then a priority may need to be established. Rigorous analysis of U.S. non-farm payrolls data releases indicates unreliable and erratic market moves. Last Friday was a perfect case in point.

___________________________________________

Previous trade signals:

Exit TS #162A Sell USD/JPY at 117.38 at market price approximately 117.10 to 117.30

Since the inception of this trade, the lowest price reached has been 117.10. The market direction favors a mild upwards momentum on this pair at this time. If the U.S. non-farm payrolls report had been unfavorable for the USD, then this trade would have borne fruit, but it wasn't - the report was interpreted as favorable for the USD.

__________________________________________________ _________

Previous trade signal:

The price of USD/JPY rose to 117.46 during the night, which would not have triggered our stop if the stop had been adjusted properly. It then fell 57 pips to 116.89, which would have been an excellent interim exit price. For those that were stopped out, or who took profit at 116.89, a re-entry opportunity presented itself when the price rose again to 117.38 the third time.

Thursday, August 31 12:00 ET

TS #162A Sell USD/JPY at 117.38

Stop is 117.51
Target is 115.90
Risk is 16 pips
Reward is 158 pips
Reward : Risk Ratio is 9.9 to 1

For research purposes only.

Monday, September 4 at 9:45 ET

The trade concept TS#165 Sell GBP/USD at 1.9030 failed. This was an attempt to jump in middeway in a downwards trend supposedly set in motion by Friday's US nonfarm payrolls report. However, no such downwards trend may exist. According to our meta-analysis, we favor the view that we are in an upwards trend. At the moment, the situation is ambiguous. This is an example of trying to capitalise on an announcement triggered strong trend, mid-way during the trend (at a supposed bounce point) with an announcement that doesn't generally produce strong, reliable trends - obviously an error.

Our trades shorting GBP/JPY ( TS #161D Re-enter short GBP/JPY at 223.55 ), and EUR/JPY are both progressing well, while our trade shorting EUR/CAD is marking time.

As predicted, our last CAD/JPY short trade was shorting a corrective wave, not the beginning of a new trend, and it did reverse and go one step higher after we recommended exiting the trade for a 70 pip profit. It reached a new high on Thursday August 31 at 17:30 ET, and has been descending since then, by about 150 pips.

Hi itme, I've been following your trade shorting the EUR/CAD for about 7 days now and everytime it seems like it's heading towards the target, it just turns right back around. Do you have any thoughts on when it's finally going to committ and stop with the mind games?

As predicted, EUR/CAD bounced substantially after descending to 1.4100 from 1.4275. It should now proceed downwards again towards our targets.

_____________________________________________

Previous trade signals and comments:

Analysis of TS #163 Sell EUR/CAD at 1.4249 <hr style="color: rgb(209, 209, 225);" size="1"> Thursday, August 31 12:15 ET

EUR/CAD rose one more time than expected to 1.4275 this morning, passing our stop by 9 pips. However, our stop adjusting procedure would have moved the stop up to 142.78, so the trade would have survived by 3 pips - a close call.

The fact that EUR/CAD rose to 1.4275 could have been predicted by our system, if we had added on a test that we had neglected to perform. We shall be more careful in the future, and perform this important test on the one day chart .

EUR/CAD then dropped 135 pips quickly to 1.4140. It will probably bounce substantially before continuing towards the prescribed targets.
__________________________________________________ __

Wednesday August 30 20:15 ET

TS #163 Sell EUR/CAD at 1.4249

Stop is 1.4266
Target #1 is 1.4070
Target #2 is 1.3950
Risk is 27 pips
Reward is 169 / 289 pips
Reward : Risk ratio is 6.2 / 10.7 to 1

For research purposes only