Hi, Serulink and Ziman389

We have not heard from you on this thread for a few days. Like what Ziman398 says, you should keep your predictions alive here, and I feel you should continue with your daily predictions using Aget. I, for one, appreciate the fact that it was you who initiated this thread, and your focus was more on short-term trading (using charts less than D1) and using Advanced Get proprietary technical tools to arrive at your trading decisions.

I am here for an interim period to fill the vacuum left by you these past few days. Be too happy to pass back to you the Aget predictions to do.

Regards
Kenneth

NOTIFICATION:

Later on today (Sat in Malaysia) – if not, then Sun, I shall be posting an article on HOW TO MAXIMIZE OUR PIP PROFITS in conjunction with the use of Advanced Get Elliott Wave analysis, and what will be our Entry and Exit strategies to achieve this objective, - (a) keep our losses within reasonable pip levels as and when the market allows and (b) a Reward/Risk Ratio of 2 & above.

I am already using these strategies and like to share with viewers of this thread. As you may now be familiar with my trading personality image, I am a no-nonsense trader. Do what I say, and say what I do – these are good principles of life.

And it is ALL FREE in this thread – no strings attached as I am not a business man and I do not have any personal blogs - just do not have that type of time.

So, TUNE IN to this thread regularly as there will also be constant market updates and EW charts.

Regards - Kenneth

Aritcle 1: Topic: How to Maximize PIPS Profitability

Do you know there is a distinction between Maximizing PIPS profitability and DOLLAR profitability?
They are two different things.

a) To maximize Dollar Profits, you can make 10 pips per trade, multiply your trade order 3x, 5x, 6x, 10x per single order to give you a total of 30/50/60/100 pips profit per order and you multiply this by US$10 per pip for a standard account and you get USD 300/500/600/1000 profit per trade. Wow, that is great.

b) To maximize PIPS profitability, I want to make 100/200/250 PIPS per order of just 1 lot (for a standard account) and multiply it by US$10, making a gain of USD1000/2000/2500 per trade. Wow, can it be done, I ask? Judge for yourself as you continue to read and grasp the ideas/concepts/thinking behind the strategy.


For (a), day traders normally use very short term charts of 5/15/30 mins to time their entries and exits, and can conclude their trade within minutes or slightly longer. Timing must be precise, a proficient tick analyst and closing orders must be executed quickly. Sorry, I fail in this category. If someone can teach me, I shall be too happy to learn.

For (b), to make 100-300 pips per 1 lot order, I have to wait much, much longer – the whole day. I am still classified as a day trader as I close my position within the same day. Here, I use the DAILY eod chart to assist me. I belong to this group of traders.

Our focus then is to find a trading system that uses EOD data and Daily charts, and help us to analyze the chart patterns to find whether a STRONG trading opportunity exists.

To contain the posting within reasonable length, I am keeping my articles short and precise. Article 2 Finding “that” trading system will be continued on next posting (which is on its way later today).

Article 2 – Topic: Finding the RIGHT trading system/software

My task then is to find the “right” trading system to achieve my objective of maximizing PIPS profitability. I am a “text-book” man. Therefore I want a Trading System that is based on “basic principles of technical analysis” which I am familiar with.

The trading system must be able to perform the following basic functions:

1.Able to identify (a) BULLISH/BEARISH TRENDS and (b) CONSOLIDATIONS and/or CORRECTIONS (retracements), so that I can decide whether to go LONG/SHORT or STAY ASIDE.
2.Able to identify the START and END of the PRIMARY trend (ie the major trend) as NEAR as possible. I shall be expecting too much if I want 100% accuracy.
3.I feel comfortable about using it based on my level of knowledge and skill, as I do not want to use something I do not even understand.
4.Proven over periods of decades – long, long enough that I know it has gone through the grinding and improvements process.
5.A lot of books and articles on that theory that I can read.

THE ANSWER FOR ME

I am a TREND follower and ELLIOTT WAVE system is a trending system. There are a lot of trending methods which can be found in technical analysis books. Somehow I fell in love with Elliott Wave Principles of market analysis.

Personally, I have used 4 EW softwares viz: (1) Advanced Get, (2) MTPredictor, (3) Elwave, (4) Wave Analyzer – how crazy one can be and have spent a bit of money on these softwares. Today I am mainly using Advanced Get for stock market and forex and Elwave for stock market. The others I have faced problems in installing old versions of these softwares into my laptop that has a Windows Vista. For Elwave, I am facing forex data conversion problem.

I will not call myself an EW expert, but I believe I have sufficient experience and knowledge of these softwares to capitalize on their strengths.

Sorry for the sidetrack. It is for the purpose of briefing you my background.

Two popular rules in a trending system:

1.FOLLOW THE TREND – whether up or down;
2.DO NOT BUCK THE TREND.

Rule 1: Playing the trend is the name of the game to make good money. Follow the trend means: a) when the market is BULLISH – go LONG and b) when the market is BEARISH – do your SHORTS. Sounds simple. No, it is much more complex.

Question: When do I place my ENTRY order?

a) In a BULLISH trend (uptrend), the normal advice is “buy on dips” ie on retracement. WRONG. Q: how far down will you start to buy. They say look at the Fibonacci Retracement Ratios. Important ratios are 38.2, 50, 61.8%. Any one of these ratios can be the answer. So, you are taking a risk when you enter at 50%, as it might go down to 61.8%. If you look for the ideal 61.8%, prices may stop somewhere above it. IT IS A REAL HEADACHE, figuring this out – isn't it?

ANSWER IN ELLIOTT WAVE: My experience is this: When prices are retracing – THE CORRECTIVE phase is IN PROGRESS. YOU DONT DO ANYTHING. WAIT and WAIT and WAIT UNTIL THE DOWN WAVE HAS COMPLETED.

2 conditions to be fulfilled: The beauty of Advanced Get is IT NUMBERS THE WAVES as they are completed or in formation. Condition (1): Wait for Aget to display the DOWN WAVE NUMBER/LABEL, and (2) in addition, WAIT FOR THE NEXT ONE OR TWO PRICE BARS TO GO UP – to confirm that the Downward Corrective Wave is OVER, then you make your move to enter LONG.

Another normal advice given in a BULLISH market is: BUY WHEN PRICE FALL TO THE SUPPORT LOWER BOUNDARY OF A PRICE CHANNEL. WRONG AGAIN. How do you know price will not drop further?? Can you answer me?

So when the price drops to the lower boundary/trendline, my experience tells me to WAIT, WAIT and WAIT until the next one or two bars go up.

And finally in a BULL trend, Please DONT SELL/SHORT when the price reaches the upper boundary of the price channel. In Elliott Wave, WAVE 3 is the longest wave and therefore the most profitable. Wave 5 is also an uptrend wave.

LET THE MARKET RUN ITS FULL COURSE is what you commonly read in my postings.

This second article is getting a bit too lengthy Read Article 3 What to do - DO NOT BUCK THE TREND. It is on the way later today. Give me a break, guys.

Hope you enjoy reading so far.

Regards - Kenneth

Article 3: Topic – FOLLOW THE TREND – What to do in a Bear trend

My earlier posting Article 2 dealt with – how to handle a Bull trend – WHAT TO DO and WHAT NOT TO DO.

This posting will deal with a Bear trend.

1)DONT BUY/LONG in a Bear trend no matter how low it has gone (this applies both to stock markets and forex). You think prices are cheap and then they go lower and you say “ayah – made a mistake. If you are financially loaded and you are a long term investor like Buffet Warren & others, these cheap prices can be a bargain because they have the holding power. In forex, what are you holding the JPY for?? to go to Japan??
2)DONT BUY/LONG when prices drop to the lower boundary of a price channel. Remember you are in a falling market.
3)SELL/SHORT when prices reach the upper boundary of a price channel and turns down.
4)With ELLIOTT WAVE, you wait for completion of the CORRECTIVE phase and WAIT, WAIT and WAIT for the next bar to go down – then you SHORT. (You do not need to wait for 2/3 bars to go down before shorting. This is the difference in techniques used in a bull trend and in a bear trend – REMEMBER THIS.

And finally DO NOT BUCK THE TREND means what it says.

1)If you are in a BULL trend, DO NOT SELL SHORT.
2)If you are in a BEAR trend, DO NOT BUY LONG.

The advantage of using an EW software (like Advanced Get or Elwave) is: I know what PRIMARY/MAJOR TREND any currency pair is in. I know what WAVE NUMBER we are in – Wave 3, Wave 4 or Wave 5.

You will notice in Friday's EW charts, I have added a PRICE CHANNEL. This is an REGRESSION CHANNEL with 3 standard deviations. Those who studied statistics will understand the concept better. Most price movements will rise/fall within these limits. It is more statistically accurate than drawing conventional parallel lines connecting the highs and the lows.

The PRIMARY trend is most important – minor waves formations using 5/15/30 min charts are formations INSIDE a DAY BAR. Most of the predictions given in this forum are based on these minor wave formations.

My mind is a bit tired. Good that I have finished this part of the article. Tomorrow Sun, probably in the afternoon/evening, I shall do the FINAL Part of ENTRY and EXIT strategies to capture the most pips and give you some insight in the use of statistical calculations.

Spend a bit of time, reading again and again UNTIL the principles are embedded in your mind. We must have a STRONG THEORY. Tomorrow we shall be putting these 2 postings into practice.

Have a good day. Regards - Kenneth

Hi Kenneth,
I am a new trader in fx, previously have traded stocks.FX market is much more fluid , I like it,however there is a steep learning curve ahead of me I feel.At this time Í trade the trend and PA watching the screen pretty much all day long.I have also realized that the fx market has gotten much more volatile lately and no system is foolproof under such conditions.
I want to thank you for you service to the community, great job.
Please keep us posted as much as your time allows you.

Thank again,
best regards,
Daniel.

Article 4 (Final Part): Topic - Get the Most Pips Per Order of 1 lot (or 0.5 lot or 0.1 lot).P

PORTFOLIO OF CURRENCY PAIRS:

Two questions I like to ask readers:

Have you asked yourself: “Which currency pair/s can give you such PIPS targets from the time you enter a BUY order to the time you close your position FOR THE DAY before you go to sleep??”

Have you made a study of the PRICE HISTORY of such currency pairs? And what did you study – their High and Low of the day, the Daily Range, Net Change in Price, etc.? Most likely, you may have. Useful but not used in my strategy. My approach is different – I study (1) Open to High and (2) Open to Low, the Maximum figures, the Average and the Mode (the most common value).

My answer to the above 2 questions is YES, I KNOW the answers because I consciously made an effort to study and to know what are the parameters to consider in order to achieve such PIPs targets.

Your answer cannot be:: I DON'T KNOW/I AM NOT SURE. How to make the most pips when you don't even know where the opportunities are. Isn't that so?

Now, to give you the answers to the above 2 questions, I made a study of the price histories for my five favorite currency pairs ie (1) EURJPY, (2) EURUSD, (3) GBPUSD, (4) USDJPY and (5) USDCHF in respect of (a) Open to High and (b) Open to Low using DAILY EOD data. The study covers Jan 2001 to Jun 2009 (perhaps it is too long a period to use), and the answers are:-

Open to High Open to Low
EURJPY:
Average value: 1,45 0.78
Maximum 13.55 9.93 (in Oct 24 and 28, 2008 – looks an exceptional case)
8.85 7.15 More likely
Mode 0.90 0.22 (the most common value)

To convert to PIPs, the Maximum value of 8.85 is equal to 885 Pips.

Open to High Open to Low
EURUSD
Average 0.0074 0.0077
Maximum 0.0576 0.0965
Mode 0.0034 0.0019

To convert to PIPs, the Maximum value of 0.0576 is equal to 576 PIPs.

(NB: You should use Excel to do these statistical calculations using their in-built statistical functions for any currency pairs you are interested. You may want to use a shorter period of 5 years. I think in my case, 2001 and 2002 are too far back in time.)

Q: From such statistical tables, I use THE MAXIMUM VALUES as an indication whether my PIPS target of 100-300 pips is (a) reasonable and (b) achievable for any particular currency pair. They represent around 50% of the maximum values – not an unrealistic target. I do not go for too high target figures as you never know how high or how low it can go. I aim for reasonable and achievable values.

(I suggest you do a similar study using Excel. You can export the DAILY data from MT4 in csv file format, then use Excel to open the csv file. If you have any problem, post and ask for help. Unfortunately, I myself do not have the time to give all the details. My apologies.)

From your studies, as you browse through the Columns High-Open and Open-Low, you will observe these column values are very much higher than our targets. You need to create formulas for these columns.

These illustrations are intended to give you an idea that such PIPs targets are feasible – not something impossible to achieve.

General: So, you now know which are the currency pairs you should be interested to do trading and their PIPs targets possibilities whether it is (High-Open) or (Open-Low).

To continue ......

BASED ON Advanced Get EW charts and their WAVE NUMBERS, we have zoomed in (a) WHAT CURRENCY PAIR TO TRADE, (b) we know what are the most PIPS targets we can achieve for this currency pair, our next stage is to make a trade order.

ENTRY Strategy/Order:

Very likely, you will be able to conclude that my ENTRY point is at the OPENING QUOTE – whether to BUY LONG or SHORT SELL, depending on the PRIMARY trend of the currency pairs.

You will observe on many occasions in my postings I suggested alternatively you can ENTER as close as PIPS to OPEN is ZERO+/- a few pips.

You should have checked THE EW CHARTS FROM ADVANCED GET in my posting to ascertain the Wave Number and observe the rules to buy/sell/stay aside. Your task is made easier as I shall be posting the EW charts for any currency pairs that satisfy all the conditions mentioned in Article 3.

Applying the RULES IN BUYING/SELLING in TRENDING MARKETS

1)If market is BULLISH, BUY at Opening Quote;
2)If market is BEARISH, SELL at Opening Quote.

WAVE 3 and WAVE 5 will give us greater confidence to enter our trades, whilst we shall STAY ASIDE in WAVES 2 and 4.

Practical Difficulties in Entering at OPENING Quotes: When I speak of OPENING QUOTE, I refer to the quotes given when the forex market opens at 5.00 AM (Malaysian Time). The PACIFIC markets start at 5:00 AM; What will be the clock time in your time zone. 5:00 am is too early for me, as I normally wake up at 6:00 to 6:30 am. Assuming EURJPY can be short today, I would have missed the OPENING quote. So, what do I do? If say at 7:00 am, the quote is PIPS TO OPEN +/- a few pips, I will still enter my trade.

It is NOT advisable to enter if the PIPS TO OPEN are too high. Your PIPs target will accordingly be short-changed, meaning it has upset your Pips target. What then can I do? I shall wait for the PIPS TO OPEN get nearer to zero, then only I make my order. And if my time is running out as the market is drawing closer to closing time or Midnite (Malaysian time), forget your order There is always another day. The market will still be around, and who knows there may be a better currency pair to trade tomorrow.

To continue ....

PIPS Target: As you watch the PIPS TO OPEN goes up to say 80, and you are happy and excited with that target, you can go ahead and close your position BUT YOU ARE NOT MAXIMIZING your PIPs to OPEN figure.

To maximize, you should LET THE MARKET RUN ITS FULL COURSE. What does this mean and what am I suppose to do? Remember you are in an established PRIMARY TREND – whether up or down – whether it is WAVE 3 or WAVE 5.

To let the market run its full course means you HOLD ON TO YOUR POSITION until Wave 3 or Wave 5 completes its cycle. Technical Signals/Indicators from Advanced Get will warn you. You have now become a POSITION trader, holding your position for days or weeks. Do you think you can do that?

If NO, then you become a day trader (like me). Let the market run for the FULL DAY to work out its day's action. I close my position BEFORE I GO TO SLEEP that is BEFORE MIDNITE (MALAYSIAN TIME) – win or lose. It is just another trading day for me.

THE RISK FACTOR: The Rewards are high and so is the Risk if (a) your order entry is placed at a time when the PIPS TO OPEN is wide, (b) when the MINOR wave trend suddenly turned against your trade though the PRIMARY trend is still intact and c) on days when major economic announcements are to be made.

Case (a) can be prevented if we avoid placing our orders when the PIPS TO OPEN are too wide.

Case (b) is tricky. Read my postings #25 to #27 of my experience on Jul 9. The EURJPY went through a “price shock wave” that day which DISRUPTED its continuing PRIMARY DOWNTREND. The currency pair shot up breaking every resistance barrier on its way up. At one stage it was +200 pips. In normal circumstances, you would have STOP LOSS and I was shorting it.

I examined my Aget EW chart for EURJPY and was convinced the PRIMARY DOWNTREND was intact. I hang on (stubbornly ?) and later in the day I saw the EURJPY was losing its steam. When the Pips to Open was +25 pips, I quickly closed my SELL position and lost 25 pips that day. Was I lucky or Was it because I stick to a Elliott Wave Trending System that encourages Let the Market run its course for the day that saved my day. I have no answer for that.

On the following day ie Fri, the EURJPY RESUMED ITS DOWNWARD TREND. Was Advanced Get wrong in its Wave reading - No.

Did I make a mistake in entering trades that day when I knew that ANY MAJOR ECONOMIC ANNOUNCEMENTS on that day can cause a “price shock wave” that will destroy everything in its path. My answer is YES, I did make a mistake as on such occasions, we should STAY ASIDE. I set the rule NO TRADES ON DAYS WHEN MAJOR ECONOMIC ANNOUNCEMENTS ARE FORTHCOMING. I broke that rule and I have to bear its penalty. I was fortunate to reduce subsequently my loss. The Risk factor in forex market is high. Money Management, Risk Management, Order Management and the like are important. Read about them. They are not the focus of my article.

Keep our Risk/Reward ratio to: (ideally) 3:1 or 2:1 meaning for every 100 pips you lose, your winning should be at least 200 to 300 Pips gain.

This brings us to the subject of PROFIT TARGETS and STOP LOSS. (Never thought that this article can be so long, otherwise I may have shied away from it. Anyway, too happy to do all this writing.)

To continue .... I need to rest my mind. Thanks.

PROFIT TARGETS and STOP LOSS:

For myself personally, I do not place any Profit Targets or Stop Loss in my orders as I do it as and when the targets are nearing. The reasons for doing this are also mentioned in this forum by other members. You can do a Search and read about them.

BUT for many of you, you may want to do so. For example, if you were able to enter at PIPS TO ZERO, and your PIPs profitability target is 250 pips, then your Profit Target will be 250 minus ZERO = 250 pips from your entry price.

Another example: if you enter at PIPs to Open +15, then your Profit Target will be 250 minus 15 ie 235 pips from your entry price. You may want to round it up to 230 pips from your entry price.

STOP LOSS: I do not put STOP LOSS in my orders. I don't like brokers to know my stop loss level though it is intended to protect me against catastrophic loss. Remember, as a full-time trader, you should be watching the market for any unexpected change.

The theoretical Stop Loss will be around 100-150 pips using a Risk/Reward ratio of 3:1 or 2:1 to calculate. Again, it will be based from your entry order of Pips to Open+/- a few pips. For example, if your PIPs to Open entry was +/- 10 pips, your Stop Loss will then be entry quote plus or minus 100 to 150 pips.

Second reason why I do not put a Stop Loss of 100-150 pips in my order is that this can be triggered during sometime in the day. Remember we are a FULL-DAY trader when we use ELLIOTT WAVE trending system. For instance, if I know the PRIMARY TREND is UP, and during the morning to lunch sessions, it can drop by 100-150 points, I do not panic because the presence of a strong prevailing Primary Trend of Wave 3 will narrow the loss and the Uptrend will resume.

Worst Case Scenario: What happens if in the after-lunch and evening sessions, it does not improve, then cut your loss whether it is 100 pips or even 150 pips WITHOUT HESITATION. YOU MUST ALWAYS BE PREPARED FOR THE MAXIMUM RISK RATIO. Are you mentally and financially prepared for such financial risk? It is crucial you have sufficient capital ie risk capital to play an ongoing gam

As we are now coming to a Conclusion of this article, I shall let you know WHY (despite nothing is 100% foolproof or infallible – humans or systems) the probability of success is reasonably good when we use an established, proven ELLIOTT WAVE system (from Advanced Get or Elwave) to play the trending game.

To continue ....