$EURUSD Observing, not participating...

I published the 4th article of “Faces of Waves Illustrated”, my online free textbook of the trading strategy based on Elliott wave principle. This is my first draft, and I have already found lots places to improve my writing, but I will hold any revision work until I finish writing to the last article on this series because to finish writing the first draft requires passion and momentum.

Anyhow, I traded 3 times in January. 0.25% x 0.26% x 7.91% = 8.5% (1.0025 x 1.0026 x 1.0791 – 1.00 = 0.0846… = 8.5%) return. No loss cut. Very efficient. I like it. Thus my January trade ended happily.

What I did not anticipate well is EURUSD sank another 350pips after I had exited the market. Maybe I was a bit too selective. But this does not change my mid & long term outlook on EURUSD.

This is EURUSD 180min chart:


I completely existed from my short position on January 19 at 1.4200. It was when the price was between the blue underlined 2 and 3. At that time, what we see now as blue underlined 2 seemed to be 4th wave. But EURUSD had some more way to go down, so I corrected my Elliott wave count. The blue underline 4 wave with the current count may have been a good re-entry point, and this could have brought me another 100pips at least. But I do not regret too much about it, because the blue underlined 5 wave did not descend as smoothly as Wave 3. This kind of sluggish move (ending diagonal) often confuses traders, and it’s just exhaust my energy. It is always a good idea to trade only when risk and reward are defined clearly. One more rule is to trade only when one can anticipate a smooth ride if you care about your mental health!

By Elliott principle and the current wave count, I am anticipating Euro to rebound in the next week towards 1.4650 (purple .II).  Wave 2 is often a zigzag up. That is a (impulse 5 wave up)- b(corrective 3 wave down), and c(impulse 5 wave up). But it could be flat that is a(3)-b(3)-c(5). Or complex (W-X-Y…). So I will pass the first two (i.e. A and B) waves and plan to long EURUSD on Wave C if we start to see purple .II.

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The plan in the article may get rejected any time, so please check out my tweets on Twitter.

Current risk exposure:

Rational Move always use stop loss orders, and this is the worse case potential loss over the capital for the currently open positions. This is unrealized loss is less or equal to the risk exposure.

Capital growth

From recent 100 trades (%) The growth right before the 1st trade is set to 0%.
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From recent 100 trades (%)
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Total returns

Since inception
(Aug 10, 2009)
Year-to-date Quarter-to-date
0% 0% 0%
This is a normalized value: the return on each trade is normalized against the capital just before the trade execution. This way, it is eliminating the effect by the capital change from deposits and withdrawals. The calculation thus reflects the trading performance of each trade. The value does not contain unrealized profits and losses. RM's trading strategy never risks more than 5% of the present capital. Not including subtraction by tax.

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