2009.09.10 DRAIN THE BANKS - LIKE A RAT

[TheRumpledOne]

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The important part is to enter WITHIN 20 pips of the daily low. The RAT REVERSAL is only one entry method.

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PLEASE DO NOT PM ME WITH QUESTIONS ABOUT TRADING, INDICATORS, CODING, ETC... Post your questions in the forum. Thank you.

[pika]

Hi TRO,

If I remember correctly, you have mentioned before that we should:
(1) trade in the same direction (color) as the current H1 bar.
(2) trade only one color, i.e. be a green or red rat.

My question is whether we must follow condition (1) AND (2), or do we just follow (1) OR (2)?

[trueblueTEX]

I'm definitely not TRO but I'll throw out my understanding of this. If I've got it right, TRO's teaching well. If I've got it wrong, I'm learning poorly.

To be a rat is to ALWAYS trade ONLY either long or short.

Trading with the current H1 bar helps put the odds in your favor.

But trading with the H1 is a rule that can be broken.

To break the rule of ONLY trading either long or short is to be a Yale student.

[skivers]

Hi TRO,

If I remember correctly, you have mentioned before that we should:
(1) trade in the same direction (color) as the current H1 bar.
(2) trade only one color, i.e. be a green or red rat.

My question is whether we must follow condition (1) AND (2), or do we just follow (1) OR (2)?

I agree with Tex - yes trading with the hour candle can put odds it your favour.

But, if you look to your left and see a reversal taking place at about (say) half past the hour (dont be fussy here) and it is happening regularly - then take the trade.

[TheRumpledOne]

I'm definitely not TRO but I'll throw out my understanding of this. If I've got it right, TRO's teaching well. If I've got it wrong, I'm learning poorly.

To be a rat is to ALWAYS trade ONLY either long or short.

Trading with the current H1 bar helps put the odds in your favor.

But trading with the H1 is a rule that can be broken.

To break the rule of ONLY trading either long or short is to be a Yale student.

That is correct.

[trueblueTEX]

Woohoo!! I'm learning!

Now to the application thereof!

[pika]

Thank you all for answering my question. I also wish to seek your views or experience on whether rat reversal method can be used in longer timeframes like M15 or H1 charts. If yes, do we adjust the stop loss with more pip distance (e.g. based on ATR, 10pips for M5 will approximately translate to 15 pips for M15 and 30 pips for H1), with reduced lot size to keep a trade at the same 1-2% risk level? Entry, however, should still be within 20 pips of prevailing daily high/low since there is only one and the same high/low for the day in every timeframe. This is my current thinking. If you think differently, I would like to learn from you too.

[MAXiMUS_]

Hi TRO,

I saw your post on z-line topic, did you try these entries?

[TheRumpledOne]

Thank you all for answering my question. I also wish to seek your views or experience on whether rat reversal method can be used in longer timeframes like M15 or H1 charts. If yes, do we adjust the stop loss with more pip distance (e.g. based on ATR, 10pips for M5 will approximately translate to 15 pips for M15 and 30 pips for H1), with reduced lot size to keep a trade at the same 1-2% risk level? Entry, however, should still be within 20 pips of prevailing daily high/low since there is only one and the same high/low for the day in every timeframe. This is my current thinking. If you think differently, I would like to learn from you too.

1) Price within 20 pips of the daily low - that is OPPORTUNITY

2) Red candle closes

3) Green candle closes - note the high price of the green candle.

4) Enter long at the green candle's high price

5) STOP LOSS IS 10 PIPS

6) Take whatever profit you can.

7) If the rules do not mention it, then it is of no concern.


Focus on #7

[TheRumpledOne]

Hi TRO,

I saw your post on z-line topic, did you try these entries?

I trade like a RAT.