2009.09.10 DRAIN THE BANKS - LIKE A RAT

free & uncensored discussion arena for TheRumpledOne

Moderator: moderators

frang0nve
rank: 150+ posts
rank: 150+ posts
Posts: 198
Joined: Thu Apr 09, 2009 7:57 pm
Reputation: 0
Gender: Male

Postby frang0nve » Mon Apr 12, 2010 12:59 pm

Hello TRO:

I have a question for the Green Rat Master Trader:

here is the context:

Image

EUR/USD
Weekly candle Green: Green Rats Territory.
Price within 20 pips above the daily low: Green Rats Opportunity.

In the enclosed 5 minutes chart:

Green candle 1 closes but as hourly candle is red I don't go long at level C in candle 2.
Green candle 2 closes. And a new hourly candle begins

As candle 3 breaks the levels C and B the hourly candle is green. Should a green rat trader go long? At which level?

Or should we wait until candle 3 closes to go long when candle 4 breaks level A?

Where would you go long?

I opened the position at level A and could grab 3 pips.

Cheers

Francisco

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11396
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Mon Apr 12, 2010 2:04 pm

Image

Don't let the rat beat you.

"Unless you experience the unpleasant symptoms of being wrong, your brain will never revise its models. Before your neurons can succeed, they must repeatedly fail. There are no shortcuts for this painstaking process."

Pg 54 - HOW WE DECIDE


"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat."

Pg 64 - HOW WE DECIDE


"Think about the stock market, which is a classic example of a "random walk," since the past movement of any particular stock cannot be used to predict its future movement. The inherent randomness of the market was first proposed by the economist Eugene Fama, in the early 1960's. Fama looked at decades of stock market data in order to prove that no amount of knowledge or rational analysis could help you figure out what would happen next. All of the esoteric tools used by investors to make sense of the market were pure nonsense. Wall Street was like a slot machine."

Pg 67 - HOW WE DECIDE


TRADING IS SIMPLE:

* Price either goes up or down.
* No one knows what will happen next.
* Keep losses small and let winners run.
* POSITION SIZE = RISK / STOP LOSS
* The reason you entered has no bearing on the outcome of your trade.
* You can control the size of your loss (skill) but you can't control the size of your win (luck).
* You need to know when to pick up your chips and cash them in.


GREEN RAT REVERSAL - LONG ENTRY CRITERIA: 1) RED CANDLE CLOSES 2) GREEN CANDLE CLOSES 3) PRICE TOUCHES HIGH OF PREVIOUS GREEN CANDLE - ENTER LONG. STOP LOSS IS ALWAYS 10 PIPS.


RED RAT REVERSAL - SHORT ENTRY CRITERIA: 1) GREEN CANDLE CLOSES 2) RED CANDLE CLOSES 3) PRICE TOUCHES LOW OF PREVIOUS RED CANDLE - ENTER SHORT. STOP LOSS IS ALWAYS 10 PIPS.


Price within 20 pips of the daily low (ClLo < 20) or daily high (HiCl < 20 ) - that is OPPORTUNITY
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

Please do NOT PM me with trading or coding questions, post them in a thread.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11396
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Mon Apr 12, 2010 2:31 pm

Image

RESULTS.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

User avatar
flinux
rank: 150+ posts
rank: 150+ posts
Posts: 219
Joined: Wed May 27, 2009 9:52 pm
Reputation: 0
Gender: Male
Contact:

Postby flinux » Mon Apr 12, 2010 4:52 pm

1.53988 isn't within 20 pips of the daily low, so buy at that price (in this case) is still correct ?
So faith, hope, love remain, these three; but the greatest of these is love. - 1 Corinthians 13:13

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11396
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Tue Apr 13, 2010 12:08 pm

Image

Price within 20 pips of the daily low (ClLo < 20) or daily high (HiCl < 20 ) - that is OPPORTUNITY
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
blubbb
rank: 150+ posts
rank: 150+ posts
Posts: 219
Joined: Mon Sep 29, 2008 8:07 pm
Reputation: 0
Location: Europe
Gender: Male

Postby blubbb » Tue Apr 13, 2010 12:36 pm

TheRumpledOne wrote:"Think about the stock market, which is a classic example of a "random walk," since the past movement of any particular stock cannot be used to predict its future movement."


I still don't believe the market is a random walk, at least not always. If this was true, everyone's equity curve would be a random walk, too...

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11396
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Tue Apr 13, 2010 1:35 pm

Image

RESULTS.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11396
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Tue Apr 13, 2010 1:38 pm

flinux wrote:1.53988 isn't within 20 pips of the daily low, so buy at that price (in this case) is still correct ?



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

GREEN RAT REVERSAL - LONG ENTRY CRITERIA: 1) RED CANDLE CLOSES 2) GREEN CANDLE CLOSES 3) PRICE TOUCHES HIGH OF PREVIOUS GREEN CANDLE - ENTER LONG. STOP LOSS IS ALWAYS 10 PIPS.

For the trade in question, the best entry would have been within 20 pips of the low. The GREEN RAT REVERSAL is "always" a possible entry.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 11396
Joined: Sun May 14, 2006 9:31 pm
Reputation: 45
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Tue Apr 13, 2010 1:41 pm

blubbb wrote:
TheRumpledOne wrote:"Think about the stock market, which is a classic example of a "random walk," since the past movement of any particular stock cannot be used to predict its future movement."


I still don't believe the market is a random walk, at least not always. If this was true, everyone's equity curve would be a random walk, too...


I do not believe you can infer or deduce that.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



Please do NOT PM me with trading or coding questions, post them in a thread.

User avatar
blubbb
rank: 150+ posts
rank: 150+ posts
Posts: 219
Joined: Mon Sep 29, 2008 8:07 pm
Reputation: 0
Location: Europe
Gender: Male

Postby blubbb » Tue Apr 13, 2010 2:51 pm

Hmmmm. I don't know, but when the market is 100% random walk then it is also a random walk between the time I enter a trade and the time I exit it. Example for a long trade:
equity = equity_before_the_trade + (price_current - price_enter) * lotsize
+ - * are all linear operations, so the way equity moves is proportional to market movement (while in a trade).

(I know I am a Yalie *g*)

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “TheRumpledOne”