2009.09.10 DRAIN THE BANKS - LIKE A RAT

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TheRumpledOne
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Postby TheRumpledOne » Tue Oct 05, 2010 1:10 pm

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"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."

P64 HOW WE DECIDE (italics added)

=============================================

"Now, 2 patterns of market behavior happen on a regular basis:

1) the price breaks to new high's (or low's)

2) the price reverses from new high's (or low's)

They happen regardless of time frame (with the obvious limitations explained above)

They are phenomena that can be exploited without the fear if found out by others, that they might cease to exist." - H. Rearden

=============================================

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

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TheRumpledOne
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Postby TheRumpledOne » Tue Oct 05, 2010 1:40 pm

Image


=============================================

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

=============================================

"The technique is so simple that just several lessons (or a few pages of explanations) cover it all. Now what? Now the student has to practice, practice and practice again to understand what he had been taught. The teacher DOES know much more than the student, but his understanding can't be "passed", "transferred" or taught in any way -- not even by reading books."
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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trueblueTEX
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Postby trueblueTEX » Tue Oct 05, 2010 1:45 pm

Dang it, I panicked and only got 2.8 pips!!

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Postby tmanbone » Tue Oct 05, 2010 2:07 pm

Image

Couldn't get in with limit order.
"The simplicity of the markets is it's greatest disguise"

T

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Postby noushina » Tue Oct 05, 2010 3:25 pm

trueblueTEX wrote:Dang it, I panicked and only got 2.8 pips!!
Much better than MINUS ten, hey? \:D/

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trueblueTEX
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Postby trueblueTEX » Tue Oct 05, 2010 3:49 pm

Yea,

however, I then proceeded to lose 11.3, gain 5.6, and lose 3.6.

Right now, I'm stalking some more pips.

We'll see :-)

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Postby tfg » Tue Oct 05, 2010 4:12 pm

TheRumpledOne wrote:Image

Avery,

You said "The important part is to enter WITHIN 20 pips of the daily low". For this trade, you entered as a green at daily high, not low.

Clearly, something beyond your standard green RAT entry rules suggested to you that uc will likely (not guaranteed) break to a new high, not reverse from the new height.

In this case, what made you think uc would break to the new height?


=============================================

"Now, 2 patterns of market behavior happen on a regular basis:

1) the price breaks to new high's (or low's)

2) the price reverses from new high's (or low's)

They happen regardless of time frame (with the obvious limitations explained above)

They are phenomena that can be exploited without the fear if found out by others, that they might cease to exist." - H. Rearden

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

=============================================

"The technique is so simple that just several lessons (or a few pages of explanations) cover it all. Now what? Now the student has to practice, practice and practice again to understand what he had been taught. The teacher DOES know much more than the student, but his understanding can't be "passed", "transferred" or taught in any way -- not even by reading books."


Avery,

You said "The important part is to enter WITHIN 20 pips of the daily low". For this trade, you entered as a green at daily high, not low.

Clearly, something beyond your standard green RAT entry rules suggested to you that uc will likely (not guaranteed) break to a new high, not reverse from the new height.

In this case, what made you think uc would break to the new height?
Last edited by tfg on Tue Oct 05, 2010 8:38 pm, edited 1 time in total.

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trueblueTEX
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Postby trueblueTEX » Tue Oct 05, 2010 4:19 pm

+ 6.2, so I'm net -0.3 for the day
wheew!

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Postby tmanbone » Tue Oct 05, 2010 8:21 pm

ncase wrote:
The_Snowman wrote:[font=Comic Sans MS]Absolutely, you need to install the Daily Pivot Points and Mid Points, see the charts I posted today, these are TRO modified indicators, they display real good and price will react at those levels due to the amount of traders that use them[/font]


Thank you snowman. I saw that in your screenprint later in the thread. By the way, I wouldn't be mad if you or tmanbone posted the name of the Daily Pivots and Mid points indicator(s) :) . Otherwise I'll just search through my batches for something obvious.

Neville


Search here:

http://kreslik.com/forums/viewtopic.php?p=37440#37440
"The simplicity of the markets is it's greatest disguise"



T

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TheRumpledOne
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Postby TheRumpledOne » Tue Oct 05, 2010 11:50 pm

tfg wrote:
TheRumpledOne wrote:Image

Avery,

You said "The important part is to enter WITHIN 20 pips of the daily low". For this trade, you entered as a green at daily high, not low.

Clearly, something beyond your standard green RAT entry rules suggested to you that uc will likely (not guaranteed) break to a new high, not reverse from the new height.

In this case, what made you think uc would break to the new height?


=============================================

"Now, 2 patterns of market behavior happen on a regular basis:

1) the price breaks to new high's (or low's)

2) the price reverses from new high's (or low's)

They happen regardless of time frame (with the obvious limitations explained above)

They are phenomena that can be exploited without the fear if found out by others, that they might cease to exist." - H. Rearden

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

=============================================

"The technique is so simple that just several lessons (or a few pages of explanations) cover it all. Now what? Now the student has to practice, practice and practice again to understand what he had been taught. The teacher DOES know much more than the student, but his understanding can't be "passed", "transferred" or taught in any way -- not even by reading books."


Avery,

You said "The important part is to enter WITHIN 20 pips of the daily low". For this trade, you entered as a green at daily high, not low.

Clearly, something beyond your standard green RAT entry rules suggested to you that uc will likely (not guaranteed) break to a new high, not reverse from the new height.

In this case, what made you think uc would break to the new height?


I didn't enter at the daily high. My entry was back in the green rat zone.

The RAT_PLOT indicator shows ALL of the rat reversal entries, not just the ones in the zone.


Let's clear things up:

1) To trade like a RAT is to ALWAYS trade in ONE DIRECTION - either LONG or SHORT. Once you pick a "team", you can't switch.

2) The "within 20 pips of the daily high/low" is the BEST possible entry to get the maximum run BUT the RAT REVERSAL entry works ANYWHERE on the chart.


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.
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.


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