2009.09.10 DRAIN THE BANKS - LIKE A RAT

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pika
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Postby pika » Wed Oct 06, 2010 2:06 pm

TheRumpledOne wrote:
pika wrote:Hi TRO,

I've posted the questions below in another thread (Data Mining) but since we are on this page which is more relevant perhaps I'll ask the same questions again. Hope you can advice. Thank you.

"I am not exactly sure why we can't be a green and red rat at the same time. Since the daily high and daily low will not happen at the same time, that means we can apply the same method to both ends of the daily candle right?

Is there not a time when we should change the color of our rat, such as when we see a trend reversal in the longer time frame (i.e. weekly, monthly)?"



"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)

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

You sound like a YALE STUDENT.


Thanks TRO, for bringing this experiment up again. Now I am not trying to predict the market like a Yale student. I recognise the importance to follow longer timeframe directional bias, but if I am a green rat, does that mean I go green on EVERY pair? e.g. ok to go green on EURUSD as the recent longer timeframe is up, but how about USDCHF where its longer timeframe is down? Won't it be right to be a red rat on USDCHF while being a green rat on EURUSD? Or do I not trade USDCHF (or any pair that has the same longer time directional bias) at all since it is more favourable to a red rat? Unless I'm wrong about following the longer time directional bias...

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tmanbone
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Postby tmanbone » Wed Oct 06, 2010 2:57 pm

The rat is not about trend, the big picture, or directional bias. Your time is wasted thinking about it. It's about buying/selling within 20 pips of the daily low/high in a repetitive manner, daily. You'll make little progress, if any at first, on the days not going your way; by repeating the exercise you'll learn things that haven't been put in words or discription. In turn by steadily pulling the trigger, one direction repeatedly, you'll beat the thinker.
Last edited by tmanbone on Wed Oct 06, 2010 4:47 pm, edited 2 times in total.
"The simplicity of the markets is it's greatest disguise"

T

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tmanbone
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Postby tmanbone » Wed Oct 06, 2010 4:41 pm

Wait on range.

Image

Take trade.

Image
"The simplicity of the markets is it's greatest disguise"



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trueblueTEX
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Postby trueblueTEX » Wed Oct 06, 2010 4:49 pm

Are you saying that you put in an order at the middle sweet spot where the lower gray bar is?

If so, did you put the order in during the last black candle?

Thanks, Tman

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tmanbone
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Postby tmanbone » Wed Oct 06, 2010 7:16 pm

Look at how the spread can keep you out of the trade, if after a red candle, green candle, green candle high entry, if the asking price doesn't pull back enough to let you in the trade. Note that TRO repeatedly mentions the important thing is to get into the trade in the rat zone. Pay close attention to the range. Note how today's price went 10 pips beyond average (50) range. I personally waited on the range to max out for today's trade. IMO not every red candle, green candle, green candle high should be traded. Also know that I'm a hobbiest. I like the challenge of figuring things out.

Study the daily, below, with the rat zone plotted. This chart tells me that the majority of days, green and red, are winners, if I wait on the range. Also note the red 5ema on my chart. Remember the flying buddhas. The flying buddha shed a new light on the way I think about things.

Image
"The simplicity of the markets is it's greatest disguise"



T

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trueblueTEX
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Postby trueblueTEX » Wed Oct 06, 2010 7:46 pm

Hey Tman,

I'm not doubting the viability of this method, I'm just trying to learn how I need to hone my skill to carry out the method profitably.

2 of my problems are these:

1) getting trounced while in that 20 pip bottom; for example if you bought in the black candle after the white candle (it would have been white when you bought) that comes immediately after the 3 semaphore (red/yellow box) that buy (which is in the top half of the 20 pip range) would have been stopped out BEFORE the nice sweep up of white candles.

2) well, maybe that's the only problem :-) So then, you would NOT trade if price were in the Rat Zone but the range was only about half what it's been over the last couple of weeks? Is that the kind of way you use range?

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tmanbone
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Postby tmanbone » Wed Oct 06, 2010 8:12 pm

Yes you are correct, if you'd bought after the first white candle high, you'd have been stopped. TRO talked about V bottoms and rounded bottoms. Maybe I need to study this more. About your range question..... I would be very careful entering before the daily average range was met, particularly on a down day. Up days I'm clueless. Still figuring it out. Keep a close eye on range tomorrow. I believe it's key.
"The simplicity of the markets is it's greatest disguise"



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trueblueTEX
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Postby trueblueTEX » Wed Oct 06, 2010 8:16 pm

TRO

Feel free to jump into mine and tmanbone's discussion with

LOTS of pointers/tips, etc

:-)

TEX

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Postby PINKPANTHER5 » Wed Oct 06, 2010 8:16 pm

Tmanbone....


Can you share your template?? Its awsome! :D














tmanbone wrote:Wait on range.

Image

Take trade.

Image
:D :D

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tmanbone
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Postby tmanbone » Wed Oct 06, 2010 8:41 pm

5ema
smSpaced_00Lines
SweetSpotsGold_TRO_MODIFIED_VERSION
b_clock_TRO_MODIFIED_VERSION
3_Level_ZZ_Semafor_TRO_MODIFIED_VERSION
TRO_RANGE_GAUGE
TRO2010_DO_NOT_TRADE_ZONE
TRO_RAT_ZONE

DO_NOT_TRADE_ZONE with a BOLD font and color tweek.
"The simplicity of the markets is it's greatest disguise"



T

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