So far my experience with M5 chart is the choice of colour doesn't really matter as long as I enter a trade within 20 pips from the day's high or low in the opposite direction consistently - eventually there will be a net gain. This is why I'd like to understand the context of TRO's statement regarding the choce of only 1 colour.ajaymein wrote:Hey pika...why don't you try multiple colors for different pairs for a week and see how you do. That will give you a true answer that you will actually experience.pika wrote:skivers wrote:pika wrote:TheRumpledOne wrote:A sixth sense do NOT necessarily make you a YALE Student.
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.
On point (1), do you mean always trade in one direction for ALL pairs? Can I choose to be always green for some pairs and always red for others, and I won't switch the colour of each pair after I have decided on their colours? You will probably quote the experiment where the rat beat Yale students by committng to one direction, but I still cannot fully understand this.
Here's my take on it.
The market is random - It can go up - It can go down.
If you choose to go long AND short - YOU are being random.
Or you can choose to be consistent and trade ONE DIRECTION.
Now you have a true 50/50 chance of being right - All you need now is a little edge to tip that balance.
Thank you for your response. I can fully understand the point you are making. This is where I do not differ from the point that once a colour has been selected, I do not switch it. The question I am asking is whether I can choose different colours for different pairs and stick to them. The rules do not mention this, so does it mean this approach is of no concern and I can do it without compromising the edge?
I believe this 'one direction' rule may apply to trades based on longer time frames like H1 and above, but not necessary for short time frames like M5. Think about it, if we trade M5 chart and only need 20 pips to meet 1-3% for the day, the chance of achieving this from prices fluctuating from the daily high or low is pretty high isn't it? For longer time frames, there will be less opportunity to do likewise since there are fewer bars to test the daily high or low, hence sticking to one colour makes sense. From a scale perspective, trading M5 chart over a day = trading H1 chart over 12 days. OK, I may get slammed again for being Yale like, but I don't think it matters if I can gain some rat wisdom in exchange.