2009.09.10 DRAIN THE BANKS - LIKE A RAT

[TheRumpledOne]

Hello,

I was going to post a similar reply to tfg.

I was trying to figure out how do you know what you have the low and the high of the day. I tried to back test this and about half of the time I get it wrong. I don't seem to enter the trade within 20 pips of the hi/lo.

THANKS!

While the day is still in progress, you only know the CURRENT high/low of the day. By the end of the day, the current high and low will the the Daily high and low.

[TheRumpledOne]

1. How do you be sure (or at least be confident) enough that the low (or hight) AT A TIME is the daily low (or high) so that you enter the RAT trade?

2. How to you come up with a 10 pips stop? Do you have any stats (or anything) to support that?

Thanks for your enlightenment.

1) See previous post

2) STOP LOSS is a function of RISK and POSITION SIZE. I choose the amount I want to risk and my position size and that gives me my stop loss.

You decide on any 2 of the three and compute the third.

[jamesmean]

Hello,

I was going to post a similar reply to tfg.

I was trying to figure out how do you know what you have the low and the high of the day. I tried to back test this and about half of the time I get it wrong. I don't seem to enter the trade within 20 pips of the hi/lo.

THANKS!

While the day is still in progress, you only know the CURRENT high/low of the day. By the end of the day, the current high and low will the the Daily high and low.

I apologize in advance if you have answered this question 100 times. I just want to make sure I understand it correctly.

You keep on saying that you should enter within 20 pips of the Daily high and low. However, you do not know what the Daily high and low is until the day is over. So does that mean you enter 20 pips within the previous day's high and low? If that's the case, then that makes perfect sense to me.

Thanks again for your quick responses to everyone's questions.

[hopearisen]

Hi TRO, the chart with the indicator is attached below. thanks

[gmat]

James: "You keep on saying that you should enter within 20 pips of the Daily high and low. However, you do not know what the Daily high and low is until the day is over..."

James you are looking for a reversal, at the lows of the current day. It might not end up being the low of that day. So it may turn out to be a loser. But the risk is defined and minimal. You may be risking 10 pips for a potential gain of 100+++.

[tfg]

Avery, in other words, everytime we open a green RAT trade, we are betting 10 pips on that the current low is ( or will become) the daily low and the price will reverse?

Am I correct?

Hello,

I was going to post a similar reply to tfg.

I was trying to figure out how do you know what you have the low and the high of the day. I tried to back test this and about half of the time I get it wrong. I don't seem to enter the trade within 20 pips of the hi/lo.

THANKS!

While the day is still in progress, you only know the CURRENT high/low of the day. By the end of the day, the current high and low will the the Daily high and low.

[TheRumpledOne]

You are NOT betting.

You are risking 10 pips.

If the trade moves your way, you stand to gain.

Eventually, the low will be the daily low.

[ZsApprentice]

Not that I am any expert by any means.. and this whole "withing 20 pips of the low of the day" discussion is one I have pondered in my head many, many times..

What works for me, is to watch for "the low" of the day to occur, and then green rat trade from there until the middle of the NY session.

Now, the question comes, how do you know it's the low? Right??

Well, the way I tell is when I see the low, and then I see the next swing low that is higher. Now, this way you won't catch the bottom, but you will be able to rat trade the rest of the day knowing the low of the day is in.

[ZsApprentice]

Another very important key, is to only trade in one direction.. That way you will make sure to catch "the low" eventually.

So, if you are looking for green rat trades, and you see that the "daily range" is usually around 125 pips, and the market is only at 70 pips for the day, and is making lows... that should probably tell you that those "lows" are not THE low of the day..

So, once the market gets to around 100 - 110pips of range (EU), then start watching for higher lows, then start green rat trading.

Its been working great for me.

[MightyOne]

Another very important key, is to only trade in one direction.. That way you will make sure to catch "the low" eventually.

So, if you are looking for green rat trades, and you see that the "daily range" is usually around 125 pips, and the market is only at 70 pips for the day, and is making lows... that should probably tell you that those "lows" are not THE low of the day..

So, once the market gets to around 100 - 110pips of range (EU), then start watching for higher lows, then start green rat trading.

Its been working great for me.

Or you could start on an hourly chart and by the time you work your way up to the weekly you should be heading in the right direction.

If a candle closes against you then work your way in the opposite direction on the hourly and build up to the weekly.

If you find yourself in great position on the monthly/yearly chart then you might just let it ride.