2009.09.10 DRAIN THE BANKS - LIKE A RAT

[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.

[TheRumpledOne]

"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)

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"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

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

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WHY ISN'T EVERYBODY DOING IT?

Most of you know I catch a lot of flak on my forums because SOME PEOPLE don't like the way I post.

One worn out argument that is used repeatedly is, "If this is so (simple, great, profitable, <insert your own adjective>), then why isn't everybody doing it?"

Simple answer is because SOYLENT GREEN is people!

We all know exercise is great, but how many actually exercise?

We all know smoking is bad, but how many do it anyway?

We all know which foods are bad for our health, but how many eat those foods?

We all know that we should save for our future and spend less than we earn but who does that?

The list is almost endless.

As long as there are people, there will always be some STUPID people and some smart people making STUPID decisions, where STUPID is defined as knowing better but acting otherwise.

Meanwhile, the RATS are still beating the Yale students.

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PLEASE DO NOT PM ME WITH QUESTIONS ABOUT TRADING, INDICATORS, CODING, ETC... Post your questions in the forum. Thank you.

[tfg]

Thanks, Avery. How/where can I get hold of the TRO2009_WICK_HISTOGRAM since this is a 2009 bunch?

Thanks very much, Avery. I am beginning to see...

What are the names of the indicators you use to display this, particularly, the histogram and the text at the bottom?

Those are 2009 DONATIONAL indicators. TRO2009_WICK_HISTOGRAM is on the bottom.

TRO2009_WICK_COUNT_UI is used to display the frequency distribution.

TRO_RAT_DOTS display the dots on the wicks.

[hopearisen]

Hi Tro,
I requested MB Trading to have you as my IB but the response wasnt favourable. So, I would like to know if you're still an IB with MB trading.

[TheRumpledOne]

MAXIMUM RISK = 2% * ACCOUNT BALANCE.

STOP LOSS = 10 PIPS. (INCLUDING SPREAD)

POSITION SIZE = RISK / STOP LOSS.

This is how you make 2% per day.
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The important part is to enter WITHIN 20 pips of the daily low. The RAT REVERSAL is only one entry method. You can even use SQUIGGLYS for your entry trigger!

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PLEASE DO NOT PM ME WITH QUESTIONS ABOUT TRADING, INDICATORS, CODING, ETC... Post your questions in the forum. Thank you.