2009.09.10 DRAIN THE BANKS - LIKE A RAT

free & uncensored discussion arena for TheRumpledOne

Moderator: moderators

User avatar
bettlebox
rank: 500+ posts
rank: 500+ posts
Posts: 733
Joined: Thu Mar 11, 2010 12:06 pm
Reputation: 7
Gender: None specified

Postby bettlebox » Mon Aug 29, 2011 6:43 pm

pp2 wrote:
bettlebox wrote:Been working hard and think i got method to read charts based on that simple statement " If price isn't making new highs then its reversing"

luv these moments :)



mmm so with the sema indi to the charts you can pretty much pick up the reversals. I guess you can add sweetspot and scalp the heck of of it :)

Thanks for the ideas bettlebox


That was 4 hr chart from Aud/Usd i used, im thinking set alert on 3ZZ indicator, sit back relax and wait for the alert. Then drop down into lower time frame and wait for your favourite reversal method.

But theres loads price action there on 4 hour chart too ie PinBars, MoMos. Take your pick.

I would say wait for yellow 3 too show and price to pull away and pull back and then start look for reversal but if price is moving back to Yellow 3 it might push it up some more, so just wait :). Entries there or it isnt :).

For example in the picture don't start trading it until swing high i labelled "2". Think thats highest probability entry point, for me that is.

Remember manage your trade you will be ok.

you could even rat trade into a trade for example green candle, followed by red candle go on break of low red. Spoilt for choice lol.

Glad you find it useful.

BB
There are two forces acting upon us: Suffering pushes us forward from behind and pleasures entice us and pull us forward.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

pp2
rank: 150+ posts
rank: 150+ posts
Posts: 158
Joined: Fri Oct 23, 2009 5:03 am
Reputation: 1
Gender: None specified

Postby pp2 » Tue Aug 30, 2011 3:46 am

Thanks BB, some nice ideas. Very simple when you can see it :)

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 12879
Joined: Sun May 14, 2006 9:31 pm
Reputation: 1525
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Wed Aug 31, 2011 1:21 pm

Image

"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 (ClLo < 20): This is OPPORTUNITY

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

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, ), 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.

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

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

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 12879
Joined: Sun May 14, 2006 9:31 pm
Reputation: 1525
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Wed Aug 31, 2011 1:55 pm

Image

<-------------------------------------------------------------------->

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

<-------------------------------------------------------------------->

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

<-------------------------------------------------------------------->

Trading is GUESSING. If it wasn't, you wouldn't need a STOP LOSS.

THINK ABOUT IT!!


<-------------------------------------------------------------------->

MAXIMUM RISK = 2% * ACCOUNT BALANCE.

STOP LOSS = 10 PIPS. (INCLUDING SPREAD)

POSITION SIZE = RISK / STOP LOSS.

<-------------------------------------------------------------------->

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.

<-------------------------------------------------------------------->

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

Trader_V
rank: <50 posts
rank: <50 posts
Posts: 4
Joined: Wed Jul 22, 2009 6:11 pm
Reputation: 0
Gender: None specified

Postby Trader_V » Wed Aug 31, 2011 10:10 pm

Man oh man I can't believe it has taken me this freaking long to figure this whole trading thing out!!!

TRO I have to thank you. The books were a great read!! (Why You Lose at Trading and How to Win at Trading) There were some very eye popping moments for me while reading :D

I do have a question for you though. In a post you wrote a while ago you said "The "rat" entries have a STATISTICAL EDGE that can be exploited for profit."

I would really like to understand this a little further. My basic understanding of this is that trading in only one direction provides a small statistical edge. But I am curious as to what that edge is.


For the rest of the folks who are reading this, here are some of the words that TRO has said hat have been rattling around in my head for a long time but I could never put it all together. Then all of a sudden the light bulb went off and I got smacked with the big ole Forex Trading 2 x 4! ](*,)

This one beat me up for a good long while "PRICE IS THE SAME ON ALL CHART PERIODS." once you grasp this concept it makes so much freaking sense!

"THERE IS NO TREND."

"TREND IS A CONCEPT."

"TREND EXIST ONLY IN THE MIND OF THE TRADER."

"Look at the chart and tell me if the trend is up or down."

"TREND IS RELATIVE TO THE OBSERVER JUST LIKE TIME WHICH IS ANOTHER CONCEPT."

"One must separate what is REAL from what is CONCEPTUAL."

"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)

"During a 60 minute period, how many 5 minutes candles are there? 12. Do you think your chances of winning are better with up to 12 entries or 1?"

"Now, there are 24 hour bars in a day but only 1 previous daily high/low. Do you think your chances of winning are better with up to 24 entries or 1?"

"You can control the size of your loss (skill) but you can't control the size of your win (luck)."

"You can not control the probabilities of wining or losing."

"You can not control your average win size."

"The only part of the equation that you can control is your average loss size."

If you take this information and like TRO says "internalize it" add a little common sense and good money management you will be well on your way to becoming a profitable trader.

Hopefully these key quotes will help some of you folks out there :wink:

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
TheRumpledOne
rank: 10000+ posts
rank: 10000+ posts
Posts: 12879
Joined: Sun May 14, 2006 9:31 pm
Reputation: 1525
Location: Oregon
Real name: Avery T. Horton, Jr.
Gender: None specified
Contact:

Postby TheRumpledOne » Thu Sep 01, 2011 2:59 am

"I would really like to understand this a little further. My basic understanding of this is that trading in only one direction provides a small statistical edge. But I am curious as to what that edge is. "

You eliminate the chance of ALWAYS being on the wrong side of a trade.

Look at this chart:

Image

If you only went long, sooner or later you would win.

If you only went short, sooner or later you would win.

But if you are a YALE STUDENT and attempt to guess the trend, you could be short when you should be long and vice-versa.
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.

johnsund
rank: 50+ posts
rank: 50+ posts
Posts: 76
Joined: Thu Dec 18, 2008 11:25 pm
Reputation: 0
Location: Colorado
Gender: Male

Postby johnsund » Fri Sep 02, 2011 1:10 am

Avery - the above description of why trade in only one direction is absolutely the best yet. Thanks for your perspective.

PipN8EZ
rank: <50 posts
rank: <50 posts
Posts: 2
Joined: Thu Jan 20, 2011 12:42 am
Reputation: 0
Location: United States
Gender: Male

Postby PipN8EZ » Sun Sep 04, 2011 6:32 pm

Traders, I've noticed Tro last post used a daily chart up, is that what you suggest to use? I'm just starting and trying to figure this method out, and could use all the help I can get on it... Please throw me your suggestions... :shock:

User avatar
MightyOne
rank: 5000+ posts
rank: 5000+ posts
Posts: 6054
Joined: Wed Dec 10, 2008 6:33 pm
Reputation: 1738
Gender: Male

Postby MightyOne » Mon Sep 05, 2011 1:31 pm

You trade off of a daily extreme w/ a 5-15 minute chart.

It is also possibe to trade the minute chart, but on those charts it is optional & often a waste of time to wait for a chart pattern BO; you should just short w/ in 20 pips from the high if you believe the house of cards will fall.

User avatar
PebbleTrader
rank: 1000+ posts
rank: 1000+ posts
Posts: 1633
Joined: Fri Nov 12, 2010 2:15 am
Reputation: 10
Gender: Male

Postby PebbleTrader » Mon Sep 05, 2011 10:57 pm

PipNISEZ,

EXPLORE through the different time frames and REDUCE RISK in each one, until you find yourself in the smallest time frame you are willing to trade.
Life is just a journey

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “TheRumpledOne”