2009.09.10 DRAIN THE BANKS - LIKE A RAT

[TheRumpledOne]

"Those five years at Venice High started my puzzlement about
drawing. As the newest teacher of the group, I was assigned the
job of bringing the students up to speed in drawing. Unlike many
art educators who believe that ability to draw well is dependent
on inborn talent, I expected that all of the students would learn to
draw. I was astonished by how difficult they found drawing, no
matter how hard I tried to teach them and they tried to learn.
I would often ask myself, "Why is it that these students, who
I know are learning other skills, have so much trouble learning to
draw something that is right in front of their eyes?" I would sometimes
quiz them, asking a student who was having difficulty drawing
a still-life setup, "Can you see in the still-life here on the table
that the orange is in front of the vase?" "Yes," replied the student,
"I see that." "Well," I said, "in your drawing, you have the orange
and the vase occupying the same space." The student answered,
"Yes, I know. I didn't know how to draw that." "Well," I would say
carefully, "you look at the still-life and you draw it as you see it."
"I was looking at it," the student replied. "I just didn't know how
to draw that." "Well," I would say, voice rising, "you just look at
i t . . . " The response would come, "I am looking at it," and so on."

Another puzzlement was that students often seemed to "get"
how to draw suddenly rather than acquiring skills gradually.
Again, I questioned them: "How come you can draw this week
when you couldn't draw last week?" Often the reply would be, "I
don't know. I'm just seeing things differently." "In what way differently?"
I would ask. "I can't say?just differently." I would pursue
the point, urging students to put it into words, without success.
Usually students ended by saying, "I just can't describe it."

One day, on impulse, I asked the students to copy a Picasso
drawing upside down. That small experiment, more than anything
else I had tried, showed that something very different is
going on during the act of drawing. To my surprise, and to the
students' surprise, the finished drawings were so extremely well
done that I asked the class, "How come you can draw upside
down when you can't draw right-side up?" The students
responded, "Upside down, we didn't know what we were drawing."
This was the greatest puzzlement of all and left me simply
baffled.


The New Drawing on the Right Side of the Brain

http://www.4shared.com/file/109993404/6 ... Brain.html

I just started reading this book.

THIS IS GOING TO BE POWERFUL!!

[TheRumpledOne]

A question I don't recall being asked/answered is:

How do you choose which color of Rat you want to be?

For example, do you declare your allegiance once, right now, and stick with that "team" for the rest of your trading career?

"My father was a Green Rat, and his father was too, and his father before him - we're a Green Rat Family, damn it - so take your Red Rat heresies and shove them up sideways, buddy." (No one likes to talk about that cousin who ran off to San Francisco claiming he was a Red Rat trapped in a Green body.)

Or, do you adjust and switch your "Gang Colors" from time to time?

If you are fickle in your "team" loyalty (much like Dallas Cowboy Fans), then the obvious question becomes "When do you make the decision to switch?".

Do you start out each DAY by looking at the longer timeframe trends, like the trend from the past few days, or week, or month, and then, based on the way the wind appears to be blowing (what TRO calls "BIAS" - although he has also stated that "trends" only exist in your mind - there is no spoon, or something like that) you choose which Rat's guidance you will follow for that day's trading? Or, do you pick a Rat at the beginning of the week and stick to it all week long? Personally, I've been reading animal entrails to decide.

Or, do you remain flexible and pick a side but if, after while, you see that the trend really is strongly in the other direction, do you then make the decision to switch (but if so, I'd say maybe limit yourself to allowing such a "reality adjustment" to change your Rat Color only once a day).

I could see maybe using something like the [Asian-Session-Start-of-Week-Box-Breakout] signal (which I have written a very cool indicator for, by the way) as a potential "statistically reliable suggestion" for which way to go for the remainder of the week, especially with JPY pairs.




Anyway - thoughts from the resident FX JEDI MASTERS, especially Master TRODA?

It does NOT matter if you choose RED or GREEN. One RAT does NOT have an advantage over the other. By choosing one color and sticking to it, we make the BLACK SWAN work FOR us rather than AGAINST us.

The key point is WE ALWAYS TRADE IN ONE DIRECTION. WE ARE EITHER RED RATS (SHORT) OR GREEN RATS (LONG). WE NEVER SWITCH.

If you are a RED rat and price runs up 600 pips like the EURJPY this week, you were stopped out with a 10 pips loss. But the prior two weeks, you got fat during the 600 pip drop.

if you were a GREEN rat, you were stopped out for a 10 pip loss, but got your revenge this week during the run up.

Most traders probably were long, got burn as price dropped, and then by the time the switched over to short, price ran up against them. THAT'S ONE REASON WHY 95% OF TRADERS LOSE!

By trading in only ONE DIRECTION ALL OF THE TIME, we protect the downside and allow the market to do the heavy lifting.

Any attempt to flip/flop color will be grounds for banishing you to the halls of Yale...LOL!!!

Since your mind is your most valuable asset and your most valuable lever, you need to be careful what you put in it. Sometimes it is even more difficult to get rid of thoughts and ideas that are already in your mind than it is to learn something new - Pg 119 WHY WE WANT YOU TO BE RICH

[MightyOne]

(EDIT)

[TheRumpledOne]

T h i s key p r i n c i p l e is: D r a w i n g is a global or
"whole" skill requiring only a limited set of basic components.
This insight came to me about six months after the book was
published, right in the middle of a sentence while teaching a
group of students. It was the classic Ah-ha! experience, with the
strange physical sensations of rapid heartbeat, caught breath, and
a sense of joyful excitement at seeing everything fall into place. I
had been reviewing with the students the set of skills described in
my book when it hit me that this was it, there were no more, and
that the book had a hidden content of which I had been unaware.
I checked the insight with my colleagues and drawing experts.
They agreed.
Like other global skills?for example, reading, driving, skiing,
and walking?drawing is made up of component skills that
become integrated into a whole skill. Once you have learned the
components and have integrated them, you can draw?just as
once you have learned to read, you know how to read for life;
once you have learned to walk, you know how to walk for life. You
don't have to go on forever adding additional basic skills. Progress
takes the form of practice, refinement of technique, and learning
what to use the skills for.
This was an exciting discovery because it meant that a person
can learn to draw within a reasonably short time. And, in fact, my
colleagues and I now teach a five-day seminar, fondly known as
our "Killer Class," which enables students to acquire the basic
component skills of realistic drawing in five days of intense learning.
Five basic skills of drawing
The global skill of drawing a perceived object, person, landscape
(something that you see "out there") requires only five basic component
skills, no more. These skills are not drawing skills. They
are perceptual skills, listed as follows:
One: the perception of edges
Two: the perception of spaces
Three: the perception of relationships
Four: the perception of lights and shadows
Five: the perception of the whole, or gestalt

The New Drawing on the Right Side of the Brain

http://www.4shared.com/file/109993404/6 ... Brain.html

I believe this can done with trading.

[TheRumpledOne]

PLEASE EVERYONE STAY ON-TOPIC.

THIS IS A TRADING THREAD!

LET'S NOT START TALKING ABOUT GOVERNMENT, POLITICS, ETC...

[oldmangeezer]

The key point is WE ALWAYS TRADE IN ONE DIRECTION. WE ARE EITHER RED RATS (SHORT) OR GREEN RATS (LONG). WE NEVER SWITCH.

"Since your mind is your most valuable asset and your most valuable lever, you need to be careful what you put in it. Sometimes it is even more difficult to get rid of thoughts and ideas that are already in your mind than it is to learn something new." - Pg 119 WHY WE WANT YOU TO BE RICH

TRO,

Aren't we watching for "3" semafors on 5 minute charts for a ready?

Then follow the remaining rules for "got cheese" trading?

I'm confused on why you would just want to be a green rat or red rat.

You can look at a 5 minute chart and start on the left hand side to see where price is. If it's at the top on the left and bottom on the right it means the trend is down. If it's at the bottom on the left and top on the right the trend is up. Wouldn't this factor in your decision to be a red or green rat?

If the trend is up on a 5 minute chart (left to right) and a semafor appears at the top (breaks resistance) then we should not take a reversal due to the current trend?

Need help!!!!

[MightyOne]

A question I don't recall being asked/answered is:

How do you choose which color of Rat you want to be?

For example, do you declare your allegiance once, right now, and stick with that "team" for the rest of your trading career?

"My father was a Green Rat, and his father was too, and his father before him - we're a Green Rat Family, damn it - so take your Red Rat heresies and shove them up sideways, buddy." (No one likes to talk about that cousin who ran off to San Francisco claiming he was a Red Rat trapped in a Green body.)

Or, do you adjust and switch your "Gang Colors" from time to time?

If you are fickle in your "team" loyalty (much like Dallas Cowboy Fans), then the obvious question becomes "When do you make the decision to switch?".

Do you start out each DAY by looking at the longer timeframe trends, like the trend from the past few days, or week, or month, and then, based on the way the wind appears to be blowing (what TRO calls "BIAS" - although he has also stated that "trends" only exist in your mind - there is no spoon, or something like that) you choose which Rat's guidance you will follow for that day's trading? Or, do you pick a Rat at the beginning of the week and stick to it all week long? Personally, I've been reading animal entrails to decide.

Or, do you remain flexible and pick a side but if, after while, you see that the trend really is strongly in the other direction, do you then make the decision to switch (but if so, I'd say maybe limit yourself to allowing such a "reality adjustment" to change your Rat Color only once a day).

I could see maybe using something like the [Asian-Session-Start-of-Week-Box-Breakout] signal (which I have written a very cool indicator for, by the way) as a potential "statistically reliable suggestion" for which way to go for the remainder of the week, especially with JPY pairs.




Anyway - thoughts from the resident FX JEDI MASTERS, especially Master TRODA?

It does NOT matter if you choose RED or GREEN. One RAT does NOT have an advantage over the other. By choosing one color and sticking to it, we make the BLACK SWAN work FOR us rather than AGAINST us.

The key point is WE ALWAYS TRADE IN ONE DIRECTION. WE ARE EITHER RED RATS (SHORT) OR GREEN RATS (LONG). WE NEVER SWITCH.

If you are a RED rat and price runs up 600 pips like the EURJPY this week, you were stopped out with a 10 pips loss. But the prior two weeks, you got fat during the 600 pip drop.

if you were a GREEN rat, you were stopped out for a 10 pip loss, but got your revenge this week during the run up.

Most traders probably were long, got burn as price dropped, and then by the time the switched over to short, price ran up against them. THAT'S ONE REASON WHY 95% OF TRADERS LOSE!

By trading in only ONE DIRECTION ALL OF THE TIME, we protect the downside and allow the market to do the heavy lifting.

Any attempt to flip/flop color will be grounds for banishing you to the halls of Yale...LOL!!!

Since your mind is your most valuable asset and your most valuable lever, you need to be careful what you put in it. Sometimes it is even more difficult to get rid of thoughts and ideas that are already in your mind than it is to learn something new - Pg 119 WHY WE WANT YOU TO BE RICH

Picking one color is likely the best solution.

I am considering the following:

1. ONE COLOR
2. Cut trade size by 2 or 3 and trade 2 or 3 pairs
3. Trade off of daily & weekly extremes

Diversify so that I am never a fat rat

GREEN RAT FOR THE WIN!

[TheRumpledOne]

The key point is WE ALWAYS TRADE IN ONE DIRECTION. WE ARE EITHER RED RATS (SHORT) OR GREEN RATS (LONG). WE NEVER SWITCH.

"Since your mind is your most valuable asset and your most valuable lever, you need to be careful what you put in it. Sometimes it is even more difficult to get rid of thoughts and ideas that are already in your mind than it is to learn something new." - Pg 119 WHY WE WANT YOU TO BE RICH

TRO,

Aren't we watching for "3" semafors on 5 minute charts for a ready?

Then follow the remaining rules for "got cheese" trading?

I'm confused on why you would just want to be a green rat or red rat.

You can look at a 5 minute chart and start on the left hand side to see where price is. If it's at the top on the left and bottom on the right it means the trend is down. If it's at the bottom on the left and top on the right the trend is up. Wouldn't this factor in your decision to be a red or green rat?

If the trend is up on a 5 minute chart (left to right) and a semafor appears at the top (breaks resistance) then we should not take a reversal due to the current trend?

Need help!!!!

"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

Read the RAT REVERSAL RULES.

There is NO mention of semafors.

THERE IS NO TREND.

TREND IS A CONCEPT THAT EXISTS ONLY IN THE MIND OF THE TRADER.

TREND IS A TRADING MYTH.

DO NOT BELIEVE IN MYTHS OR THE RAT WILL BEAT YOU.

If after reading the quote about the RAT vs. Yale students you do not understand. Read it over and over. If you do NOT "get it", then you are Yale material...LOL!!

[PTG]

Diversify so that I am never a fat rat

The Zürich Axioms by Max Gunther, 1985

Minor Axiom II - Resist the allure of diversification - from page 18

Major flaws:
1. you're watering down meaningful stakes
2. you create a situation where gains and losses might cancel each other out
3. you become a juggler trying to keep too many balls in the air

Interesting read, that book.

http://www.neif.org/Zurich_axioms.pdf

[TheRumpledOne]

Yes, PTG, that's a classic.

Thanks for sharing.