2009.09.10 DRAIN THE BANKS - LIKE A RAT

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jackm1
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RAT Plot vs RAT reversal

Postby jackm1 » Sun Oct 25, 2009 4:55 pm

Avery,

Which one has a higher probability to win, RAT plot or RAT Reversal.
Which one do you play the most...........

Thanks.

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Patch
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Postby Patch » Sun Oct 25, 2009 4:57 pm

TRO

What is the significance of the "1 - 4 trades on most days" based on and what does it tell me?

Thanks

Patch
ENOUGH being a Yalie for me Back to the Sea. "What i can lose, i can win" "YES YOU CAN" - dragon33 -"Pick one method and one pair and stick with them until you master it. "The choice is yours - success or failure." TRO

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Postby TheRumpledOne » Sun Oct 25, 2009 5:00 pm

The RAT PLOT indicator indicates a RAT REVERSAL.

You traders need to spend some time in front of the charts LOOKING AT THEM. YOU MUST LEARN TO SEE.

You are asking YALE STUDENT questions.
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.

jackm1
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Postby jackm1 » Sun Oct 25, 2009 5:31 pm

LOL......."You are asking YALE STUDENT questions.".....
Ok. I got it. Will do.
All paid jobs absorb and degrade the mind. -Aristotle

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Postby snscott » Sun Oct 25, 2009 7:16 pm

The arrows appear on RAT_PLOT when the PREVIOUS two candles are configured for a RAT REVERSAL. The arrow shows which way the reversal is "statisically" likely to continue heading (for a short time at least).

The arrows you see on bars in the past are simply a "historical record" of those previous rat reversal signals and mean NOTHING in terms of what is going on with the current candle / reversal setup.

So, to try to explain it even more clearly with an example:

With RAT_PLOT, if the candle 2 bars ago was a GREEN candle, and the previous candle was RED, you are now waiting for the RAT REVERSAL SIGNAL to complete by having the price of the current candle move LOWER than the LOW of that previous RED candle. RAT_PLOT, if set to SHOW THE LINE, will highlight the low of that previous red candle, which is the "trigger point" that says: "This looks like a good RED RAT REVERSAL". RAT_PLOT will also draw a RED arrow at the LOW of the current candle indicating that it is a RED RAT REVERSAL that is currently "in play"

Once time moves on and a new candle forms, the RED arrow that formed on the "here is comes" candle will remain there as simply a historical record.

Does that help anyone?

And, obviously, TRO, correct me if I am wrong here.

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Postby snscott » Sun Oct 25, 2009 7:44 pm

You know, the Yale Rat story is interesting, but I think it is important to note that the Rat did not really just choose a random direction to turn.

The setup for the experiments states that the "random" food placement was weighted to put food to the left 60% of the time, so it was not purely a case of "always turning left" made the rat win more than the students in a PURELY RANDOM situation. It was "random", but rigged such that the food was slightly more likely to appear on the left. And it was that small fact that "allowed" the rat to beat the students.

The article even says that the Rat LEARNED that he had a better chance of getting food if he went to the left. So, it was not a case of the rat just willy-nilly deciding he was a "left-turning" rat at birth.

Meanwhile, the HUMANS might have also realized (at some level) that food came up on the left slightly more often - which is why they tried to establish some kind of pattern or rules to follow (like 2 rights are followed by 3 lefts - or whatever).

How is that any different from us humans establishing "rules" to govern how we trade the random market that say, for example, a green candle, followed by a red candle, followed by another red candle that breaks lower than the low of the previous red candle is a "valid signal" that the RED Rats are going to get fed?

Isn't the "Rat Reversal" system (or any system) still exactly the same human-thought-process that made the Yale students "lose" against the rats?

Now, some might say that the "rat reversal" rules are using a candle configuration to establish which direction has that "60% edge" over the other - but in actuality, the market is still RANDOM, so aren't you're still using a YALE Brain when you think that the price action on the previous two candles plus the current candle gives you an "edge"?

Either the market is truly random and therefore no amount of number crunching on statistics will really help, or it isn't random and has some level of order or rationality and therefore "predictability" to it.

You have to decide which you believe, I suppose.

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Postby Patch » Sun Oct 25, 2009 8:26 pm

snscott

Very in sight filled post above. The idea of the market being purely random movement since some guy wrote a book that I haven't read. A guy from Harvard or Yale I bet but I am out or wooden nickels. Another smart guy wrote a book centuries ago stating the world is flat.

I didn't go to Harvard or Yale, and I am going to write a green carbon foot free, print ink saving paragraph instead of killing all those trees and ask, just how can the market be purely random when it is all based totally on humans behaviors? Humans behaving, responding and reacting to their emotions of greed for dollars gained, and fears of losings their money at risk and even the additional dollars gained? No, market movement is anything but random.

Patch
In VA
Flipping a Coin Randomly
Last edited by Patch on Sun Oct 25, 2009 8:52 pm, edited 1 time in total.
ENOUGH being a Yalie for me Back to the Sea. "What i can lose, i can win" "YES YOU CAN" - dragon33 -"Pick one method and one pair and stick with them until you master it. "The choice is yours - success or failure." TRO

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Postby blubbb » Sun Oct 25, 2009 8:39 pm

I reckon, the real market cannot be completely random since there are people making a living from trading. Remember the little application I posted in my indi thread. That simulates 100% randomness (coin tosses). And although those charts look like you can trade it rat style... no one would win (or lose!) it consistently.

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Postby jackm1 » Sun Oct 25, 2009 8:40 pm

Hello All,

I asked the question because I saw two indicators in the zip files. One named RAT_plot which I knew, works off hi-low reverses.

The other named MP_RAT_Reverse. So I got little confused.

Anyways, no more confusion now. I will only use RAT_Plot as this is all about price and statistics.

Most indicators, if not all, are lagging and therefore quite useless.
All paid jobs absorb and degrade the mind. -Aristotle

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Postby snscott » Sun Oct 25, 2009 8:51 pm

Would the rat still have "won" if, after some period of time, they modified the weighting so that the food starting coming to the right 60% more than the left? From that point forward, the "always turn left" rat, would not perform as well as he had previously.

And how would the rat have ever known or learned that he needed to start turning right now to have better odds of finding food? He had already "declared himself a green rat" and would only turn left (trade green). That means he would have gone from being right 60% of the time, to only 40%.

Or does that even matter? Would the 40% right rat still do better that most humans?

Patch, the forces that move the market are indeed not random, but each tick that comes in really is a coin-flip. Random. Unpredictable. The tick might go up, or it might go down, or stay the same price. At what point do these random tick movements coalesce into NON-RANDOM, predictable price movement, that is the question.

If you look at a tick chart, if you zoom waaaay out, you can start to see how the price is trending one way or the other, but zoom in close and you can't predict where that next tick is going to go and can look like a seismograph during an earthquake. :-)

People win at trading, not by predicting the markets, I think they win by handling their EXITS, along with position sizing and so on. When you ENTER seems to not make a tremendous amount of difference. One of those "tree killing" books mentioned that they tried a purely RANDOM entry system and managed to make money consistently with it simply by controlling their exits and using proper money management.

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