2011.01.04 THE RAT ADAPTS

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Relativity
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Postby Relativity » Sat Jan 08, 2011 4:04 pm

Price is the same for all timeframes = All price movement is relatively the same regardless of timeframe?

Like a trading strategy applied successfully on M5 will be usually similarly successfully on D1, with the only difference the scale of trading involved (e.g. T/P and S/L size)?

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newscalper
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Postby newscalper » Sat Jan 08, 2011 5:35 pm

No.

Price is the same on all timeframes as TRO has quite clearly and emphatically stated.

A timeframe is just fixed 'photograph' of the market over a block of time.

No matter what chart you are looking at price is the same on all. If current market price is 4 it is 4 whether you look at 5 min, 15 min 4, hr, etc etc and it was ever thus and ever will be.

What is different is average range of price movement for each block of time.

While looking at the market as price bars helps us to make sense of what has happened, the market itself is fluid.

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bredin
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Postby bredin » Sat Jan 08, 2011 9:34 pm

wangyue22 wrote:since market is up/down 50/50 the probablity of 3 down/up bars is really .5^3 power or 12.5% of this occurance happening and if market tries to go back into equilibrium of being 50/50 then there will be ~ 87.5% chance that the next bar is going to close opposite of the previous 3 bars.


This is not mathematically true..... the probability of the next bar closing opposite after 3 consecutively colored bars is still 50%, since the occurance of (eg) RRRg is 6.25% (.5^4) while RRRR is also 6.25% (.5^4).

If the math were as you say then buzzards would rule trading :lol:

G. (incorrect probability math costs money)
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wangyue22
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Postby wangyue22 » Sat Jan 08, 2011 10:38 pm

bredin wrote:
wangyue22 wrote:since market is up/down 50/50 the probablity of 3 down/up bars is really .5^3 power or 12.5% of this occurance happening and if market tries to go back into equilibrium of being 50/50 then there will be ~ 87.5% chance that the next bar is going to close opposite of the previous 3 bars.


This is not mathematically true..... the probability of the next bar closing opposite after 3 consecutively colored bars is still 50%, since the occurance of (eg) RRRg is 6.25% (.5^4) while RRRR is also 6.25% (.5^4).

If the math were as you say then buzzards would rule trading :lol:

G. (incorrect probability math costs money)




:smt119 :smt120 :smt119 :smt120


o.O.

i thought you got me. bredin, until i stepped back a bit. as a whole the market is fifty/fifty, counting R/G candles since candle 1 for a very large sample. however, market is random in the sense that how this 50/50 ratio achieved is random. hope that makes sense. -.- and sorry if it sounds like a preacher.

if we have 10 candles, and these 10 candles represent the entire market since the day it was conceived. (decade candles, market can be a candle growing, or it can be infinite amount of candles, which ever you way you want to perceive it)

if market is suppose to be 50/50, you just had 3 RRR marble in a row, what are the chances a G marble is gonna be picked out by you next time??? ;)


and who said math geeks dont rule the market. ;) (wealth and power is related but not directly the same, a seed of an idea is more powerful than money. ^.^)

we are thinking big when when we think about time frames. apply the same but drilling it down to the market core (tick chart) and you will find why HFT exist and why they are so profitable.

this then going back to my other thread, warren buffet invest longterm using his tools to get high probability trades on weekly if not monthly basis using "FUNDIS" whereas HFT from goldman sac use indis (order flow, supply/demand) to trade on the micro scale. same concept, different go about doing it


hehe, you almost got me. and thank you for making me writing this, its much clearer in my head now.

i apologize if this offends you or the tone is not a helping one, as still working on the right brain of mine.

since we got to power and wealth, i have a interesting theory about it. there is a nice correlation between right and left handed people, but i wont post it here, since it is more general and i dont have all the statistical proof (o.O)
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Postby newscalper » Mon Jan 10, 2011 10:13 am

TheRumpledOne wrote:Image

Long trigger is open + 4.

You can see from the frequency distribution that over the last 100 days, this would be profitable more times than not.

Using what was learned from the BUY ZONE and the RAT should prove to be very profitable .

ADAPT OR PERISH!


TRO - you've missed the advice or rule about above below weekly open out of the rat rules, last rule is if it doesn't mention it it's of no concern so this needs to be mentioned I think?

Right...dagnabbit :) I'm going to open Pandoras box and ask.

I cannot SEE that over the last 100 days this would have been more profitable than not. All I SEE is that price more than not eventually went more than 20 pips, it doesn't take your 10 pip stop and negative excursion from your entry into account.

I know I had this conversation with you before Christmas about something else and your answer was it was in the realm of back-testing and we know your view on that.

OK, but how is looking at past bars and how far they've moved in one direction not back-testing? How it it any different to knowing how far they've moved in one direction before how far they've moved in the other, it's just another statistic?

I'm just looking for clarity of thought on this, please.

I'm left handed btw. :?
Last edited by newscalper on Mon Jan 10, 2011 4:41 pm, edited 1 time in total.

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bredin
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Postby bredin » Mon Jan 10, 2011 11:38 am

newscalper,

OEF : Opposite Extreme First

With this in mind look over a daily chart again, but then look again as m5 (or m15) candles watching what happens in relation to the daily open.

G.
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Postby newscalper » Mon Jan 10, 2011 12:22 pm

bredin wrote:newscalper,

OEF : Opposite Extreme First

With this in mind look over a daily chart again, but then look again as m5 (or m15) candles watching what happens in relation to the daily open.

G.


Cheers Bredin :) Yeah I know what to look for, I think, but afaik (might be wrong here LOL) TROs charts haven't shown that. Is there a dashboard or something for OEF? Even then I'm not certain how OEF comes into the context of the 10 pip stop, that's just showing us if it hits daily high or low first isn't it? Doesn't take into account amount of wiggle to get there and AFAIK we aren't going down to 5 etc to time entry on this we just enter at the line with a 10 pip stop....

Or do you mean wait for price to hit the opposite extreme then come back across the open, then enter?

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Postby newscalper » Mon Jan 10, 2011 3:18 pm

Hmm
Maybe I'm seeing something here:


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Postby trueblueTEX » Mon Jan 10, 2011 3:48 pm

Newscalper,

I'm a bit of a dumkopf and I feel like I'm just looking at a Rorshach blot. Could you elaborate on what you are seeing? And maybe even how/when to react to what you see?

I'm still all confused as to what TRO is adapting to, here :-)

Thanks
TEX

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newscalper
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Postby newscalper » Mon Jan 10, 2011 4:33 pm

Bredin said about price going to the opposite extreme then coming back across the open.

5 min chart, yellow line = weekly open. Look for daily rat then observe, the trade here is on the third day. The chart shows a nice win, lots of trades don't win but I don't want to post that chart.

I think you must to be prepared to place more than one trade a day but not overtrade, maybe limit to only one per hour when price is crossing the daily open.

I see many trades that don't work but also many that make a large profit, statistics on this are???

Trade management is key and your rules for exit. I don't agree with 'if you see 2 pips it's a win' etc (sorry TRO) because if you think like that you don't know when to hold and when to fold, or with trailing stop at 5 pips etc. you'll get crazy stopped out: isn't Zline about that? But I also see that by averaging out you can sometimes hold on all day or even for days with little risk :shock:, which is what I was talking to TRO about b4 Xtmas in 2%. i.e. if we know the probability of our trade going + pips before our stop we can take off part of our position and hold. It's the missing part of the puzzle.

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