Unidirectional Trading

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roshannaidu
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Unidirectional Trading

Postby roshannaidu » Wed May 26, 2010 12:05 pm

Hi TRO, in your ebook 'why you loose at trading' you mention that one should either trade long or short.

does the market (dynamic, structure, smart money etc) have a bias. what I mean is; is it 'easier' to trade short? is the short trade a more efficient trade..ie. quicker profit, less struggle for downward movement ito market energy, support by smart money.

thanks

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TheRumpledOne
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Postby TheRumpledOne » Wed May 26, 2010 1:55 pm

Ease depends on you, not the market.

If price goes up 100 pips and then down 100 pips, what is easier? The distance traveled is the same so the profit/loss potential is the same.

It make take longer to go up than down or vice versa on any given day.

The bias is relative to the time period.

And it is LOSE not LOOSE!!
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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jarnapal
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Postby jarnapal » Wed May 26, 2010 3:32 pm

TheRumpledOne wrote:Ease depends on you, not the market.

If price goes up 100 pips and then down 100 pips, what is easier? The distance traveled is the same so the profit/loss potential is the same.

It make take longer to go up than down or vice versa on any given day.

The bias is relative to the time period.

And it is LOSE not LOOSE!!


I think he was asking for this:


"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."


And one from me too : "Bats always turn left when exiting a cave"

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Postby TygerKrane » Wed May 26, 2010 10:19 pm

Thanks roshannaidu,
You gave me a reason to start my search again to try and find this MightyOne post that I haven't been able to find for the last freakin' month and a half.

Posted: Sun Oct 18, 2009 6:58 pm(EST) http://kreslik.com/forums/viewtopic.php?p=28424#28424

:idea: MightyOne :idea: wrote:
foreman01 wrote:
Patch wrote:Does it make sense to be a Red Rat because the market falls much faster, and farther over a shorter period of time than a market rising?


Might be true for stocks, but forex pairs are relative. If EUR/USD was instead called the USD/EUR pair, then it would go in reverse -- so what does it mean to fall or rise? You buy one EUR you sell the USD at the exact same time - that's what always happens.


As to the idea of only playing one direction. The DTB rat - as I recall - was based a statistical study that said "20 pips from the high, OR LOW" -- both directions were equally valid.

I think on a more generic level one could be a rat by always playing their "system." One often hears pros say "learn one system and stick with it." So in this sense the system could be stated as: be a red rat when 20 pips from the high; and be a green rat when 20 pips from the low.

I feel pretty confident that if this forums experienced traders were to trade both red rats and green rats, that they would still have the same percentage of successes.

LMAO (at myself for this next statement) ON THE OTHER HAND -- it may be that by only playing one direction on one pair that the price action would be different for a red rat than a green rat and thus one would become better at recognizing a successful trade (especially the price action for exiting - because the entrance rules are pretty much ground in stone).


You would only benefit from switching rats if you could tell that price was going to make a strong trending move.

Over one period of time there will be more green than red bars and over another period there will be more red bars than green.

There may even be near equal distribution of red and green bars :shock:

Upon entering into the market you cannot know if price will move 11 or 1,100 pips nor can you tell for sure the beginning of a move from its end.

What you can know are the statistics of individual bars or how the current bar usually interacts with its neighbor(s).

Pick one color and stick to it and maybe later, when you are not subject to an alarm clock, you can attempt to switch just before a strong trending move should you have the experience to do so.

ImageImage

**Krane catches Tyger** !>I'm here to chew bubble gum and make major pips...and I'm all out of bubble gum.<!

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A quick question for TRO

Postby frang0nve » Thu May 27, 2010 8:19 pm

Hello Tro,

Can you tell us please how were affected your trading results since you avoid shorting the market (becoming a green rat trader)?

Could you increase your winners/losers ratio in the long run? How much?

Cheers

Francisco

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Postby TheRumpledOne » Sat May 29, 2010 3:52 pm

More waiting, less trades per day.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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