Remember what H. Rearden said:
Now, 2 patterns of market behaviour 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)
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If price is NOT making a new high then it must be reversing from the high.
If price is NOT making a new low then it must be reversing from the low.
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"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
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This is a simple method that, when applied properly ( and don't load up the charts with SQUIGGLY'S ), will enable you to NEVER LOSE AGAIN!
1) Only trade if there is a 1, 2 or 3 semafor on the current or previous H1, H4 or D1 candle. NO EXCEPTIONS.
2) After you see the semafor on the chart, look at the chart for the long(indigo) and short(magenta) triggers based on TRO RAT ZONE indicator.
3) When price touches the trigger you enter. DON'T THINK, JUST ACT!
4) STOP LOSS IS 10 PIPS
5) If price went against you and makes a new daily high or daily low, get ready to enter at the trigger. If you can't see how this works, then DO NOT TRADE IT.
6) What's the TAKE PROFIT? You take what you can.
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DRAIN THE BANKS REV 9 exploits the fact that the size of the daily wicks is usually greater than 20 pips based on the frequency distribution of wick sizes.
You can see the frequency distribution in the above chart shows, for the last 100 days, wick length of 20 pips or more occurred over 66% of the time.
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The best trading opportunity is right after a new high or low has been made. That is when you should begin trading rat reversals. Price does NOT have to be in the "rat zone" to enter a trade.
GREEN RAT REVERSAL TRADE - ANY CHART PERIOD
1) price within 20 pips of the daily low - that is OPPORTUNITY
2) red/black candle closes
3) green/white candle closes - note the high price of the green/white candle
4) enter long at the green/white candle's high price
5) STOP LOSS IS 10 PIPS
6) Take whatever profit you can.
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RED RAT REVERSAL TRADE - ANY CHART PERIOD
1) price within 20 pips of the daily high - that is OPPORTUNITY
2) green/white candle closes
3) red/black candle closes - note the low price of the red/black candle
4) enter short at the red/black candle's low price
5) STOP LOSS IS 10 PIPS
6) Take whatever profit you can.
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You are either a RED RAT, a GREEN RAT or a YALE STUDENT. If you do not understand the reason you can not be both a red rat and a green rat then you are YALE MATERIAL:
http://www.yale.edu/admit/freshmen/appl ... index.html
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"The technique is so simple that just several lessons (or a few pages of explanations) cover it all. Now what? Now the student has to practice, practice and practice again to understand what he had been taught. The teacher DOES know much more than the student, but his understanding can't be "passed", "transferred" or taught in any way -- not even by reading books."
Try these methods using a micro lot or 0.1 mini lot. Trade it this way until you feel comfortable and are profitable on a consistent basis. Just trade it, AS IS, and don't add anything to it to improve it. You'll be amazed at how profitable a simple method can be.
Many traders will say this "is not a system" because there is no set take profit. They also say to "cut losses quick and let profits run" which is in direct contradiction of having a set take profit. No wonder 95% of traders lose - they follow traditional trading education!
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Get your DRAIN THE BANKS T-SHIRTS
HERE.
I can only ship to USA addresses.
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FREE MT4 version DRAIN THE BANKS REV 9, including SOURCE CODE and TEMPLATE, attached.
PLEASE DO NOT POST MY CODE ON OTHER FORUMS.