DRAIN THE BANKS - LIKE A RAT!
GREEN RAT REVERSAL TRADE
1) price within 20 pips of the daily low - that is OPPORTUNITY
2) red candle closes
3) green candle closes - note the high price of the green candle.
4) enter long at the green candle's high price
5) STOP LOSS IS 10 PIPS
6) Take whatever profit you can.
"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."
CLASSIC 5 PIP SCALP!
THE DRAINING CONTINUES...
IN CASE YOU ARE WONDERING WHAT'S ALL THIS TALK ABOUT RATS...
"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
"Think about the stock market, which is a classic example of a "random walk," since the past movement of any particular stock cannot be used to predict its future movement. The inherent randomness of the market was first proposed by the economist Eugene Fama, in the early 1960's. Fama looked at decades of stock market data in order to prove that no amount of knowledge or rational analysis could help you figure out what would happen next. All of the esoteric tools used by investors to make sense of the market were pure nonsense. Wall Street was like a slot machine."
Pg 67 - HOW WE DECIDE
"Unless you experience the unpleasant symptoms of being wrong, your brain will never revise its models. Before your neurons can succeed, they must repeatedly fail. There are no shortcuts for this painstaking process."
(Page 54) HOW WE DECIDE
ALL YOU NEED TO KNOW ABOUT TRADING
* Price either goes up or down.
* No one knows what will happen next.
* Keep losses small and let winners run.
* POSITION SIZE = RISK / STOP LOSS
* The reason you entered has no bearing on the outcome of your trade.
* You can control the size of your loss (skill) but you can't control the size of your win (luck).
* You need to know when to pick up your chips and cash them in.
Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)
You can not control the probabilities of wining or losing.
You can not control your average win size.
The only part of the equation of the equation that you can control is your average loss size.
Remember what H. Rearden said:
Now, 2 patterns of market behavior 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)
If price is NOT making a new low then it must be reversing from the low.
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
DON'T LET THE RAT BEAT YOU!
No... I was wondering what happened to your previous thread !
The NEVER LOSE AGAIN!! thread is HERE in the General Trading Talk section.
Thanks for asking.
Your logic posted don't correspond entirely to the trades shown in the previous chart and well all other old charts as well. I get the "buy at green's high, sell at red's low...", but it is obvious that there's more to it.
What have those fancy indicators with arrows and numbers got to do with this system?
What is your exit strategy? "Take whatever profit"???
1) The trades shown are based on the entry rules (logic) I posted. Can you be more specific and show me what does not correspond? There are no more rules. There is nothing more.
The first chart shows a setup in progress. The second chart shows a successful 5 pip scalp. That is what is to be focused on. I don't Monday Morning Quarterback. Don't look at history. I show the setup alert. Then I showed how the trade played out.
2) Fancy indicators? LOL! Those are very simple indicators with simple calculations. The arrows show when a RAT REVERSAL trade was triggered. Please note that the RAT REVERSAL that has the biggest profit potential occurs within 20 pips of the low. The ARROWS show EVERY RAT REVERSAL setup - red/green/green breaks high.
The indicators that display numbers are gauges. I am going to start calling them PRICE GPS because they tell you exactly where price is compared to the open, high and low.
3) Exit strategy? Yes, take whatever profit you can. It is purely discretionary. STOP LOSS is fixed at 10 pips. If you understand EXPECTANCY and THE BLACK SWAN then you should be able to see why there is no set TAKE PROFIT. You want the market to do the "heavy lifting" and work for you.
Could you provide some more details.. For example, Is this trade placed at a particular time of day. You said wait for price to come within 20 pips of the days low. The days low is not known until the following day. Are you saying that on a given day, price will make a high and a low. Wait for the low to be revisited within 20 pips then place trade? I seek your clarification. Thank you.
Here comes another good thread by TRO.
good system tro
The day's low is known AT THE TIME. It may go lower or it may not.
When price is within 20 pips of the daily low AT THE TIME, you look for a green rat reversal trade.
I usually trade when London and New York are both open.