TRADING IS SIMPLE ... (TheRumpledOne)

bmwhendrix · Feb 27, 2012

Ok, so it is a breakout of the 20 pop trailing alert and a pullback? When do you enter on this pullback?

CALLumbus · Feb 27, 2012

Hi,

this does not make alot of sense in my oppinion.

If you trade only long you have the chance of the price spiking up in your direction. But you have also the risk of a black swan against you.
If you trade both long and short, you have the chance to catch both an up or down spike, but you have also 2 times the risk, you could get caught by an up or down black swan.

You said this is ONE reason to trade only in one direction. What are other reasons you have in mind ? I think what you say makes alot of sense, I would just like to understand more of your thought process behind it. And when do you change the direction of your trades ? The next day ? Or when the big, longer term trend is changing ?

Thx !
CALLumbus

Quote from TheRumpledOne:

Have you read THE BLACK SWAN?

One reason to trade in only one direction is to make the BLACK SWAN have a chance to work for you.

If you only trade long, the day the price spikes up, you cash in big. However, if you are switching between long and short, you could be short during long spikes and long during short spikes.
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TheRumpledOne · Feb 28, 2012

1) To trade like a RAT is to ALWAYS trade in ONE DIRECTION - either LONG or SHORT. Once you pick a "team", you can't switch.

2) The "within 20 pips of the CURRENT daily high/low" is the BEST possible entry to get the maximum run.

TheRumpledOne · Feb 28, 2012

Quote from CALLumbus:

Hi,

this does not make alot of sense in my oppinion.

If you trade only long you have the chance of the price spiking up in your direction. But you have also the risk of a black swan against you.
If you trade both long and short, you have the chance to catch both an up or down spike, but you have also 2 times the risk, you could get caught by an up or down black swan.

You said this is ONE reason to trade only in one direction. What are other reasons you have in mind ? I think what you say makes alot of sense, I would just like to understand more of your thought process behind it. And when do you change the direction of your trades ? The next day ? Or when the big, longer term trend is changing ?

Thx !
CALLumbus
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If you only trade in one direction, then you sooner or later you'll be on the profitable side of the trade.

TheRumpledOne · Feb 28, 2012

Quote from FreakofNature:

What would 20 and 10 pips be in ES, how about NQ and YM

thx
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I do not know.

You would have to run a frequency distribution to find the "sweet spot".

TheRumpledOne · Feb 28, 2012

Quote from bmwhendrix:

Let me see if I get this. Say we are in a downtrend. I could just have a trailing 20 pip stop entry?, since we never know where the low of the day will actually be.
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No. That's not what the rules say.

You want to enter within 20 pips of the high for red rats and 20 pips of the low for green rats.

RCG Trader · Feb 29, 2012

Quote from Tango 6 Alpha:

Kent,

It is definitely not that TRO has an edge, that he receives the "flak" - as you put it. And, merely continuing to do the same thing does not necessarily demonstrate the truth about the matter.

I guess in a way, why should anyone care?

I mean, after all, TRO is just doing what TRO does. He posts charts after a move has been made, calls it "Results," sells T-Shirts and Donational "indicators" that he's re-worked and/or added lots of bells and whistles to - washes/rinses and then repeats. He is relentless in this regard - probably the most prolific Small Business FX Advertiser I've seen (ever) in the online trading world.

But, again - why should we care?

For every chart that TRO posts that shows "Results," I could post a matching chart that shows "Failed Results," - but again, why should we care? He's not going to stop doing this - that's laughable. This man is unstoppable and in truth, I admire him for his tenacity, even though his "stated" methodology for trading is tantamount to spinning your wheels in the snow of high-winter in Colorado.

Here's an example:

This chart pretty much says it all in an encapsulated nutshell. The method calls for the use of an arbitrary 10 pip Stop and no clearly defined Limit level. If you run this Red Bar, Green Bar, Green Bar, Entry at First Green Bar High, sequence of patterns through an EA, you will find that the Failures far outweigh the winners, even in flat (range bound) markets. In trending markets, these rules simply won't hold water.

The problem is not in the method, but in the rules that he applies to the method. The 10 pip Stop has never been defined either logically or mathematically. The Limit level rationale, logic and mathematical justification has never been in existence with this method as publicly unfolded.

This causes the position to always enter a period of "Undefined Risk" by way of an "Undefined Hold" period. Simply saying Take whatever profit you can get," should be a massive red flag to any experienced trader, as such a phrase is absolutely meaningless when trading the Hard Right Edge of the chart - as the trader never knows "whatever you can get" will mean for the remainder of the trading session.

For the newbies, they need to exercise extreme caution when approaching such undefined trading rules that look simple on the surface. There is nothing wrong with simplified rationale, but there is something very wrong with over-simplified rationale to the point of not being rational at all.

I'm not here to burst any bubbles. I just find it really interesting that some people can't see through the fog to the lack of justification in the underlying rules.

Prove it to yourself by simply building an EA that follows the rules of the methodology. The equity curve will undoubtedly turn negative and never recover, as the market shifts through its trending/range bound phases.
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To be fair to TRO, he does give an exit strategy, so with clearly defined entry and exits, the method should be easy to code up and run an EA for.

Macho · Feb 29, 2012

I can see where the 'prompt' is to enter a trade, but I would like to know if there is a minimum size to the 'wick'.

Surely, a one pip 'wick'would not qualify as a prompt.

TheRumpledOne · Feb 29, 2012

1) Price within 20 pips of the CURRENT daily low (ClLo < 20): This is OPPORTUNITY

============================================

PLEASE DO NOT PM ME WITH QUESTIONS ABOUT TRADING, INDICATORS, CODING, ETC... Post your questions in the
forum. Thank you.

TheRumpledOne · Feb 29, 2012

Quote from Tango 6 Alpha:
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I thought you said you were gone and not coming back?

I post OPPORTUNITY then I post RESULTS. Each gauge/chart that I post has a time stamp in the upper left hand corner so the reader can see these are not posted AFTER THE FACT!!

I don't take every trade. An EA that takes every trade could easily produce a negative equity curve.

Perhaps if you ran a EA for the time period that you trade, you might have a POSITIVE EQUITY CURVE if you had it STOP TRADING once you achieved your daily goal.