Ever heard of RBBM? It's short for Rubberband Model, a game-changer for traders who've been struggling to turn a profit. We're talking about taking those inconsistent traders and turning them into absolute powerhouses with some serious gains under their belt.
Now, if you've been at this trading game for ages and still haven't seen any green in your account, there are basically two reasons why:
- You might just have a weird love for pain, getting a kick out of the struggle more than the cash.
- Or, you've been looking at the market all wrong.
If you're nodding along to the first one, well, I kinda respect your resilience, but let's be real—you're more of a gambling enthusiast than a trader. And hey, no judgment, but maybe the "Trading Made Simple" thread is more your speed.
But if reason number two hits home for you, stick around. There's some good stuff in this thread that might just change your whole trading game. Get ready to see things differently and maybe finally start making those gains you've been dreaming about.
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Introduction to RBMM
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The Rubberband Model (RBBM) offers a solid roadmap for understanding how markets work. It's like having a cheat sheet that helps traders make smart choices and estimate market shifts accurately. Once you've got a handle on it, you'll find yourself confidently steering your trades every single day, staying ahead of market trends.
I use the term "Rubberband" to explain how markets move. Think of it like stretching a rubber band – it snaps back when you release it, right? This analogy paints a clear picture in traders' minds, helping them grasp how market dynamics work and making it easier to understand how prices move up and down.
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Framework
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In my personal trading experience, I've found that there's no one-size-fits-all approach when it comes to timeframes.
You're free to choose what works best for you, but based on my own journey, here are some recommendations.
Timeframe
Entry Timeframe: 15min
Confluence Timeframe: Daily/4Hour
- Each Week, Phases start anew
- Wait before Monday to pass befor analyzing
- No Indicators are needed (but can be used)
- Not every Week/Instrument will give perfect Cycles. Markets arent perfect. deal with it.
(dont worry, we will get to these Points)
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Understanding the Rubberband Model
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The RBBM breaks down market behavior into three clear phases, much like the different states a rubber band can be in:
1.1: Phase 1 - Default Phase:
Think of this phase as the default setting, like when a rubber band is just sitting there without any tension. In market terms, it's when things are going sideways, without any clear trend one way or the other.
1.2 Phase 2 - Stretched Phase:
Here, the rubber band is being pulled in one direction, much like when a market is on the move in a particular direction. It's when we see a clear trend forming.
1.3 Phase 3 - Bounce Phase:
After being stretched, the rubber band snaps back, and similarly, in the market, we see a reversal or pullback in the opposite direction. This phase marks a shift in the trend or a temporary correction.
In addition to the main phases, there's an intermediary stage, Phase 1.5 (or 3.5) - the Setup Stretch Phase. This acts as a kind of warm-up, giving us hints about direction without fully committing to the tension we see in the later phases. It's like the calm before the storm, signaling potential movement without going all-in just yet.
Weekly Cycle BluePrint
Central to the Rubberband Model is the Weekly Cycle Blueprint, a vital resource for traders navigating market intricacies. This blueprint acts as a roadmap, offering valuable insights into the cyclical patterns and trends that drive market movements throughout the week.
Now armed with an understanding of the various phases, traders can leverage this knowledge to decipher daily market dynamics.
Monday: Phase 1 - Default Phase [DP]
Mondays kick off with traders digesting the weekend's news and events, setting the tone for the week ahead. This period is marked by a scramble to gauge sentiment, resulting in chaotic and unpredictable price movements.
Trading during this phase is strongly advised against. The initial hours of Monday trading are often marred by erratic price action, making it unwise to rush into positions. Moreover, there's a psychological aspect to consider: after a weekend break from trading, there's a temptation to dive back in for a quick dopamine fix from executing trades.
However, giving in to this impulse can spell trouble, leading to impulsive decisions, deviation from trading plans, and overall poor risk management. To counteract these tendencies, it's best to exercise restraint and refrain from active trading on Mondays. Instead, take a passive approach and spend time observing chart patterns. This not only cultivates self-discipline but also reinforces adherence to trading strategies, laying the groundwork for long-term success in navigating market volatility.
Tuesday: Phase 1.5 - Setup Stretch Phase [SSP]
On Tuesdays, we step into the Setup Stretch Phase, where market momentum extends in a single direction with minimal pullbacks. It's crucial to tread carefully during this phase and avoid jumping the gun on reversal trades.
The temptation to predict a market reversal grows as traders witness sustained momentum. However, giving in to these impulses is both futile and counterproductive. Trying to impose personal biases onto the market, like anticipating a reversal based solely on subjective assessment, is a common mistake.
It's important to understand that the market operates independently of individual expectations. Believing that the market "has to" conform to a certain direction is wishful thinking. Traders must remain objective and refrain from projecting personal preferences onto market dynamics.
While Phase 1.5 offers strategic trading opportunities, it demands a disciplined approach and adherence to predefined strategies. As we delve deeper into the Rubberband Model, we'll explore the best techniques for navigating Phase 1.5, seizing market opportunities, and effectively managing risks.
Wednesday: Phase 2 - Stretched Phase [SP] + Phase 3 - Bounce Phase [BP]
On Wednesdays, we dive into the Stretched Phase, seamlessly transitioning into the Bounce Phase within the same day. This is when the market pushes to its limits, encountering resistance that hints at a potential reversal.
Wednesdays are a goldmine for traders, often offering the week's best opportunities with the highest accuracy for trades. Personally, I've found Wednesdays to be so promising that I focus exclusively on trading during this day.
In the next sections, we'll delve into trading strategies for Phase 3 and pinpointing entry points. Mastering these tactics will empower traders to seize the abundant opportunities Wednesdays offer, boosting their success in the market.
Thursday: Continuation of Phase 3 + Phase 1.5 (3.5)
On Thursdays, the market tends to stay on its path from the Bounce Phase before gradually shifting back into the Setup Stretch Phase. This signals a rebound after tension release, akin to a rubber band recoiling and stretching out again.
During this phase, traders can capitalize on continuation trades stemming from Wednesday's bounce. Additionally, they can gear up for a mini-cycle repeat expected on Friday, marked by Phase 2, the Stretched Phase, as the market gears up for another round of extension.
Friday: Back to Phase 2 - Stretched Phase + Phase 3 - Bounce Phase
Fridays often mirror the market dynamics seen on Wednesdays, returning to a fully stretched rubber band state. This presents traders with the opportunity to actively pursue Phase 3 Bounce Setups, rounding off the trading week on a positive note.
Full Weekly BluePrint Model (Example)
Summary of Weekly Blueprint:
Phase 1 - Default Phase (Rubberband Relaxed): At the beginning of the week, the market behaves like a relaxed rubber band, absorbing weekend news and events. Price action is chaotic and directionless, making it wise to refrain from trading to avoid unpredictable movements.
Phase 1.5 - Setup Stretch Phase (Rubberband Initial Stretch): Following the Default Phase, the market gradually extends in one direction without major pullbacks. This phase serves as a warm-up, indicating potential movement before significant shifts occur.
Phase 2 - Stretched Phase (SP) (Rubberband Fully Stretched): Midweek, the market reaches its maximum extension, resembling a fully stretched rubber band. While opportunities abound, traders must be cautious as resistance increases, signaling a potential reversal.
Phase 3 - Bounce Phase (Rubberband Release and Rebound): After the Stretched Phase, the rubber band is released, leading to a bounce or reversal in the opposite direction. Thursdays focus on continuation trades from Wednesday's bounce, while Fridays aim to identify bounce setups to conclude the week.
Weekly Cycle Blueprint: The Weekly Cycle Blueprint offers insights into cyclical market patterns and trends. By understanding these phases through the rubberband analogy, traders can navigate each stage effectively, making informed decisions and maximizing profitability.
There is a lot more to come, but I am going to end it here for now.
We will be slowly adding things.
