Charts?

[wrbtrader]

...So, if the S&P500 goes down say 2% on a candle chart, then it goes down 2% on the rest of the chart styles. What are the advantages of using candles rather than bars or renkonk?

Thanks!

2% down on a candle chart is still 2% down on a bar chart, 2% down on a line chart and still 2% down on any other chart.

You can take this further. Pretend you're talking about futures...all session chart in futures will produce different backtest results than regular session chart.

Something scarier, some data vendors will use different start times for the Opening and the Closing on regular trading session charts. Yeah, very weird.

Some may think its no big deal about the chart configuration on a trader's monitor in comparison to the chart configuration on the monitor of another trader. Yet, here's an example why it is a big deal. There was a thread here where someone shared their "simple trade strategy". Lots of arguments by those that said its works against those that said it doesn't work. Funny thing is that many were getting different backtest results and different simulator results just because the chart configuration was different from trader to trader while testing the exact same trading instrument via the exact same time frame...

It was a light bulb moment for me.

wrbtrader

 

[Xela]

I just wondered what the difference between candles and bars was, if any, in their representation?

As mentioned above, they both display (and are constructed from) exactly the same information (the open, high, low and close for each specified period), but candles visally emphasize the opens and closes, while bars visually emphasize the highs and lows.

 

[themickey]

...So sometimes the market goes up and down 1% on a daily basis, then at other times 2%. Overall it may lose 5% in a week for example. Is it better to use the larger variation figures to compile a plan of attack? The logic being - it changes less.
I hope I've explained that in a coherent manner (I know what I mean )

I don't quite understand this paragraph but I think you may be talking about volatility and possibly time frames as well.
The shorter the time frame your chart (indicating bars of for example either 1 hour chart or daily bar chart or weekly bar chart) will change the volatility. Every trader has their own time frame they wish to trade, depending on their choice of lifestyle, some trade 5 minute bars/candles all the way up to some may trade/invest via monthly bars/candles. The shorter your time frame, the more likely you will be whipped around (chopped in and out re your buy/sell signals)
Therefore as a new trader one of the first things you need to deeply ponder is, how frequently do you wish to trade, then work your charts around that. Most traders will use different time frames at any one time to get a perspective on the lay of the land, eg, they may trade infrequently but will use weekly charts, daily and all the way down to 5 minute bars to decide levels of support, resistance and other stuff to determine which way next probability.
Re bars or candles, renko, lines etc, its a matter for you to decide which way your brain gives you the most satisfactory detail for your trading style.

 

[themickey]

Every trader's brain is different, there is no right or wrong way, no selection method which is more superior, it depends on you as an individual which pleases you most, your brain may love candles, my brain might prefer bars on the monitor to represent the chart.

 

[padutrader]

Strictly speaking this is perfectly true. I always oversimplify, in what I say on this subject. (I normally get away with it, Mr. Hawkeye, but you're quite right, of course!).

The example that springs to my mind is always the old Joe Ross discussion about what happens if you trade from 9-minute charts instead of 10-minute charts, and/or if you start your timed bars off at one minute past the hour instead of on the hour. Of course you're trading from different charts from everyone else (not always a bad thing), but realistically nearly all the highs and lows on your chart are at the same levels as those of your "more orthodox" timeframe-equivalent traders: it's the opens and closes that are all different, "because they're ultimately user-defined".

Nice one Joe Ross is a old war horse and always talks sense

And i do not believe you can over simplify...but that does not stop me from trying

 

[SunTrader]

Highs and lows often are exaggerations. Traders that are caught out of sync with PA.
IMO closes and opens are where it's at.

Here are 3 examples on ES (all short signals touches of previous opening prices of bearish bars) 5 minute, 30 minute (twice) and daily (to the tick) - notice wicks ignored:

 

[SunTrader]

Now of course there are times price turns right at a high/low. Though often it will turn out the reversal is short lived. Especially intraday.

 

[iccenuol]

Hi SunTrader. The above chart is the other end of the scale, one minute time intervals. I've added volume as an indicator, and I'm currently looking for some kind of logic or reasoning to enter the market. What I have noticed immediately is that you don't seem to get much of a run for your money in terms of trade longevity. By the way, thanks to all for the replies, much appreciated.