I could show you but it's useless. You have found a better way to trade (relative to your experience) and that's great! It's the trader that makes the system, not the system that makes the trader. What works for one won't work for another, because we might perceive the same event differently. I was just pointing out that there were signals on the time-based chart too.
POLL: Do you principally use a time-based, tick-based, or volume-based chart?
- Thread starter Gabfly1
- Start date
I have heard people say this many times, but I would like further clarification on why people feel time based charts are better?
In this poll people seem to prefer time based charts 2 to 1, but when asked why, they seem to make a case for not using vol/tick charts. But no one has really articulated the reasons for using time based charts.
As a intra-day trend follower, I use volume charts, they seem to trend better for me, smooth out the price action. What is it about time based charts that you like? Just trying to learn, not being argumentative etc. Thanks.
--I think gabfly mentioned he uses time based charts because he finds volume charts at his sub level build too fast, for him to keep up during fast mkt action.
--One other poster mentioned something about time based charts showing congestion better, but I would argue volume charts would show you similiar congestion, but with much less bars.
-- one poster in another thread mentioned that all the traders in investment banks use time based charts. so the inference that time based charts are better.
Here is what one poster posted, we can use this as a reference.
http://www.dacharts.com/faq/tick-charts.php
Quote from NoDoji:
I've been feeling a bit at the end of my rope lately with regard to trading purely technical without interjecting the thought process, and so as of this past weekend I asked my wonderful geek of a husband to please automate my crude oil strategies. One thing this is doing is forcing me to express my rules for entry and exit in a manner that can be coded. My Skype group takes me to task, too, and that helps. "That was a long signal, why didn't you take it?" I sometimes have a logical, sensible reason, but just as often my reason is, "Because I'm an idiot."
Thank You NoDoji
You are doing exactly the correct thing. When you attempt to codify a trading system, you often discover that you did not know as much as you thought you knew. Codification of a thought process is tough - but once done, you can employ rigorous testing to determine the validity of your assumptions - and modify them as necessary.
The codification process is fluid, it is a thought process that, with each pass, you get smarter and more insightfully.
One more thing,...don't fall into the trap that so many traders fall into - a collection of optimized indicators IS NOT a trading system - they can however be apart of the system.
Still, from time to time you gotta use some gray instead of silicon.
Good luck NoDoji (by the way, great moniker!)
--I think gabfly mentioned he uses time based charts because he finds volume charts at his sub level build too fast, for him to keep up during fast mkt action.
If volume charts are too fast for a specific sub level . . . slow them down by increasing the amount of volume in the bars. Too fast charts are too noisy.
-- one poster in another thread mentioned that all the traders in investment banks use time based charts. So the inference that time based charts are better.
Always remember the larger the institution doesn't mean they are smarter. Usually it is the exact opposite. Their shear arrogance keeps them away from exploring new and potentially highly profitable techniques, methods or systems.
--One other poster mentioned something about time based charts showing congestion better, but I would argue volume charts would show you similiar congestion, but with much less bars.
Agree, volume bars show consolidation or congestion quicker because it does it in fewer bars: HHs & HLs to LLs & LHs are easier to distinguish from HLs & LHs which back-to-back immediately show consolidation or conjestion because they are based on immediate oscillations.
Finally remember that "Constant Tick Charts" are not constant. Back in August 2006 GLOBEX began the practice of bundling small trade orders into larger groups. This immediately destroyed the natural consistency tick charts had. they were still better than time based charts for reading oscillations though.
Here's the thing. I had tested the use of volume in my trading, using a regular time-based chart. I found that sometimes volume led or accompanied a move and at other times it was late to the party. And then there were the times when an increase in volume was not accompanied by a follow-through in price. Bottom line, I was not able to discern a use for volume that would enhance the reliability of my setups. Perhaps our setups are quite different and that is why volume works better for you in the manner that you use it.
I also had a brief look at volume bars, which you seem to favor. The charts were somewhat different but neither was remarkably better or worse from my standpoint and my setup criteria. It was rather like six of one and half dozen of the other. In some spots a regular time-based chart gave me a setup whereas in other spots a volume chart would give me a setup. Occasionally, the setups occurred at the same time. This finding is consistent with my general view that volume doesn't serve my own purposes one way or the other. Again, I'm only speaking for myself.
And as I had previously noted, the thing I don't like about volume bars is that there are times when several bars form at once, which I find discombobulating. As for slowing down my charts to reduce this effect, that would defeat the purpose for me because it is the short-term charts that serve me best. It seems that some of what you regard as noise serves me well. Just as volume, which largely appears to be noise to me, seems to serve you well.
Quote from Gabfly1:
Here's the thing. I had tested the use of volume in my trading, using a regular time-based chart. I found that sometimes volume led or accompanied a move and at other times it was late to the party. And then there were the times when an increase in volume was not accompanied by a follow-through in price. Bottom line, I was not able to discern a use for volume that would enhance the reliability of my setups. Perhaps our setups are quite different and that is why volume works better for you in the manner that you use it.
I also had a brief look at volume bars, which you seem to favor. The charts were somewhat different but neither was remarkably better or worse from my standpoint and my setup criteria. It was rather like six of one and half dozen of the other. In some spots a regular time-based chart gave me a setup whereas in other spots a volume chart would give me a setup. Occasionally, the setups occurred at the same time. This finding is consistent with my general view that volume doesn't serve my own purposes one way or the other. Again, I'm only speaking for myself.
And as I had previously noted, the thing I don't like about volume bars is that there are times when several bars form at once, which I find discombobulating. As for slowing down my charts to reduce this effect, that would defeat the purpose for me because it is the short-term charts that serve me best. It seems that some of what you regard as noise serves me well. Just as volume, which largely appears to be noise to me, seems to serve you well.
I agree with your statements.
Seems like if you use a coordinated view of both, you would learn to see the two evolve together improving your overall profitability.
You need to be careful about the poll numbers. For example, some traders that prefer time charts may be saying such because it's the only type of charts offered by their data vendor. Another example, maybe someone that's using vol/tick charts is because they are using a trade method specific for volume or ticks which is why some time base charts don't use volume charts because volume is not part of their method.
I'm one of the latter, I don't need volume because I can see it in price itself. Thus, there's no need for me to use volume base charts nor do I use a strategy that's based upon volume eventhough I have access to the other types of charts.
Use whatever type of charts that fits your trading style or method instead of worrying about what others use.
Simply, if you need volume...I can't imagine why someone wouldn't be using charts based upon volume. Thus, there's really no debate nor any reason why someone needs to try to convince others that his/her type of chart will be better for them.
Mark