Interesting concept. Seems like it would depend on one's core approach to the markets.
1) IF one seeks patterns that nobody else knows about, then nonstandard definitions of the bar duration (or bar cycle time, bar periodicity) and bar phasing (the subinterval start time of each bar) might be promising. The logic is that if everyone uses the same periodicity and phasing, then most of the profitable patterns have already been exploited. Too many traders trying to all use the same view on the markets will create an efficient market. I would guess that contrarians and bottom feeders fall into this first category. The natural analog to this is the solitary predator, waiting to take down prey that no one else knows about.
2) IF one seeks to be part of the dominant trading pattern, then one would seek the most common definitions of the bars. This is the "Don't fight the markets", "trend is your friend" crowd. The key to this perspective is to be part of the herd -- buy when others are buying and sell when others are selling. The logic for this perspective is that the markets are most predictable when lots of traders are trading the same direction. I would guess that momentum traders fall into this second category. The natural analog to this is penguins jumping off an iceberg -- the penguin that jumps alone gets eaten by the sea lion, the penguins that jump together thrive.
I am not sure which perspective is better.
Cheers,
-Traden4Alpha
1) IF one seeks patterns that nobody else knows about, then nonstandard definitions of the bar duration (or bar cycle time, bar periodicity) and bar phasing (the subinterval start time of each bar) might be promising. The logic is that if everyone uses the same periodicity and phasing, then most of the profitable patterns have already been exploited. Too many traders trying to all use the same view on the markets will create an efficient market. I would guess that contrarians and bottom feeders fall into this first category. The natural analog to this is the solitary predator, waiting to take down prey that no one else knows about.
2) IF one seeks to be part of the dominant trading pattern, then one would seek the most common definitions of the bars. This is the "Don't fight the markets", "trend is your friend" crowd. The key to this perspective is to be part of the herd -- buy when others are buying and sell when others are selling. The logic for this perspective is that the markets are most predictable when lots of traders are trading the same direction. I would guess that momentum traders fall into this second category. The natural analog to this is penguins jumping off an iceberg -- the penguin that jumps alone gets eaten by the sea lion, the penguins that jump together thrive.
I am not sure which perspective is better.
Cheers,
-Traden4Alpha
