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Why do people use Volume, Range and Tic charts?
- Thread starter fearless9
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Quote from ProfLogic:
I did, years ago and discovered there was too much noise in minute charts. Noise like static on a TV screen skews the view and personally I like crystal clear like HDTV.
The ratio I was talking about was not time based but tick based equivalents that have been reduced to the 1 minute period and then multiples of which are used to see the broader picture.
So if 1 minute of ticks (calculated my way) = 10 ticks
the sequence to look at would be:
10t, 30t ,150t ,300t ,600t
What would your sequence be? (assuming no volume charts are available as in the case of spot fx).
PS This is a swing/micro swing trading sequence not a scalping settup.
Quote from fearless9:
Pl, can you expand please.
For example, my choice of V2500 comes from a desire to keep my bar at a sub 60 second level in the heavy traffic without being ridiculous.
Using squares I could select 7
ie 7*7*7*7 = 2401
Whether this produces a smoother chart, I just dont know
7s are nice!
Quote from NZDSPeCIALISt:
The ratio I was talking about was not time based but tick based equivalents that have been reduced to the 1 minute period and then multiples of which are used to see the broader picture.
So if 1 minute of ticks (calculated my way) = 10 ticks
the sequence to look at would be:
10t, 30t ,150t ,300t ,600t
What would your sequence be? (assuming no volume charts are available as in the case of spot fx).
PS This is a swing/micro swing trading sequence not a scalping settup.
Ticks aren't much better than time especially since GLOBEX destroyed the Constant Ticks. Still too much noise.
Eample: Use the Euro FX as your Trend chart. Use "9" as an example. Create a 729 Volume Bar Chart for Intraday Trend, faster for scalping and slower for longer term trends. The FX and Spot moves near identically. Use the Euro FX for trend and your Spot chart for entries and exits. I have large bank currency traders that do just as I layed out and they're trading extremely well.
I still use Tick charts but only where Volume Bar Charts aren't available.
Hopefully soon, Reuters and the CME will link up all of the interbank feeds to one solid stream. They are shooting for some time next year.
ProfitLogic
Let me say as a long time trader, overall, I think this is one of the more insightful intelligent posts I have seen on ET.
a little background
I have been a full time trader for many years.
I started trading stocks in 1979.
By 1981 I was doing fairly well, by my standards at that time.
Best single day profit was a little over $16,000.00
In 1982 I became a series 7 stockbroker with Paine Webber.
By 1985 I had started an independent NASD broker dealer.
My firm traded managed accounts of which I was director of trading.
During this time I also owned controlling interest in a registered investment advisory firm.
I traded equities for clients and options and equities for myself and my family.
I now only trade for myself and my family. I trade equities, options, and ES futures.
You say, "Price does move methodically. One just has to view it in a stable non-varying environment to see it."
Experience has led me to believe this is correct.
But, I must confess I also agree with much of what Specialist has to say.
I mainly trade the regular session in the ES.
I have at times tried trading some during the night session. The ES environment is considerably different, varying, comparatively unstable (in my opinion) when the DAX is/is not trading, when bonds are/are not open, day vs night session, etc.
I don't believe excluding or segregating night session data to be an arbitrary decision.
You say,
"No offense Specialist but please explain to me how you can get an accurate read on any market if you arbitrarily eliminate a portion of the data? ..........
All of the transactions, shares, contracts . . . whatever MUST be included in the data to get an accurate and consistent read on a markets price movement, direction and strength. Even the data from the slower overnight sessions must be included. This is the sole reason why Volume Bar charts are the only consistent and stable viewing environment for the markets. This is because it isn't necessary to build in a bias against a certain segment of the data. It include all of the data conveniently."
In my search for clarity I don't want to leave data out. But I also don't want to try to reach a conclusion about APPLES from a mix of APPLES & ORANGES.
Experience has led me to believe that is what mixing transactions (data) form the day sessions with transactions (data) from the night sessions amounts to.
Yet, I do both. I use volume charts which include the night session because I want to know the exact highs and lows for support and resistance. Then I use minute charts on which I exclude data from the night session, many indicators become useless at the open otherwise.
I have found that for most individuals successful trading is very individualized and not cookie cutter. There are shortcomings in any approach I have seen. Some just work better for certain personalities or individuals than others.
Good luck and thanks for posting.
Nutsneal
Let me say as a long time trader, overall, I think this is one of the more insightful intelligent posts I have seen on ET.
a little background
I have been a full time trader for many years.
I started trading stocks in 1979.
By 1981 I was doing fairly well, by my standards at that time.
Best single day profit was a little over $16,000.00
In 1982 I became a series 7 stockbroker with Paine Webber.
By 1985 I had started an independent NASD broker dealer.
My firm traded managed accounts of which I was director of trading.
During this time I also owned controlling interest in a registered investment advisory firm.
I traded equities for clients and options and equities for myself and my family.
I now only trade for myself and my family. I trade equities, options, and ES futures.
You say, "Price does move methodically. One just has to view it in a stable non-varying environment to see it."
Experience has led me to believe this is correct.
But, I must confess I also agree with much of what Specialist has to say.
I mainly trade the regular session in the ES.
I have at times tried trading some during the night session. The ES environment is considerably different, varying, comparatively unstable (in my opinion) when the DAX is/is not trading, when bonds are/are not open, day vs night session, etc.
I don't believe excluding or segregating night session data to be an arbitrary decision.
You say,
"No offense Specialist but please explain to me how you can get an accurate read on any market if you arbitrarily eliminate a portion of the data? ..........
All of the transactions, shares, contracts . . . whatever MUST be included in the data to get an accurate and consistent read on a markets price movement, direction and strength. Even the data from the slower overnight sessions must be included. This is the sole reason why Volume Bar charts are the only consistent and stable viewing environment for the markets. This is because it isn't necessary to build in a bias against a certain segment of the data. It include all of the data conveniently."
In my search for clarity I don't want to leave data out. But I also don't want to try to reach a conclusion about APPLES from a mix of APPLES & ORANGES.
Experience has led me to believe that is what mixing transactions (data) form the day sessions with transactions (data) from the night sessions amounts to.
Yet, I do both. I use volume charts which include the night session because I want to know the exact highs and lows for support and resistance. Then I use minute charts on which I exclude data from the night session, many indicators become useless at the open otherwise.
I have found that for most individuals successful trading is very individualized and not cookie cutter. There are shortcomings in any approach I have seen. Some just work better for certain personalities or individuals than others.
Good luck and thanks for posting.
Nutsneal
Quote from ProfLogic:
Price & volume run hand in hand. Price movement or oscillations are the reflections of the sentiment or the emotions of the individuals that trade inside of any market IN REAL TIME. Volume shows the amount of that collective sentiment that is effecting the market at any given moment. Time is the monitor where we view a combination of price and that sentiment.
The most common viewing options for traders are Minute Charts, Ticks Charts, Range Bar Charts and Volume Bar Charts to use as that monitor.
1. Minute Charts - Varying number of shares or contracts traded per bar. (Volume unstable)
2. Tick Charts - Constant number of Ticks but still a varying number of shares or contracts traded per bar. (Volume unstable)
3. Range Bar Charts - User defined bar range but still varying number of shares or contracts traded per bar. (Volume unstable)
4. Volume Bar Charts - User defined number of shares or contracts traded per bar. (Volume Stable)
Price will always be stable because it can not be manipulated. It is a perfect reflection of any Market at any given moment (past & present). Volume Bar Charts then give stability to Volume and Time (Chart Increment). The user (YOU) define the number of contracts or shares that make up each bar. Less contracts or shares gives you faster charts and would be used for intraday or scalp trading. More contracts or shares traded per bar gives you slower charts and would be used for Swing, Position or Long Term trading. The environment is now perfectly viewable, stable and non-varying. You now need to choose the chart increment to best suit your trading style (Intraday, Swing, Position or Long Term) and as stated earlier, spend the screen time to learn just exactly what does price do consistently in the "time frame" that you wish to trade.
I don't use the term "interrupt" because it implies a subjective action. I prefer "read" because what the ultimate result of this environment is, is to be objective in your decision making process trading on price consistencies.
Price does move methodically. One just has to view it in a stable non-varying environment to see it.
Quote from NUTSNEAL:
I mainly trade the regular session in the ES.
I have at times tried trading some during the night session. The ES environment is considerably different, varying, comparatively unstable (in my opinion) when the DAX is/is not trading, when bonds are/are not open, day vs night session, etc.
I don't believe excluding or segregating night session data to be an arbitrary decision.
In my search for clarity I don't want to leave data out. But I also don't want to try to reach a conclusion about APPLES from a mix of APPLES & ORANGES.
Experience has led me to believe that is what mixing transactions (data) form the day sessions with transactions (data) from the night sessions amounts to.
Yet, I do both. I use volume charts which include the night session because I want to know the exact highs and lows for support and resistance. Then I use minute charts on which I exclude data from the night session, many indicators become useless at the open otherwise.
I have found that for most individuals successful trading is very individualized and not cookie cutter. There are shortcomings in any approach I have seen. Some just work better for certain personalities or individuals than others.
Good luck and thanks for posting.
Nutsneal
Nutsneal,
Thanks for the compliment.
I look at all transactions coming from a single market as being "Apples". It is just that there are less "Apples" occurring during the overnight session and because of that, I do not trade there. The trades occurring there are not different just less frequent. Mixing Volume Bar and Minute charts WILL confuse you though. Volume Bar Charts are a perfect meld of time, price and volume. That clarity that will never be attained in minute charts unless you add a volume indicator which needs to be interpreted. And we all know what happens when things are left open to interpretation. Subjectivity creeps in. Subjectiveness will kill a trader.
The other difference I think is that you sound like you use numerous indicators. I only use one. Since Volume Bars are constant I use only a single less common indicator I have tweaked to mirror price movement to confirm price oscillation tops and bottoms at either extreme or minor levels. This gives me a clear view of extreme oscillations, of which I derive Trend and the Minor oscillations as entry and exit points in-between the extremes.
I have tracked The EMini S&P, Euro FX, EMini Dow, EMini Russell and EMini NASDAQ over the last 12 years (market creation inclusive) tick for tick, 24 hours a day and can emphatically tell you that trading any of these markets becomes a whole lot clearer Intraday or Swing when one uses all of the data.
I've attached a Position Trade Chart for the EMini S&P using Volume Bars and my single indicator. All oscillation labels are computer generated in real time. The only thing not computer generated on this chart is the circle and the date, time and price tag for the trade. This trade is still valid in the December contract.
The key factors for taking this trade were:
1. We were in a confirmed Bull Trend
2. 1229.00 was a Divergent Extreme Support giving us the first "WARNING" that a bottom COULD be setting up. By the way that occurred on 06/14/06.
3. 1231.00 was the confirming oscillation again giving us further "WARNING" of the impending bottom. That occurred on 07/18/06.
4. 1243.50, the extreme oscillation failure occurred going into the close on Friday 07/21/06.
5. Finally the trade was executed on Monday the 24th at about 10:15 am.
The point is that this trade began setting up over 5 weeks before it was executed and because it was perfectly clear it was easy to watch it blossom.
Attachments
Quote from ProfLogic:
No offense Specialist but please explain to me how you can get an accurate read on any market if you arbitrarily eliminate a portion of the data? That would be akin to tossing out a QB's 1st quarter numbers because he's just getting warmed up.
It reminds me of that Metalica parody . . . 13 hours baaaad . . . 11 goooood.
All of the transactions, shares, contracts . . . whatever MUST be included in the data to get an accurate and consistent read on a markets price movement, direction and strength. Even the data from the slower overnight sessions must be included. This is the sole reason why Volume Bar charts are the only consistent and stable viewing environment for the markets. This is because it isn't necessary to build in a bias against a certain segment of the data. It include all of the data conveniently.
For Volume Bar increments use perfect squares to create you chart increments. Example:
9
9 x 9 = 81
9 x 9 x 9 = 729
9 x 9 x 9 x 9 = 6561
9 x 9 x 9 x 9 x 9 = 59049
9 x 9 x 9 x 9 x 9 x 9 = 531441
9 x 9 x 9 x 9 x 9 x 9 x 9 = 4782969
9 x 9 x 9 x 9 x 9 x 9 x 9 x 9 = 43046721
9 x 9 x 9 x 9 x 9 x 9 x 9 x 9 x 9 = 387420489
This is just an example but it gives you a starting place. Some markets like Feeder Cattle that are thinly traded would need a 9 Volume Bar Chart. The other extreme would be the QQQ's where you would want to build a Trend chart with a 4782969 for Intraday viewing or an even larger one for Swing or Position trading. You can even go so far as set up one Volume Bar chart as a Trend chart and the next fastest chart increment to use for entries and exits because it is incrementally perfect. A sub set so to speak.
Enjoy a good portion (but not all) of my 12 years of research . . .
Why does the market care that 3 x 3 = 9 ?
Quote from dcraig:
Why does the market care that 3 x 3 = 9 ?
The market doesn't.
You are missing the point but if you don't understand the posts that preceded then the one you quoted won't make much sense. Then again it might not make sense anyway.
It's like building a 5 story building and one of the crew comes up and asks, "why does the building care if you use 2 x 4's verses 1 x 1's". The building doesn't care but the people building it and the people using it do.
Quote from ProfLogic:
The market doesn't.
You are missing the point but if you don't understand the posts that preceded then the one you quoted won't make much sense. Then again it might not make sense anyway.
It's like building a 5 story building and one of the crew comes up and asks, "why does the building care if you use 2 x 4's verses 1 x 1's". The building doesn't care but the people building it and the people using it do.
OK, I'll rephase it. Why do the market participants care if 3 x 3 = 9 ?
It's quite clear that in construction if 2 x 4's are required and 1 x 1's are used, the thing is going to fall down and the people involved do care about this. All this can be exactly calculated and figures derived within the constraints of cost and safety.
I see no reason to believe that market participants give a fig about perfect squares. Why should they ?
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