Quote from ProfLogic:
Jimmy one of my students helped invent them, though MacRae gets all of the credit. Mittalo was trying to get Ensign to add them 18 months before MacRae published them.
I completely understand them. A new bar does not start until a price tick is received that would exceed the fixed (user defined)range of the current bar. That and the 'phantom bars' are just that. There is NO need to add noise into an already noisey environment.
Nicolellis Range Bars were conceived in 1995 by a Brazilian broker and trader - Vicente M. Nicolellis Jr.
During 13 years running a trading desk in Sao Paulo, where local markets tend to be volatile, he wrestled with the problem of how to handle this volatility and its variability. Finally he concluded that the most promising approach would be to eliminate time from the equation, and just concentrate on price.
After all it is price that you trade (rather than time, unless it is an options market).
Essentially this reverts to the early days of Technical Analysis, and the use of Point an Figure Charts which just record price changes.
By using a constant range, ex. 10, and opening a new bar once that range is covered, one can also apply modern concepts of indicators, which are bar based.
In 1996 the concept was computerized, which meant that many more markets could be studied.
Experience in the last 8 years has shown that Nicolellis Range Bars are particularly good at focusing on and clarifying movement.
The way in which a long meandering, horizontal "congestion" is condensed into a bar or two, concentrates attention on the essential underlying price movement while eliminating unnecessary "clutter" and "noise".
This also makes the use of Trendlines easier.
from
www.fibonaccitrader.com
