Why do people use Volume, Range and Tic charts?

[Corey]

Quote from MAESTRO:

I would like to point out a little gem that, in my point of view, is relevant to this discussion. The advantage of using something similar (but not quite) to “range bars” is to present the price-time series in the format that is a lot more Gaussian than one can imagine. Example: If you take an S&P 500 chart for the last 40 years or so and try to run the frequency distribution analysis you would soon find out that it looks like Log-normal or Power Low distribution. If you then plot a chart that presents the daily close price divided by an Average daily ATR (average true range) you will easily find that the chart looks totally different and it is 100% Gaussian! This leads to so many implications! The golden nugget here, of course, is presenting the price movements in the units of its volatility! This influenced dramatically the way I look at the markets and led to the development of the whole slew of successful trading strategies.

I find this particularly fascinating given that I am currently working with markets relative to random number distributions.

If you don't mind clarifying (I don't expect a free lunch here, I just don't quite understand one part) -- relative to what are you taking the 'frequency' for the S&P 500 chart? Overall price levels? Price levels on there own, being continuous, don't seem to lend themselves to frequency distribution tables without some form of normalization. Currently, I have been examining distance from the 200DMA -- but I don't think this is what you mean.

Am I misunderstanding?

Thanks for the insight.

 

[MandelbrotSet]

Quote from ProfLogic:

Jimmy, check out the previous post where I stated that I talked to my student who mentioned he had gotten the idea from a Brazilian friend of his. I admitted the mistake based on the information I was given and admitted to it. I'm not above error but am man enough to admit to it.

Um, no. It stretches the credibiility level just a bit too far. You know, some people can come here and talk about trading, others need to come here to be somebody. When you think about it, that's pretty sad.

Quote from ProfLogic:

I also didn't "trash" someone's life's work I said that adding variability to charts wasn't a good idea for people looking for consistency in price. Once they see how and why price oscillates, Range Bars could provide some usefulness. You seem to have found a good use for them but then you are comfortable at seeing the use of "pure price" action. There is a huge difference.

It's funny how the only one using your trading technique around here ... is yourself. That speaks volumes to how "easy" and "obvious" it is to use ... NOT.

Quote from ProfLogic:

I simply scolded you for not clarifying the point to the individual that thought Range Bars and Volume bars were the same. You know they aren't but prefered to simply make a snide gesture. That is adding to the problem.

You scold me.

LOL, I'm not your son.

Quote from ProfLogic:

Lastly, I have NEVER stated or implied I EVER caught the top or bottom of ANY move of ANY chart . . . EVER. I do not trade that way now or ever. Surf and I have never had a competition and most likely never will.

Yeah, OK, whatever you say.

 

[marketsurfer]

Quote from ProfLogic:



Lastly, I have NEVER stated or implied I EVER caught the top or bottom of ANY move of ANY chart . . . EVER. I do not trade that way now or ever. Surf and I have never had a competition and most likely never will.

yes, it would serve no purpose who was "luckiest" during the contest. i would prefer to understand and learn what you see as edge when it makes no sense to me outside of a linquistic flow chart.

surf

 

[marketsurfer]

Quote from MandelbrotSet:



This is delusional on the level of when you supposedly caught the highs and lows of what was it? 10, 20 markets? perfectly in a competition with market surfer ... funny how you're the only who doesn't see it that way.

how is market surfer delusional? market surfer makes no claims as to market savvy, market surfer has calls going back to 1999 posted on line, some uncannily accurate, some amazingly bad.

market surfer has traded ( as a hobby and as a short time professionally) since 1990. he has talked with many of the top people in the field and has many contacts in the business.

market surfer's associates have directly reviewed literally hundreds of traders who claim to have edges based on TA, NOT ONE survived

market surfer wonders why prop firm traders and other professionals don't go down this path when it's freely available, but rather it's pitched to the market naive'?

market surfer seeks EDGE not promises and kreskin claims.

how is market surfer delusional?

thank you,

market surfer

 

[MAESTRO]

Quote from Corey:

I find this particularly fascinating given that I am currently working with markets relative to random number distributions.

If you don't mind clarifying (I don't expect a free lunch here, I just don't quite understand one part) -- relative to what are you taking the 'frequency' for the S&P 500 chart? Overall price levels? Price levels on there own, being continuous, don't seem to lend themselves to frequency distribution tables without some form of normalization. Currently, I have been examining distance from the 200DMA -- but I don't think this is what you mean.

Am I misunderstanding?

Thanks for the insight.

Ok, here is what you do. First, create the time series that is the daily close divided by the 30 day ATR. Then use 30 day long linear regression curve on it and measure the deviations from it. Plot the distribution of frequencies. You should see purely Gaussian distribution.

 

[MandelbrotSet]

Quote from marketsurfer:

how is market surfer delusional?

thank you,

market surfer

You mis-read and mis-quoted the quote, Dave.

Remember when ProfLogic supposedly found every correct turn in the market ... for a substantial number of markets?

This supposed work of trading magnificence took place several years ago.
***
I'm saying ProfLogic was delusional then, and he's completely delusional now if he thinks I'm going to believe for one minute his student stole the idea of range bars from Vicente M. Nicolellis Jr. and presented them as his own, and that's why he said he created them.
***
See?

So lets move on from this one, he's been completely discredited and folks around here want to talk about trading.

JJ

 

[marketsurfer]

Quote from MAESTRO:

Ok, here is what you do. First, create the time series that is the daily close divided by the 30 day ATR. Then use 30 day long linear regression curve on it and measure the deviations from it. Plot the distribution of frequencies. You should see purely Gaussian distribution.

yes, fine observation. however, the question is, how is this knowledge exploited for profit?

regards,

surf

 

[MAESTRO]

Quote from marketsurfer:

yes, fine observation. however, the question is, how is this knowledge exploited for profit?

regards,

surf

Well, if you know that your price deviations are purely Gaussian can you not think of betting using 1 STD rules? Just think; it will come to you... I promise

 

[Corey]

Quote from MAESTRO:

Well, if you know that your price deviations are purely Gaussian can you not think of betting using 1 STD rules? Just think; it will come to you... I promise

MAESTRO --
A very interesting concept, measuring price versus volatility. Have you tried any other measures of volatility? 30 day linear regression of the ATR seems rather ... arbitrary. Was this optimized, or just eyeballed?

Later I plan on working through the math of the transformations you make to ensure that the near-gaussian distribution is a function of the underlying data and not a mathematical statement about the transformations made ... though at first sight I don't see any blatant evidence of the transformations defining the distribution rather than the underlying data.

That being said, it is certainly an interesting concept and one I plan on delving into further!

Thanks for sharing!
-C

 

[ProfLogic]

Quote from marketsurfer:

you did an excellent job at explaining your understanding of the market. unfortunately, you didn't answer the question---- let me rephrase--- are you seeking repeatable patterns in your presentation of data by which will provide an edge for you to exploit based on greater than average repeatability of these patterns?

surf

Absolutely and I know where you are going with this . . . as usual.

You must first understand that pattern repetition is worthless unless the environment is consistent. Normal pattern repetition applied to time or tick charts is a coin toss but when the environment is stable the patterns created by price oscillations are deadly constant and perfectly fractal.

Posted is my YM chart from this morning and we are currently setting up a potential Long opportunity again. (Notice Jimmy that I didn't catch the top or bottom of either move, entry or exit). This pattern set-up not only gives me the ability to SEE when potentail trades are setting up but gives me a BAR-BY-BAR view of where my EXACT entry and exit exists.

Thus answering your implied & restated question. Yes, it can be tested but more over . . . programmed. I've told you repeatedly as well that I would give you the information to test this and prove it to yourself but I will only give you this information in person. I require you sign a non-disclosure which is pretty much self-explanatory. I've also told you that after you "beat it up" you could come back and tell the world that I'm a fraud and an idiot if I was wrong. I know you wouldn't. I absolutely KNOW what you would do with the information. This is why I KNOW you will never show up at my office with a pen in your hand.

Oh and that long I was talking about just executed at 12233. Played out while writing this.