First off, this is posted in psychology because I dont have a PHD to adequately describe what I see happening on charts. However, it is an objectively definitive approach... My question is this: Based on anyone's experience, are the imbalances in market activity better captured based on pure price levels -> swing H's and L's and the time it took to get from one to the other... or is utilizing the duration of the bar (on chosen timeframe) an integral part of how it all comes together i.e. the bar must be made before its created (thx r.n.) thus giving the market direction, trendlines, etc To sum it up, are arbitrary bar times like 60 min necessary when attempting to capture a snapshot of price/potential imbalances or is knowing the path of price then vs now adequate to cause imbalances for one to project? thank you kindly for any real responses. bd p.s. I ask cause I want to switch to range bars to control risk but also feel like knowing/trading the same timeframes as everyone else is what gives this approach a potential exploitable edge which could be lost
Since nobody answered . . . I played with range bars and CVBs at one time, but eventually went back to price bars because I was better able to see what traders were doing. I suggest you plot all three in separate windows and see for yourself which provides the information you're looking for.
cmb posted a tick chart recently on another thread showing the trade entries that made sense to him and interestingly I'd taken every one of them based on my 5-min/1-min time charts, leading me to believe that price action is price action no matter how you slice it.
ND, you are saying its price level then not bar signals? I agree but then its not PA really. price has to start somewhere/when. the open is the only logical time to use (in addition to HL measured swing times) unless bar breaks alone are valid signals, and that would depend on the participants. bd
I find time based bar superior to everything, but it's important to cycle and not just stick to to a fixed chart as clarity tends to shift from tf to tf.
I use range bars on FX to simplify what I am looking for. Price levels. Then at those price levels you can look for more focused detail on what happens at those levels....in which case a tick bar or 1min, or what ever suits you. The reason for range bars for me is I see the bigger picture clearer, and I think that as prices levels are more important than some arbitrary time issue it makes sense. I also can tailor it a bit to account for volatility somewhat by changing the amount of range I wish to look at in each bar. I found this not really possible with time based bars. However....you have to be aware of the limitations of range bars and how they are formed regards gaps etc - dont fool yourself if backtesting and looking at charts with hindsight. What is always interesting is that when you draw trend lines etc how various scales change etc.....hence consistency is probably an issue to keep in mind. Depending on your system you can prove this to yourself.
that's because the 1min CL chart with key S/R at 93.82 is same key level on a 500 volume, 200 tick, 5-range or any other chart. now when all four of those varied charts break = confirm that level as a short entry at different times... it is the same general trade expressed from four slightly different angles. newer traders think in linear terms, because they lack years of experience and therefore ability to think in layered or exponential terms. so they naturally assume one specific chart must be "right" or "best" over all others when in fact just about any chart setting will work over the course of time.
True. The behavior is the same regardless of the clothes it wears. And it's the behavior that moves price, not the means of illustration. Which is why entering at exactly the "right" tick or the "right" level is of no consequence. If the trade itself is right, it will be profitable, even if it doesn't take off the instant one hits the Transmit button.
Very true. What's most important to me is that if I can't get in at the exact tick I want (price doesn't quite get to my limit order, for example), I'll get in somewhere as long as the risk:reward ratio still makes sense. It makes no sense to place a stop loss in the path of acceptable adverse excursion because you don't want to take a loss bigger than N. Better to either accept the technically sensible stop loss or patiently wait for the next trade that meets one's R:R criteria.
This sort of confidence, though, comes only with experience, one of those aspects where there's just no substitute. The question I'm most commonly asked is "where do you enter?", and the answer, of course, is that it doesn't really matter. But this isn't acceptable. However, if one understands how the plot is unfolding, what difference does it make whether one enters on this tick or that tick? If one is that uncertain, any adverse movement is going to throw him into a panic.