TriPack explains range bars and goes into the subject in accurate and interesting detail in his article referenced from somewhere in this thread and I really like the concept that it shows *only* the trend and cuts out the sideways movement in the market. The advantage (you may call this disadvantage) of volume based bars is that they will show you a consensus area where a large number of contracts trade in a certain range which is useful for to work out S/R areas when/if the price returns to this area. Time based bars just destroy the notion of a trend if there is sideways movement for a prolonged period of time.
Not necessarily..There could be many low-volume ticks, so in that respect, one must define what market-moving activity really is. Range bars are an interesting concept.
I found that in the range bars I built for sierra that I had to build optional hysteresis in as well. Otherwise with a 5pt range on hsi they were toggling back and forth with slight overruns on the multiples of 10 which negated the "show the trend but hide/compress the sideways movement" argument a bit. images stored at freewebs.com
So if you defined activity as number of contracts traded (volume) versus number of orders executed (ticks) then activity=volume otherwise activity=ticks? So extrapolating from this we can define tick charts as representing activity as defined by number of orders executed, volume charts representing activity as define by number of contracts, time based charts representing activity based on the pasage of time and range (momentum) charts representing activity based on movement in price. So what it boils down to is what one feels activity is. Is it number of (1) contracts traded (2) orders executed (3) minutes passed (4) cents movement in price? So a trader that looked only at tick charts would feel that market activity (or the important aspect of market activity) is based on number of orders executed. Some traders may feel that all 4 aspects are valid in some way and may use a hybrid of charts based on all 4 in order to draw an opinion and may weigh each one differently. It would be interesting to derive a consus indicator(s) from all 4 sources and see when they all signal in the same direction...
n : the lagging of an effect behind its cause; especially the phenomenon in which the magnetic induction of a ferromagnetic material lags behind the changing magnetic field In this case, when price has gone down thru 12390 to form a bar in the 12390-12380 range I require it to go back to 12392 before I will accept a reversal to create a new bar. With no hysteresis (or noise filter) when it went back to 12390.000001 this would be enough to create a bar in the 12390-12400 range. Apologies for the number of words Regarding your consensus, thats exactly why I built a tickvolume option for sierra. I couldnt imagine combining it with constant price bars though. I think the objectives are different.
I like this comment. Having been a floor trader at one time, big/fast price swings are when there is a relative absence of available counterparty volume. Sellers are just backing off in one mother of a retreat when price is shooting towards the heavens. Gorgeous. Price is falling like a mother when buyers are disappearing in one disorderly rout. Also gorgeous. After a big swing like that it can go quiet for a while or equally, bingo, the other side who have been re-grouping, hit back and hammer the sh*t out of you driving the price back through the direction you had just come from.
Again referring to floor trading and as is well known you can get pitched battles of very high volume on both sides without clear victory. Also thats exciting or was to me. Price is moving down, price is moving up, the battle rages and then as the battle dies you may look and see that there has not been a big gain up or down. The flushed combatants feel, oh well, that was a damned good fight anyway.