Logic

You are absolutely correct!

If your trading only returns 3% then you aren't trading you are investing. Some of us have "traded" for years and earned far greater than 3% even monthly. Skills are skills.

I don't quite understand the reasoning for constantly lighting a fire under this argument. You will always have three schools of thought: those that think TA is worthless because they base their assumptions on 100 years of "witch doctor" research and testing and those that actually use it every single day to eek out profits. The third group of us are the researchers, God forbid any of us talk about the consistent returns we get from the non-typical TA we've discovered and use. Then the authors, bloggers and the "fundamentalists" come out of the woodwork screaming that NOTHING NEW CAN EVER BE DISCOVERED, "THERE IS NO SUCH THING AS PENICILLIN". Idiots. They sit with blinders on and their fingers in their ears saying . . . LA LA LA LA I can't hear you. I for one am sick and tired of this discussion. If you aren't bright enought to post something stimulating that works toward the advancement of TA, don't post the same tired crappy argument again. If you are doing it to increase pages views to this site then at least be honest and state that upfront so those of us that actually trade and do our own research can stay away from the discussion like the plague.

If you email me at wm.schamp@gmail.com I can offer you a trial of the software but I will no longer be giving it away. I ran into problems with people trying to steal the parameters.

Since my software is done and I can concentrate on trading instead of data mining and the research. I'm only in front of the screens trading for about 4 hours a day. I spend another 2 to 3 hours supporting my software and working with the programmers on the web application but that is it. It is like being on permanent vacation compared to the hours I used to put in.

12 hours per day X 20 trading days a month X 12 months a year X 15 years = 43,200 hours. The first 9 years it was more like 16 hour days and that doesn't count the typical 15 hour weekends reviewing the weekly data for any errors. Billy's focus was to create a consistently profitable trading program. I did. So I guess all those hours were worth it. I get a kick out of all the hundreds of traders that have made fun of my work over the years that are still trying to put a consistently profitable week of trading together. A typical neurosurgeon's time in training is well under 15,000 hours but people say I couldn't accomplish what I've accomplished with nearly 3 times the time involved. :doh:

One thing I've found in the many years of using these charts is that real time data and historic data are different. This is why I've always stated that the key to trading is learning to read a chart and that begins with a chart constructed with Constant volume bars. You've done that . . . well done! Now the indicator. Whatever indicator you use it shouldn't be confined to a range. The Sto and MACD are range bound and that is why they are worthless. Most other indicators are just as worthless for the same reasons. This is why I use the Ergodic. It is not because it is range bound not because it has some magical power. Now that I've set the ground rules and explained what I learned digging through and watching over 40,000 hours of real time data, I can tell you the key. Take ANY indicator that isn't range bound, apply it to the chart, adjust it to show you the extreme oscillations and make it smooth to ease you into being comfortable with making decisions on what is shown on the chart. Then watch that chart to establish your confidence in making decision based on those oscillations. The chart you posted is as good as any and if you learn to read it you will be consistently profitable. If you want to play with the parameters in your off hours to see if you can improve on them . . . go for it. That is a good way to learn the indicator. Since posting that thread on that other website, I've tweaked the parameters and improved on them. I've even had a programmer create a program that will read the chart in real time. It will label the entries, exits, reverses, stops and exits in real time. It will display trade alerts on the screen and send trade and exit alerts to my email. A new day is dawning.

Hey Tams, Is there somewhere that shows how to use your definitions objectively to trigger trades?

The old saying, "If life serves you lemons, make lemonade" is a phrase that is seemingly lost to most traders. The updated version as it would relate to trading should be, "If the market is too quiet, turn up the volume." If a particular chart (market) slows down (loses liquidity) adjust the chart environment (resolution) to increase the chart speed to compensate for that loss. This is easier when using Constant Volume BarTM charting than tick or time based charts. I trade Crude Oil futures primarily & the Euro FX occasionally, full time and I always prepare for the trading week by looking at what news reports are coming out each day. This week we had light news on Monday, Tuesday and Wednesday so I traded accordingly, by speeding up my trading chart by 50% for those days. Today and tomorrow has a steady flow of major news reports so we move back to normal chart speeds. Trading is a business and should be treated that way. Retail knows when their peak times are and when their slow times are. Manufacturing and the service sector is order driven. These industries know how to forecast when their businesses see an increase in volume. Traders need to do the same thing and they can't accurately do that by concentrating on the fundamentals each day. The fundamentals are OK for forecasting and preparing for longer term tops and bottoms but they are all but worthless on giving you any tangible information that a trader can use on an hour by hour basis. Traders need to adjust their trading based on liquidity but should never drastically nor subjectively adjust their rules on a whim. This brings up a couple points regarding your last statement, "Trade well and follow the trend, not the so-called “experts.”. All 3 excellent points . . . taken out of context. Trade well? I would certainly hope that is one of a trader's main goals. Follow the trend? One first must objectively and specifically define it first before one can follow it. It's like "The Force". If Obi-Wan Kenobi didn't tell poor Luke how to find it and use it, those movies would have sucked. Finally, follow the trend, not the so-called experts. Well sir I don't know about you by my whole goal many years ago was to become a successful trader and I do believe a by-product of my success was becoming an expert of my trading environment. So I will damn sure follow what I have discovered that is consistently successful and continuously profitable. I am the expert that counts when I sit in front of my charts each day, the only expert! I've uploaded my Crude chart from today and there was plenty of profit there like every day. We marry our significant other, not our symbols. For god's sake traders if a particular chart is lacking liquidity there are only nearly 1000 others to choose from, pick one. The trades listed on the chart, by the way, are automated. They are not annotated in hind sight.

CME isn't aggragating ticks, GLOBEX is. Other than that, I Agree 100%!!

I'm right there with you on finding something that is consistent and not complicated. Your expalnation cleared thaing up for me on how you view and use your charts. Thanks.

We've had this discussion before Josh. I agree with your time-based bar assessment but traders and investors trade using charts "in" time, they don't trade time using charts. Volume is an inherent and primary ingredient in all charts and when you ignore it's predominant effect on price movement you do your overall profitability a great disservice. You're stated previously that you trade using time charts and have a volume indicator that you read as well. I know a bunch of traders that do the same thing and are profitable. I'm not saying it doesn't work. It's obviously working for you and others. I am saying it isn't as efficient as a trading environment as it could be. Common sense dictates that anytime one must "interpret" anything, you open yourself up for potential errors. To error is human (emotions), that is common sense. I personally prefer to eliminate the human (emotional) aspect from my trading environment. Tick charts are aggregated directly through GLOBEX so their order flow is dysfunctional to begin with. Even if they were perfectly accurate, which they are not, giving the same level of importance to a tick made up of a single contract verses a tick made up of a tick made up of 20 contracts is simply wrong from any mathematical level. A previous poster said that 95% of the ticks are 1 or 2 units as a general statement, which is inaccurate as well. It all depends on the contract traded. Even if 50% of the ticks were 1 contract and 50% were 2 contracts you have half of your bars carrying twice the volume weight but you were treating the bars with the same level of credence as an indicator. This is not good nor consistent. It is common knowledge that I am a vocal proponent of Constant Volume Bar Charting but only from a standpoint of accuracy and consistency. Traders tell me over and over and over again that when they apply their OWN method to them they see price movement more clearly, have more accuracy in their decisions, have higher win rates and bottom line . . . make more money. Do they work for everyone? Nope. Hey, I know guys that like CRT monitors better than they like flat screens too. Go figure. There are many ways to profit in these markets . . . period. Just never close your mind to something different. Even subtle changes in chart environments can make huge differences win rates and profitability.

Since ticks aren't equally balanced and aren't consistent on any chart they are applied to, how can fractals accurately be applied to them?

In any problem solving scenario one must begin from a point of accuracy. Yes, volume varies daily as it does yearly, monthly, weekly, hourly, each minute and each second but there is no variable aspect of constant volume bars. Each bar is weighted, by volume, exactly as the one preceding it or following it. What this means is that there is absolutely no difference the way your indicator reads a day where volume barely hits 1.6 millions contracts or a day where volume exceeds 3 millions contracts. The difference is that on higher volume days there are more bars printing. All this means is more volatility more liquidity and more trading and profit opportunities but your indicators don't change or act differently on those days. Constant volume bars are a perfect vehicle to track and validate momentum, trend (once you are able to objectively define it) and immediate strength. Everyone looks at HFT as this uncontrollable beast. I laugh at it. All it does is add volatility and liquidity which is where my profit comes from. I consider what I do as "Slow Frequency Trading" and it will work 50 years from now as it did 5 years ago. It is a physical impossibility for its "edge" to evaporate. Seeing it and using it allows one to believe it.

So John, is the question, "how do you verify momentum, trend and immediate strength using constant volume bars?

Hi John, Try not to over-analyze your trading environment. It is just important that the chart you are trading gives is volatile enough to easily extract profit from its swings and liquid enough to slide you quickly in and out of a position with as much profit as possible. I created Constant Volume Bar charting because it simplified my trading environment making it more efficient. I've studied this question and it all depends on the size you have designated for the bar. The beginning or opening of a bar has no more volatility, on average, than the close of the bar.

The email address above I killed due to spam. Email me at trading.computer@gmail.com and I will send you the current EBook information.

Tams, email me when you get a chance please. Thanks.

IMHO - Your 3 rules are perfect. 1. Support and Resistance are a couple of the only perfectly perpetual indicators a well constructed chart gives us. The problem is that you are constructing your chart using time bars that are inherently unreliable and inconsistent. Since I began using Constant Volume BarsTM (where each bar is a specific number of contracts or shares traded) all of the inconsistencies of my charts disappeared. The reason your "240 minute chart" edge disappeared was that whatever "edge" you discovered changed due to liquidity & volatility. Since minute charts can only display bars with shares or contracts displayed based on liquidity, as liquidity rises or falls, this isn't directly or specifically reflected in the bar weight. The edge disappears because the liquidity that was present when your "edge" was created changed over time. This usually occurs moving from high liquidity times from September through May and going into low liquidity times from May through August. (All markets liquidity and volitility varies throughout each year.) Price moves the same regardless of the chart, creating support & resistance at extreme leaves and minor levels. Whatever you use on Gold chart should work on a Soybean chart or a Cotton chart or the Apple stock chart. And it shouldn't ever "stop" working. Since I switched, I proved this to myself. 2. Trends are unique & ONLY exist on each chart we trade, specifically. Remember to objectively define them based on your support and resistance levels. Also remember that once you have defined and determined the trend of a particular chart, not to "trade the trend". That sounds odd but let me explain. You trade the support & resistance oscillation tops and bottoms inside your objectively defined trends. Example: You primarily buy support oscillation bottoms in an objectively defined Bull Trend. You primarily sell resistance oscillation tops in an objectively defined Bear Trend. 3. Each moment is unique and should be treated that way - Perfectly stated!! Because each moment is unique one must find a way to view this uniqueness in a consistent way. This is what Constant Volume BarsTM do for you. Your 3 steps are a great way to view price direction and trend. You just need to smooth out the volume that is displayed on your chart. Next look for a way to view "directional strength" on your chart. I discovered that incrementally slowing down the volume using a second feed on the chart gave me this tool. You are on the right track. Keep up the good work.

Differences of opinion are the balance that makes the world go around. Questions are the fertilizer that makes innovation and inventions grow. This is why logic is the absolute best problem solving environment or test kitchen, so to speak. There is no room for subjectivity. Are there better trading methods than mine? I would think so. Are there better methods at reading a chart? I haven't found any. Yes, I know where you are coming from and happy dancing to you.

Having a conversation with you is fruitless. I researched these charts/markets for years testing them and trial trading them before I jumped in with both feet, trading them for a living. I did exhaustive tests of time based charts for more years than you have been trading. I did exhaustive tests of tick based charts (before and after GLOBEX destroyed them) for more years than you have been trading. I did exhaustive tests of range, equi-volume and candlestick based charts for more years than you have been trading. All of those years of testing led me to create the constant volume bar charts due to what all of the others chart type lacked and that was balance and consistency. Constant volume bar chart offer the user a pure view of price action that they can regulate based on their own personal choice of speed. They are naturally balanced and precisely accurate for what they are. I have never ever ever said that everyone should use them. I said that everyone should test them against their own personal trading method. There are many ways to profit from these markets/charts but the more experience one gets the more one learns what he likes, what he doesn't like and what he can profit best using. I got my nickname because my second degree was in Math and I learned a true fondness for Logic. I won awards in school for it and was chosen over 5 Ph D's with a measly B.S. degree for a position at Raytheon Corp. as an apprentice working with their best problem solver at IBM in their training division. That was over 30 years ago. Since then I have eaten and slept logic, first in corporate American in a problem solving position and for the last nearly 20 years, researching price action. Everything I do is 100% objective and programmable. Nothing I do is subjective. I have a musician in LA that trades my stuff you should talk to. That being said we are done.

Pure can be defined as "not tainted by an "outside influences or variables". Simply ask any scientist about tainting environment and the results they produce. My definition of "Constant Volume Bar" charts is all that matters because I invented them and no one has proved that definition wrong. You are welcome to try using math proofs not by simply saying, "because I said so". Tams correction of terms is perfect. It isn't an elimination of time but ignoring it. Any part of a problem that is ignored is a further problem to finding an accurate solution to the problem. Your explanation of range bars and mine are the same, just described differently. I do not ignore time nor do I need a price bar to give me that information. I trade each chart and can clearly see how much time price spends in particular ranges. My volume charts specifically show when those ranges consolidate and when they are breaking out. I again can clearly see the time it takes to achieve each task or event. The amount of time it takes to complete each event is irrelevant to me though I stated it can be used by others. The important and critical information to me and any trader should be "the exact point the event begins" & "the exact point the event ends". I know traders that use those spikes in time charts but I've been trading and researching these charts/markets for many more years than you have. I don't use them and never said they were useful. I was taught as a lad to always respect experience from others. Maybe you weren't taught this. I was also taught ask questions. I have many more years experience than you do Josh at researching and trading these markets. I would not have created volume bars if I had proved that the existing environments offered a better way to make profit. I'm not saying that others like yourself can't profit from other environments because they do. What I'm saying is that until you put in the time EQUALLY evaluating all of the charting environments as I have (nearly 20 years) you are in no position to tell me what I know as fact, is wrong.

Perfectly clarified . . . You are correct, thank you.

trendinglife, Josh as clearly pointed out the 4 best chart type examples but I will elaborate a bit. One of these "WILL" end up being superior to "YOU". It will take testing on your part to determine which chart type that is. 1. Range bars allow the trader to focus on ranges of price, by eliminating time and volume. Range bars do not eliminate time, no price bars do but they do eliminate pure price flow. Range bars encapsulate price action into artificial man made ranges. The disadvantage here is the elimination pure price flow. The advantage is that in liquid fast directional moves in price it is easier to extract profit from the moves. The problem here is that during periods of price and oscillation consolidation there is little or no opportunity to trade successfully. 2. Volume bars allow the trader to focus on price based in the activity (volume) of the market, by eliminating time. Volume Bars do not eliminate time, no price bars do. Volume bars are a pure reflection of price flow by going you a chart view of price action from a reference of perfectly weighted price bars. The advantage is that all variability and inconsistency that is embedded in range, time and tick bars are eliminated so you are left with pure price action. the disadvantage is that since you have pure price action you have to test different chart increments to find a chart that you personally are visually comfortable with. These bars the most accurate in regards to price action but also take the most patience to use. 3. Time bars allow the trader to focus on price over a period of time, by eliminating volume. Time bars do eliminate volume which is an intricate part of the chart/market viewing process. I've researched charts and the markets for going on 20 years and I can tell you that eliminating any aspect of the essential information the charts/markets provides us as traders or investors is not going to lead to consistent success or profits. It is an impossibility to successfully solve any problem by eliminating one of the essential parts of that problem. the advantage of time charts is to visually see spikes or large ranges in price immediately following reports. (These I am told are advantages though I have yet to determine how these random spikes assist in consistent profitability). I personally consider those spikes as a gross disadvantage but I am bias. 4. Tick bars allow the trader to focus on transactions, by eliminating time. Tick bars do not eliminate time either but they do eliminate all consistency of price action. Since a "tick", in this instance is by definition a transaction, a transaction size can be anywhere from 1 contract to thousands of contracts. That shear variable aspect is ridiculous but to make matters worse, since August of 2006 GLOBEX has decided to arbitrarily combine ticks as they enter and exit their environment so all aspects of pure price flow is lost. Transactional ticks provide volume data though. On top of the consistencies and inconsistencies the chart bar types offer each of us the data providers and chart software providers add other variables to the equation that is also a problem. Some data providers do not provide all ticks (volume is embedded in the transactional ticks). Some data providers only offer "snap shots" of the data as it comes out of GLOBEX. This eliminates parts of the data that is essential. Be sure that if you require real time data you get an honest answer from your provider that they provide "ALL" of the GLOBEX data they are given. Some data providers, during peak liquidity times, purposely or inadvertently drop data packages and then reassemble then correctly at the end of the day so one must refresh or reload their data to see what really happened. Again check with your data provider for their procedures. Finally data providers offer varying amounts of historic data. Some offer none which means all of the historic data you have is what you save on your own. Others offer as much as 3 years worth of data. I currently use eSignal but will be switching to BarCharts data soon. Chart platforms offer yet another level of angst. These range from bugs to inaccurate reading of data. I've either tested personally or had others test the following programs with different data feeds for accuracy and consistency; Ensign, MultiCharts, Sierra Charts, Tradestation, NinjaTrader, eSignal and Amibroker. My favorite is MultiCharts but it isn't perfect, no software is. NinjaTrader is my second choice. Each of the other charting platforms create problems I personally can't tolerate. Now you might find that one of those is adequate for your needs and that is fine. The process of getting a combination of accurate charting platform, comfortable trading platform, honest broker, consistent data provider and visually appealing charting environment is a process most traders do not want to deal with. This is a time consuming process that most people try to find short cuts to. Let me tell you the the only place short cuts will lead you, is failure.

You just described one of the major pitfalls of range bars. There is a problem with artificially encapsulating trades inside ranges that do not represent to free flow of price and volume. No one can accurately nor consistently read price and volume in these environments.