[BlowFish]

Originally Posted by AgeKay »

Yes, but currently only if there were also trades at that bid or ask, I might change this in the future though. This is how I think of price changes when I watch the order book so it makes natural sense to me to plot it that way. I would not use it with FX though because volume plays a big part on those charts.

Thanks for clarifying. Incdidentally that is exactly how FX volume is reported (the order book is used as a proxy as there are no reporting requirements) but that's a bit off topic.

[UrmaBlume]

Originally Posted by brownsfan019 »

You should include volume based charts in the discussion as well.

Right on BrownsFan.

Price is not motivated by the passage of time, but rather, is motivated by the occurence of trade and more specifically an imbalance to the buy or sell side within that trade.

Tick charts record transactions and treat each transaction equally regardless of size. When measuring trade or the imbalance in trade how useful can a chart that treats a 1,000 lot the same as 1 lot be?

Below is a Volume Chart (4k) of the last half hour of yesterday's trade in the emini S&P showing flat prices and an indicator which is our calculation of net trade by commercial traders.

While prices are flat the indicator, based on an imbalance of trade, shows net distribution - THE PRO's WERE SELLING THE CLOSE. The result was an immediate drop that continues as I write.

Price does not predict price - it is the balance or imbalance in order flow/trade that motivates price and in most cases it is apparent before price responds. That imbalance is best read on Volume Charts not price or tick charts.

[AgeKay]

All bar charts and candle stick charts - based on ticks, volume, price or time - have one big flaw with regards to volume. You don't see how much volume was traded at each individual price, only how much traded at a range of prices, which makes it pretty worthless in my opinion.

[Tams]

[thetatrader]

Great topic, My 2 cents. low Tic, Vol and range bars will make your indicators fire off faster. So if that is your goal maybe they will help. but Indicators only tell you what price action is doing. I would study price action and price action patterns. I like using the five minute chart and I look for spots were early shorts or longs got sucked in and are jumping out. most of whom are using tic vol range and 1min charts. When they are forced out of their trades they are driving the market in my direction.

Also I find it hard to trade with an absent of time. just watch an emini 5 minute chart for a day and pay attention. don't be checking email and IMing. watch the chart. You will see a number of times through out the day that a bar will sell off and stay at its low but just before the bar closes it will shoot to the top of the bar and makes a bull close. It happens all the time. The 89 tic and it indicators are all saying sell. and now your trapped short. Also watch major closes. your 15, 30, 1hr closes.


I hope some of you try this and give feed back.

[rsinghal2000]

Originally Posted by uexkuell »

That sounds convincing and interesting.

Which software would do this?
Could you please post a chart?

I believe TradeStation displays inside bid/ask.... however, I'm unsure if it displays historical information or displays based on how long the chart is kept open.


Rahul

[rsinghal2000]

Originally Posted by BlowFish »

Not sure I have this clear you show 'ticks' based on best bid best ask? Similar to how FX ticks are reported? So if the bid or ask changes you plot a new price point? Just trying to be clear what you are doing.

As to which charts to use it depends what you want to see, For example price rejection often happens quite quickly so time based charts often show this well with 'tails'. Constant volume charts definitely look smoother to me. They are great for drawing/seeing trend lines for example.

What you are doing is holding a different variable constant to determine your 'sample' for a chart. Price Time or Volume (ticks are a bit of a wierd one most akin to volume). Constant Price, Time or Volume charts.

Ticks with a fast setting can be quite nice to see S/R holding as they often make flat tops/bottoms as price hits a wall of other side orders.

Horses for courses.

Ticks and Volume have been shown through various research studies by the CME (I believe) to have a high degree of correlation... meaning you can use either.

Rahul

[Catorpega]

Originally Posted by eurotrader »

Agree 100%, there is definitely no holy grail in trading and you are better served by not wasting valuable time looking for it. Hopefully through this topic traders will share their views on various chart types and provide some food for thought to others. The biggest service I think a trader can do for his/herself is find a simple system that works for them and use it as the foundation. Then keep an open mind for ideas that come their way and improve the basic system. Hence this topic. Cheers.

Hi all,,
I preffer trade without indicators, I dont need them, altho, I can use a couple of them very efficiently, like the WCCI or the MACD(4,5,13); both pattern oriented.
I use RangeBars for my charts. The size range varies from 1 pip to whatever size needed to adapt accordingly to market conditions.
My method is pure simple technical analisys; higher highs= buy, lower lows=sell. Im experimenting with a demo and use low risk management. The results are incredible and I would like to invite you to view my trades live and give me your honest opinion. By the way, I have 9 very hard years experience in this trading world.
This is the URL to view how I trade https://www.gotomeeting.com/join/230311986
You may have to give me a knock; the room is not always open; I have my own work to do too other than trade.

Catorpega