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joshdance

The Close of a Bar is Meaningless

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I'm not saying they can't be high or "too high". I'm saying they can't both be high within the same strat. It is an either or situation.

 

High win/loss ratio with small win amounts or Low win/loss ratio with high win amounts.

That is just how math works whether it is trading or sports or music or .......

 

I don't think that this is true at all. I believe it is very possible to have a high win/loss ratio with high win amounts. In fact, it is the one thing that I continually strive for on an ongoing basis. Have I achieved it yet with total consistency? No. Do I believe that I will get there eventually? Absolutely!

 

I'm curious what math you are using to arrive at this self-limiting conclusion?

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Hopefully most of the thousand readers are doing serious inner work aligning their representational system to their own perceptual type/profile, instead of assuming, the standard consensus charting methods, the bars, etc. really are the market…

 

I started this thread to accomplish that very purpose, because you may "hope" all you want, but I'm sure you would doubt that this is the case for the general trading community. As with everything in trading and most things in life, there is no right or wrong, clear cut answer. The title of this thread itself challenges one of the many assumptions that most traders hold.

 

Hopefully, we haven’t influenced anyone to come to discount the close if it actually should be ‘meaningful’ in their world

 

If they are doing well, then I hope not too; but the "world" of many traders is a world that they might be okay with if it were 'shaken up' a bit. Just look at youtube videos of trading, and you will see what the average trader learns from. Realize that this is the food they are eating and the air they are breathing, and then it may not seem so bad to introduce some conflict into their minds, and jump start the engines of critical thought. My ideas are no better than anyone else's. But when we all exchange ideas in a relatively civil way, and when we stimulate each other's thought process, then we have accomplished the purpose of coming together in a forum format to begin with.

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..... to introduce some conflict into their minds, and jump start the engines of critical thought. My ideas are no better than anyone else's. But when we all exchange ideas in a relatively civil way, and when we stimulate each other's thought process, then we have accomplished the purpose of coming together in a forum format to begin with.

 

on this vein, if you dont think the close has meaning then what does? (system specific for Zdo)

or is the point as others have touched on, the close of a 5 min, v 6 min v 241 tick bar is largely irrelevant, its just a means of triggering a trade based on taking the snapshot at that timeframe?

 

plus, the meaning part can simply be that it forms a part of a more complex system, it is merely the ignition to start an engine, so in terms of being system specific, it is crucial however its meaning by itself is only a minute part of the overall system - so maybe it is more a question of how meaningful is the close of a bar to your system/method?

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I'm curious what math you are using to arrive at this self-limiting conclusion?

The math of reality.

 

Knock 'em dead kiddo. Own the world when you are done.

 

In the meantime google terms like: probabilty theory, bell curve, statistical analysis etc.

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... Just look at youtube videos of trading, and you will see what the average trader learns from. Realize that this is the food they are eating and the air they are breathing, and then it may not seem so bad to introduce some conflict into their minds, and jump start the engines of critical thought...

 

Similarly, I cringe when people say" google it" to find an answer, as if the right answers are just a few keystrokes away. There are certainly answers, but they are not right by virtue of the fact that they have been put on a website. Most people will accept an answer as truth when they read or see threads that have similar or consistent answers. Research takes patience but it has turned into an .A.D.D. event

 

We only wish it was so easy.

 

Just a thought

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I'm not saying they can't be high or "too high". I'm saying they can't both be high within the same strat. It is an either or situation.

 

High win/loss ratio with small win amounts or Low win/loss ratio with high win amounts.

That is just how math works whether it is trading or sports or music or .......

...............................................................................................................................

(stupid comment (mine) EDIT

Edited by mitsubishi

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or is the point as others have touched on, the close of a 5 min, v 6 min v 241 tick bar is largely irrelevant, its just a means of triggering a trade based on taking the snapshot at that timeframe?

 

It's the "triggering a trade" part that mostly concerns me. I've had conversations with traders who were looking to enter a trade, and heard them practically praying that the 5 or 3 minute bar would close at the price they wanted, so their R:R would be better -- in other words, they were looking to buy, but per their "rules" they could not enter before the close of the bar, and they were hoping that it wouldn't go up until the bar closed, so that they could get in, and so that the bar would be smaller, because they would place their stop on the other side of the bar.

 

Many times we will wait to see if the market will support a price before buying before blindly jumping in, allowing others to engage in price discovery first so that we can piggyback. We can either wait a certain amount of time, until a certain number of shares or contracts have traded, or use some other criteria, to have a greater degree of confidence that we are with the side of the market that is stronger. But why should how long we wait, be it time, or activity, be predetermined by a bar periodicity? Why not say "I will buy if it stays above X for Y minutes," rather than the trigger always happening or not happening at 1:15, 1:30, and every other 15 minute interval, for example? What if the price trades that you want at 1:14 -- is 1 minute really enough to verify for you? Or what if it trades at 1:16? You then have to wait 14 minutes?

 

I've attached 5 minute charts of ES for today, each starting at one minute offsets from each other. The beauty is that the market's intention and direction is very clear--up. Do you need to see where each bar opens and closes? The range of price movement continues up.

 

What does each closing price of the bar, or opening price of the bar, tell you that you cannot see without them? Look at the other two charts. One is a 5 minute, the other is volume based for smoothness, but neither shows the open or close. When I look at these, my eye is drawn to the direction of the market, and particular areas. On the other charts, you see red and green (again, based on open/close), bodies and wicks, and more data to interpret. I might add, data that is NOT generated by the market, but imposed by the structure shown. We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

00.png.b46b625cc925367d5bd86b52a0c85a63.png

01.png.e7eda62bed27166f1761d415ed4080dc.png

02.png.15211758f4a92fb628549bc4a3810289.png

03.png.50a31907fc234f6e9f988cc21a6c4339.png

04.png.80d2dbecef1a18a3fa4175b177d46f83.png

noclose.png.c9dfae8490ff1b59f64583a9bcbd4b45.png

noclosevol.png.931bbb6f4f13d40bf4585e4acd7796ae.png

Edited by joshdance

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It's the "triggering a trade" part that mostly concerns me. I've had conversations with traders who were looking to enter a trade, and heard them practically praying that the 5 or 3 minute bar would close at the price they wanted, so their R:R would be better -- in other words, they were looking to buy, but per their "rules" they could not enter before the close of the bar, and they were hoping that it wouldn't go up until the bar closed, so that they could get in, and so that the bar would be smaller, because they would place their stop on the other side of the bar.

 

Many times we will wait to see if the market will support a price before buying before blindly jumping in, allowing others to engage in price discovery first so that we can piggyback. We can either wait a certain amount of time, until a certain number of shares or contracts have traded, or use some other criteria, to have a greater degree of confidence that we are with the side of the market that is stronger. But why should how long we wait, be it time, or activity, be predetermined by a bar periodicity? Why not say "I will buy if it stays above X for Y minutes," rather than the trigger always happening or not happening at 1:15, 1:30, and every other 15 minute interval, for example? What if the price trades that you want at 1:14 -- is 1 minute really enough to verify for you? Or what if it trades at 1:16? You then have to wait 14 minutes?

 

I've attached 5 minute charts of ES for today, each starting at one minute offsets from each other. The beauty is that the market's intention and direction is very clear--up. Do you need to see where each bar opens and closes? The range of price movement continues up.

 

What does each closing price of the bar, or opening price of the bar, tell you that you cannot see without them? Look at the other two charts. One is a 5 minute, the other is volume based for smoothness, but neither shows the open or close. When I look at these, my eye is drawn to the direction of the market, and particular areas. On the other charts, you see red and green (again, based on open/close), bodies and wicks, and more data to interpret. I might add, data that is NOT generated by the market, but imposed by the structure shown. We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

 

That pretty much sums it up.I used that phrase a couple of days ago on another thread.When i first started trading i realised (for me) that unless you have an unfair advantage in terms of insider knowledge and the ability to move a market,then the quickest route to succeed might be to impose a model on what to the beginner seems random.Somehow during this process the models that got "imposed" became progressively better as the learning curve grew.But since it is all, in the end just numbers,lot's of things can work,even if the theory behind them is flawed.

Anyone who has a deeply flawed theory that is making a lot of money isn't going to change their view based on threads like these.

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It's the "triggering a trade" part that mostly concerns me. I've had conversations with traders who were looking to enter a trade, and heard them practically praying that the 5 or 3 minute bar would close at the price they wanted, so their R:R would be better -- in other words, they were looking to buy, but per their "rules" they could not enter before the close of the bar, and they were hoping that it wouldn't go up until the bar closed, so that they could get in, and so that the bar would be smaller, because they would place their stop on the other side of the bar.

 

............

What does each closing price of the bar, or opening price of the bar, tell you that you cannot see without them? ........

We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

 

absolutely - if you are a trader waiting in hope then you have other issues. You do need the context and the trigger be it a 5 min, 1 min, 30 min is a RELATIVE measure. Your context in terms of something is going up has to be based on what you are looking at. Trying to tell the trend of a daily chart by looking at the 5 min is next to impossible, but using a 5min chart to try and time daily entries makes sense......and its in the timing that makes the difference, as this can be linked to how much you want to stop yourself out for.

 

eg; do you want to take a $1000 risk once, or ten trades at $100 risk to try and achieve the same result. (now while the brokers may want you to take the 10x) I would rather take more trades with less loss.

 

So thinking something is going up and just buying might work, trying to improve the timing should help, the key will be in the trade management afterward - ie; if you are right, how long you run it for v the losses, and how small your losses are relative to how long you expect to be able to run it for......similar themes arise - cut losses, run profits - no matter the time frame, or the trigger.

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We all must impose a structure on top of the market's free flowing, continuous nature. The question is, does the structure you impose help you? If the answer is yes, then that's all you need to know. If it is "maybe" or "no" then it may be good to reconsider how you view the market.

 

Spot on! Not the entry is important but the direction.

 

I shifted to volume and tick based charts - and it's working for me. As long as you are using a chart you need to deal with closes. In your case you don't display them but they are there.

 

The bar close is what it is - a dead sentence. Now that the bar is done and over we can assess it's life - high, low, volume, speed of formation (for tick and volume charts) and, yes, if this helps you make right decisions - bar open and close.

 

I appreciate this thread because many gurus out there put too much importance on candle types and bodies and wicks... At best you can break even without having the bigger picture and the direction in mind.

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I'm not saying they can't be high or "too high". I'm saying they can't both be high within the same strat. It is an either or situation.

 

High win/loss ratio with small win amounts or Low win/loss ratio with high win amounts.

That is just how math works whether it is trading or sports or music or .......

 

ST,

 

again what do you consider "high".

 

Since math is involved we need to deal with numbers to asses your statement.

50% win probability and 1:1 win/loss ratio will give you a flat curve.

 

At what point for you see these two (yes, both of them) become too "high" mathematically?

60% and 2:1? Or 90% and 5:1? Or in between?

 

Thanks!

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ST,

 

again what do you consider "high".

 

Since math is involved we need to deal with numbers to asses your statement.

50% win probability and 1:1 win/loss ratio will give you a flat curve.

 

At what point for you see these two (yes, both of them) become too "high" mathematically?

60% and 2:1? Or 90% and 5:1? Or in between?

 

Thanks!

At the risk of repeating myself - over and over. :doh:

 

No overall win rate (other than can't go over 100%) or winning individual trade is too high(depending on how long trade is held).

 

It is the combination. Repeat combination of the two.

 

High win rate with high winners.

 

Horse racing like trading is another form of gambling. Life is a gamble. Everything is so don't misunderstand my use of the word gamble. Doesn't bother me in the least.

 

At the track you can bet on the favorite or on the long shot. Favorites win more often but pay out less, longshots rarely win but when they do they pay big.

 

Now why is that? Might it have something to do with the math involved, i.e. how much the track takes in and can afford to pay out but still make a profit? Hmmm.

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It is the combination. Repeat combination of the two.

 

High win rate with high winners.

 

 

With risk to bore my self - I am kindly asking for numbers, SunTrader. We can talk in general as much as we want about math and probabilities.

 

Fortunately, math uses numbers! Show me the numbers, please!

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With risk to bore my self - I am kindly asking for numbers, SunTrader. We can talk in general as much as we want about math and probabilities.

 

Fortunately, math uses numbers! Show me the numbers, please!

Start with 1+1 then and let me know when you are done.

 

Because I sure am.

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Start with 1+1 then and let me know when you are done.

 

Because I sure am.

 

 

You can expand on horse races all you can.

 

Until you don't pull out some numbers your talk is not about math and probabilities.

 

I hope you have someone to talk to because I am done will taking a condescending attitude.

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It is really Nice thing to share with you..i just read the opinions and eagerly want to share mine.First of all i believe that closing is absolutely effective on long term analysis. i am using line charts for trading and all we know that line charts are totally based on closings. As far as my observation i believe that one level is break when it close below or above the level. beauty of line chart is that there is no shadows. so if i need to open or close a position than i will wait for various closings.if a level breaks in 30 M and 1H chart respectively it will indicate me that now there is more chances to break that level in 4H chart and 1Day chart which clear my mind to sit on a long or short direction.if it resist some levels i will think about to stand a side.

So as far as my observation i believe that close of a Bar or Candle is not meaningless.

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The only close that has a higher relative importance is the close of a day.

Because it forces those working on very small time Horizons to close positions.

 

Multiples of this Day .. week month YEAR will have also a (less) relative importance.

Divisions will have even less relative importance ( but yes, some )

 

Still all these even are of only relative importance.

 

What has an absolute importance.. IS not the close of a time frame.

 

But the end of a Buying or Selling wave..

 

Something that is very educative is to draw a 1 box reversal P&F chart.

 

2x 5x or 10x the bid/ask spread ( depending on the price ) . make sure you use the course of trades ( they are the absolute reality ) and not any H/L of a time framed bar.

 

Then look at what you have drawn

Ask what is it that makes the chart change columns ?

 

It is not any time frame or the close of any time frame. it is when buyers and sellers become exhausted .

 

Those tops and bottoms of the alternating columns.

Have an Absolute Reality. They have Absolute Position in Space and Time.

 

Just like looking at a Mountain from varying distances.

 

Its top is THE TOP etc

 

Changing the BOX size is not changing time frame it is just changing the distance you are viewing the absolute reality FROM.

 

Motorway

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The only close that has a higher relative importance is the close of a day...........

 

What has an absolute importance.. IS not the close of a time frame.

 

But the end of a Buying or Selling wave..

 

Finding tops and bottoms definitely is more important but it wasn't the question.

 

In any case P&F is good in hindsight.

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As always, this is solely my opinion as there is little "truth" in the markets but rather we merely have opinions and our own view of things.

 

Bar closes are not "important" in the sense that they mean anything significant to any significant number of people.

 

The close of a bar is a snapshot of a price traded in the flow of market activity.

 

Is the close of a bar truly meaningless? Let's have a look...

 

1. There is little truth in the markets. If this is a true statement, then the only truths are price, and more importantly, change in price. So far, so good.

 

2. Bar closes are not important to any significant number of people (variable time frame distortion, etc, muddles the picture, ...) I'm not so sure that this is a true statement. A more accurate statement might be "no single time frame's close (or range bar, or tick bar, etc) is more significant than any other time frame's close."

 

3. The close of a bar is a snapshot of price traded in the flow of market activity. So very true.

 

And at some point, since we are taking measurements of the flow of market activity, we are going to have to choose a price somewhere in the price bar to make our trading decision. If we are going to "measure" price action, we are going to have to pick some point and call it personally significant, or we'd never enter the market!

 

And if we are using price bars, what are we going to call "significant" if not the open, or the close, or the high, or the low, or all of the above? The only wrong answer is "none of the above."

 

So JD's title is relative. One man's meaningless is another man's bread and butter...

 

 

Luv,

Phantom

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1. There is little truth in the markets. If this is a true statement, then the only truths are price, and more importantly, change in price. So far, so good.

 

Actually you lost me here phantom -- I don't see how price can be "true" or "false."

 

A more accurate statement might be "no single time frame's close (or range bar, or tick bar, etc) is more significant than any other time frame's close."

 

Possibly, but after further thinking, if we measure significance by how many traders (or the potential trading volume of such traders) view a specific time frame, then perhaps we could say that one is more significant than another. If 50% of all market participants watched exactly the same chart, then it would be more significant than any other, assuming that those who watched it used its bar closes in making trading decisions.

 

we are going to have to choose a price somewhere in the price bar to make our trading decision.

 

Let me fix that: "we are going to have to make a decision, and are going to have to enter the market at some price." For example, those who do not trade with bars, and who have no concept of a "bar," do not need such a bar to make a choice on when to enter the market. They must, however, enter at some price, of course. This goes along with the intent of this thread.

 

So JD's title is relative. One man's meaningless is another man's bread and butter...

 

Agree, and thank you for your contributions and opinions, they are appreciated and valued!

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The only close that has a higher relative importance is the close of a day.

Because it forces those working on very small time Horizons to close positions.

 

Bingo.

 

But the end of a Buying or Selling wave..

 

Something that is very educative is to draw a 1 box reversal P&F chart.

 

2x 5x or 10x the bid/ask spread ( depending on the price ) . make sure you use the course of trades ( they are the absolute reality ) and not any H/L of a time framed bar.

 

I have never gotten into P&F charts but am going to use this an example to learn some new things. I have two settings: a box size and reversal size. For the ES, what settings should I use to start with in my quest here motorway? Sorry, I'm just not familiar with the terminology of what "1 box reversal" is.

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Try box size .5 and reversal size 1

 

As alternate ( depending on your software )

 

You could try BOX size .25 and reversal 2

 

 

Try also Box Size 1 X Reversal 1 (alternate Box size .5 X Reversal 2 )

 

Should give you nice charts.

 

.25 being the min increment on the instrument.

 

Motorway

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