that is actually nothing new, i know people here in this forum who trades like that
- Joined Feb 2009 | Status: Trader | 2,293 Posts
Always knew that he is just average joe. He was only ego tripping, nothing new, many uses daily open, weekly open...
Let's Bring Closure to this Long Twisted Saga
MAs are used to smooth price to see the momentum over a longer range. However, MAs lag and so do indicators derived from it. Thus, it's hard to use this information in RT trading. However, when combining the contradicting information from multiple indicators, one is able to derive a smoothed price curve.
I've used this principle to "reconstruct" price curves from the readings of 3 indicators:
If you want to see a more smoothed price curve you can only use 2 indicators (this is imo what CPs 36 dimensions stand for):
Look at the far right of every panel image. The slope of the dark blue price lines tells you whether market is currently going up, sideways or down. Moreover, you can classify the price momentum and use this info to your advantage.
Knowing all this, you should be abe to know whether price reverses or continues (but not whether this price behavior will continue for another minute) ...
Once knowing the exact price momentum you don't need to be able to classify the strength of accelerations/decelerations, continuations/reversals or bounces/breaks (this is what CP implied in his image from the quoted post).
{quote} Hi AntiCre, nice work. What if there are "dimensions ? Then whatever time series we look at is one dimensional. Another thing is knowing the reversal point. Reversal point has to refer to a dimension. Again dimension is there. Cheers
Well, I mean you can call it "dimension" if you want to. My problem with this word is that (as far as I perceive it) a physical dimension has the same relation to every other dimension. What CP calls dimensions are imo only subspaces on 1 scale (or a combination of two scales). Thus, I prefer to think of boundaries, thresholds, lines in the sand or subspaces.
- Joined Feb 2006 | Status: Trader | 2,175 Posts
So for years I've been obsessed with this idea of profiting from every market condition on the 1m chart after reading Crucialpoint's posts. Tried pretty much everything, but came to the conclusion that its not viable. Right now I trade stocks & crypto and adapted the investing principe of Buffet & I only strike when the time is right with high conviction Killed so much time, but atleast Im not plotting trendlines & fibonaccis thinking that I'm actually doing something that is good.. Gotta look at everything in a positive way.
I just stumbled upon your post regarding Crucial Point. Ole Crucial Point put me on a better trading path after I printed out all of his post that I could find & kept reading them until the
turned on in my head as to what he was sharing is on crypted style. Keep reading everything you can find by Crucial Point & see what you discover. Outside of one nonstandard coded indicator & two standard ones with different that the standard settings, I use no indicators. Also take a look at what BWilliam shares in his postings. The guy makes plenty of sense. Just my view & nothing more.
At this point, I would like to join the quotes of my predecessors,
and direct my perspective towards the start of this thread by Neio.
In doing so, I would like to share my conclusions drawn from a multitude of posts by the highly respected member, CrucialPoint, such as how information from a Japanese candle can be used to dissect the direction of price change and trend strength, the significance of the ratio of the candle's closing price to its opening price and median, how these measures relate to the indicators used by CrucialPoint, and what the 6 dimensions entail. Unfortunately, since I joined here years too late, I was never able to discuss these matters with CrucialPoint himself. Now it seems too late, even though I have strong evidence that he has not left Forexfactory and occasionally occured as shapeshifter (e.g., blob, rapidscalper, etc.)
This thread is about using the information condensed in a candlestick. Everyone knows that ticks (a change in the fifth decimal place in most Forex pairs) are the fundamental unit of the fx market. Classic candlesticks are simply a summary of these price changes over longer periods. The time frames used to summarize price activity are relatively arbitrary. If we use the candles of time frames that have traditionally been established and want to use their information quantitatively for scalping, we have to wait until the candle is fully formed. Of course, we can also trade during the life of such a candle, but during that time, the range of the candle can be continuously expanded arbitrarily. This becomes a particular problem when we want to use different measures of a candle to make decisions. Why? Because then we lose comparability. The same problem also arises when we interpret the entire market as a single candle.
How can we overcome the problem and still trade candlesticks? For me, the answer lies in forming a new candle with each incoming piece of information, with each new tick, containing an equal number of ticks (price changes). For example, for each new tick, we could consider the last 50, 270, 500, or 1080 ticks and determine the opening (first tick price) and closing prices (last tick price), high and low. In this way, we would obtain a rolling candle, as shown here by 030985 for ordinary Japanese candlesticks. By receiving quantitatively comparable candles within a short update period, we can consider how to use them for trading.
How could this look like? As only a few traders work with tick charts and are more accustomed to the sight of Japanese candlestick charts, I would like to use M1 candles instead of ticks as a basis in the following to derive everything else from it and to make it as easy as possible for every reader to follow my thoughts and interpretations. Let's say we want to track the momentum of the market of the last 120 candles (a more or less arbitrarily chosen large number) with each new M1 candle, so we calculate rolling 120-minute candles:
The upper window shows the used M1 candles, the lower window represents the rolling 120- or H2 candles.
The stronger the difference between the closing and opening prices, the greater the momentum in the market generally is. Thus, the long red or long green candles with few upper and lower shadows indicate bearish or bullish trends in the market. However, as always when we calculate something in the market over several data points, we create a lagging signal. This also applies to the momentum measure we have chosen, close - open. For example, relatively long red candle bodies can still be found towards the end of the bearish trend, or relatively long green candle bodies only after the bullish trend has already gained momentum at the right end of the figure. Nevertheless, it remains important to note that we can describe the overall trend momentum well using the difference between close and open!
"Let's bring closure to this long twisted saga,"
and direct my perspective towards the start of this thread by Neio.
In doing so, I would like to share my conclusions drawn from a multitude of posts by the highly respected member, CrucialPoint, such as how information from a Japanese candle can be used to dissect the direction of price change and trend strength, the significance of the ratio of the candle's closing price to its opening price and median, how these measures relate to the indicators used by CrucialPoint, and what the 6 dimensions entail. Unfortunately, since I joined here years too late, I was never able to discuss these matters with CrucialPoint himself. Now it seems too late, even though I have strong evidence that he has not left Forexfactory and occasionally occured as shapeshifter (e.g., blob, rapidscalper, etc.)
This thread is about using the information condensed in a candlestick. Everyone knows that ticks (a change in the fifth decimal place in most Forex pairs) are the fundamental unit of the fx market. Classic candlesticks are simply a summary of these price changes over longer periods. The time frames used to summarize price activity are relatively arbitrary. If we use the candles of time frames that have traditionally been established and want to use their information quantitatively for scalping, we have to wait until the candle is fully formed. Of course, we can also trade during the life of such a candle, but during that time, the range of the candle can be continuously expanded arbitrarily. This becomes a particular problem when we want to use different measures of a candle to make decisions. Why? Because then we lose comparability. The same problem also arises when we interpret the entire market as a single candle.
How can we overcome the problem and still trade candlesticks? For me, the answer lies in forming a new candle with each incoming piece of information, with each new tick, containing an equal number of ticks (price changes). For example, for each new tick, we could consider the last 50, 270, 500, or 1080 ticks and determine the opening (first tick price) and closing prices (last tick price), high and low. In this way, we would obtain a rolling candle, as shown here by 030985 for ordinary Japanese candlesticks. By receiving quantitatively comparable candles within a short update period, we can consider how to use them for trading.
How could this look like? As only a few traders work with tick charts and are more accustomed to the sight of Japanese candlestick charts, I would like to use M1 candles instead of ticks as a basis in the following to derive everything else from it and to make it as easy as possible for every reader to follow my thoughts and interpretations. Let's say we want to track the momentum of the market of the last 120 candles (a more or less arbitrarily chosen large number) with each new M1 candle, so we calculate rolling 120-minute candles:
The upper window shows the used M1 candles, the lower window represents the rolling 120- or H2 candles.
The stronger the difference between the closing and opening prices, the greater the momentum in the market generally is. Thus, the long red or long green candles with few upper and lower shadows indicate bearish or bullish trends in the market. However, as always when we calculate something in the market over several data points, we create a lagging signal. This also applies to the momentum measure we have chosen, close - open. For example, relatively long red candle bodies can still be found towards the end of the bearish trend, or relatively long green candle bodies only after the bullish trend has already gained momentum at the right end of the figure. Nevertheless, it remains important to note that we can describe the overall trend momentum well using the difference between close and open!
[To be continued ...]
If we want to calculate the trend momentum over the last 120 M1 candles (rolling candles) using the difference between the closing and opening prices and we know that this momentum lags, the next question we should ask ourselves is how we can counteract this lag. One option would be to leave the trend momentum as a general measure for the last 120 minutes and simply determine the momentum of the last half of this observation period in addition. To do this, we simply look at the rolling 60-minute candles:
The top subfigure shows the original M1 chart, the middle subfigure shows the rolling M120 candles, and the bottom subfigure shows the rolling M60 candles.
Now we can see changes in the trend as well as trend confirmations much earlier. However, due to the smaller number of M1 candles used for rolling, we introduce more noise into our data, which we did not see in the previous post's illustration. And we are only in the identification of the current trend or market environment. If we were to choose a smaller calculation period, the lag would decrease, but the noise would increase, making it more difficult for us to make decisions about the current trend phase. Therefore, the question arises as to whether there is another way to keep the noise approximately constant but still see signals a little earlier.
What we are actually interested in is how far the current price (closing price of the rolling candle) has retraced from the high or low of the candle. The first idea that came to mind was, therefore, to track the distance between the closing price and the high and low of the rolling candles. For this, we would need to use two measures. If we wanted to make it just one measure, we would have to change the reference measure (high or low) depending on the position of the closing price (whether above or below the midpoint of the rolling candle). For this reason, I would like to take up the possibility that CrucialPoint introduced:
That means, instead of comparing the current price with the high and low, we simply use the midpoint of the rolling candle (the median) as a unified measure. This is indeed a very interesting tool - mathematically as well. While I see a strong relationship between the difference between opening and closing prices and a regular MACD, comparing the closing price with the median price seems to me to have strong similarities with CrucialPoint's ZLMACDs. Of course, the interpretation shown in CrucialPoint's illustration is not entirely correct. If the price closes above the median, in my opinion, it does not mean that there were more buyers during the entire life of the candle, but only that there were more buyers in the last half of the candle's lifespan (and only on average).
So now let's draw the centerline (short horizontal light gray lines) for each rolling candle in the top chart and compare whether the closing price of each rolling candle is above or below:
Although we are now using the same data basis as in the first illustration, we can recognize changes in direction much earlier. CrucialPoint and others in this forum seem to interpret ZLMACDs or the difference between closing price and median as acceleration or deceleration of the market. This interpretation personally seems semantically not quite correct to me. Rather, I see it as another, faster momentum tool to measure how strong the current overall trend still is (i.e. whether the last half of the trend calculation period would change the interpretation of the identified trend). And just as I would interpret the combination of rolling M120 candlesticks and the close-median differences of the rolling M60 candles: if the overall trend is strongly bearish, for example, and your M60 candle closes above the median, this indicates a slowing of trend strength and therefore a weakening of the bear market.
The top subfigure shows the original M1 chart, the middle subfigure shows the rolling M120 candles, and the bottom subfigure shows the rolling M60 candles.
Now we can see changes in the trend as well as trend confirmations much earlier. However, due to the smaller number of M1 candles used for rolling, we introduce more noise into our data, which we did not see in the previous post's illustration. And we are only in the identification of the current trend or market environment. If we were to choose a smaller calculation period, the lag would decrease, but the noise would increase, making it more difficult for us to make decisions about the current trend phase. Therefore, the question arises as to whether there is another way to keep the noise approximately constant but still see signals a little earlier.
What we are actually interested in is how far the current price (closing price of the rolling candle) has retraced from the high or low of the candle. The first idea that came to mind was, therefore, to track the distance between the closing price and the high and low of the rolling candles. For this, we would need to use two measures. If we wanted to make it just one measure, we would have to change the reference measure (high or low) depending on the position of the closing price (whether above or below the midpoint of the rolling candle). For this reason, I would like to take up the possibility that CrucialPoint introduced:
That means, instead of comparing the current price with the high and low, we simply use the midpoint of the rolling candle (the median) as a unified measure. This is indeed a very interesting tool - mathematically as well. While I see a strong relationship between the difference between opening and closing prices and a regular MACD, comparing the closing price with the median price seems to me to have strong similarities with CrucialPoint's ZLMACDs. Of course, the interpretation shown in CrucialPoint's illustration is not entirely correct. If the price closes above the median, in my opinion, it does not mean that there were more buyers during the entire life of the candle, but only that there were more buyers in the last half of the candle's lifespan (and only on average).
So now let's draw the centerline (short horizontal light gray lines) for each rolling candle in the top chart and compare whether the closing price of each rolling candle is above or below:
Although we are now using the same data basis as in the first illustration, we can recognize changes in direction much earlier. CrucialPoint and others in this forum seem to interpret ZLMACDs or the difference between closing price and median as acceleration or deceleration of the market. This interpretation personally seems semantically not quite correct to me. Rather, I see it as another, faster momentum tool to measure how strong the current overall trend still is (i.e. whether the last half of the trend calculation period would change the interpretation of the identified trend). And just as I would interpret the combination of rolling M120 candlesticks and the close-median differences of the rolling M60 candles: if the overall trend is strongly bearish, for example, and your M60 candle closes above the median, this indicates a slowing of trend strength and therefore a weakening of the bear market.
[To be continued ...]
- Joined Feb 2006 | Status: Trader | 2,175 Posts
Most interesting. I think Crucial Point left out one or two details the way Gann Man did. I filled in enough blanks to put me on the path to a much better way of trading. Thank you for sharing. Very thought provoking.
I think Crucial Point left out one or two details the way Gann Man did. I filled in enough blanks to put me on the path to a much better way of trading. Thank you for sharing. Very thought provoking.
Most interesting.
thank you very much. As a new member, it seems I do not have the necessary rights to give a thumbs up yet. I apologize for that.
I would like to discuss Gann later on. Unfortunately, I often (but not always) have time to post here during the weekends. Nonetheless, I would be interested in your interpretation. Please feel free to share with us what you would like to share. I think we can all benefit from each other's thoughts.