Toon Trading

[Crap Buddist]

Types of close referred to in trading.

The close of a trade and the close of a bar have nothing to do with each other. Again, my use of the word "close" had nothing to do with completing a transaction.

Yes please, glossary for me, when /if you get a mo. . Might be interesting how many can get on the list.

your glossary would help me cheers.

 

[TheBramble]

This isn’t going to be an ‘essay’ as Tune mischievously suggested as (1) I don’t yet know enough about it to write that authoritatively (2) it’s going to consist of a number of parts (posts) - one long-winded piece will get little feedback as few will take the time or trouble to read it and (3) I need the feedback to understand how I could have gone so far off track and still think it all makes sense. I know you guys will help me out there…

Part 1 – The Ultimate Price Data

When you choose to encapsulate any given fixed time period of price action in a bar or candle – a 1 minute bar or a 5 minute bar or a Daily or a Weekly - whatever, you elect to dismiss the structure and development of price during that period. You’re saying, I don’t care how quickly, or slowly, it got to its high and its low, or how long it lingered there or at each level in between, or which occurred first. I just want to know what the high, low, open and close were.

Every arbitrarily selected time bar occupies the same amount of X-axis real estate as the next. Regardless of the range relative to its neighbours and regardless of its internal development and structure.

I’m going to ignore volume in this review for two reasons. One is that many traders will only be interested in FX which carries no useful volume data. The second is that it was the study of volume (and an attempt as utilising a tick pressure as a proxy for volume in these markets) in relation to the range on bars and the profile of the range-volume within the context of all the other bars that led me to take a view that only tick data has any real sense in technical analyses of price data. When you decompose what goes into any bar you’re going to end up with pure tick data. I’ll maybe pick up on volume in a subsequent piece.

That so much technical analysis focuses on the close (and high and low and even sometimes the open) as discrete levels at discrete points in time is both understandable and ridiculous at the same time. Understandable in that it provides a simple basis for developing all those great indicators which ‘need’ such discrete data as parameters. Ridiculous in that is has no meaning in reality except that which we assign it – and we do, in large numbers.

Take the simple MA. This is where I started out on this thought process I am developing here now. I wondered what I would need to do if I were to develop a standard range based on recent historical range data and assign a normalising value to all the actual ranges in order to do this. I decided, quite arbitrarily, to ‘fix’ all bars to a common size based on recent High-Low range. What would I need to do to do this, while maintaining the information of the development of these two levels (high and low)? I decided to compress and expand the non-typical ranges (those outside the ‘norm’) so that the ranges were near identical and in order to maintain the integrity of the information on those data points I’d also need to stretch some parts of the X-axis and squeeze others. Time would have to run slower in some places and faster in others. And as you break that process down further, you realise that eventually you need to completely reassess your model of time (for these purposes) and take the tick as your metronome – not chronological time.

So how does this relate to the MA which I started off with in the previous paragraph? The MA averages the movement of an arbitrarily selected parameter (O,H,L,C or Volume) of an arbitrarily selected slice of time. It’s really convenient for making trading systems and methods. It also forms the basis for those few systems that have stood the test of time in being consistently profitable, simple and effective. The reasons for this will become clear soon enough.

So, does this view of time and price action mean the end of the good old MA? An MA takes consecutive unit of specified data type, adds the data up and divides the result by the number of data units taken. This is a simple MA. The number of units taken is defined as the period and relates to the number of bars/candles that you select. The specification of data type (OHLCV) is the only thing that changes. You now have only one data type to choose from – the tick value.

What do you gain from this?

What do you lose from this?

I’ll address these questions in the next part, but in the interim, I’d ask you to consider this. As you look from the longest timeframe you currently use (Yearly, Monthly, 5 minute?) down to the shortest, you are looking at the amalgamation of all the tick data that went into producing those bars/candles – whatever. The Support/Resistance levels are all there – just the same, at precisely the same levels, the trends, the channels, the breakouts – all still there. But what I want you to consider is, where does a change in trend actually start? If you’re on the same track as me, that one will fuzz you…

 

[searchlight]

Hi,

I think we always process continuous information with chosen time frame that suit our purposes.collectively we devised all kind of time frames.(year,month,day,hour, etc...).

So i really don't see where the problem is ; if someone chooses to evaluate continuous info (tick data) in one hour intervals.(or monthly,weekly intervals for that matter.)

For my purposes weekly weather forecast is good enough. For shipping industry it is a daily forecast. And when i was watching F1 racing on tv they where getting the forecast every minute.(it was a rainy day ; tyre choice is crucial) .The source was the same continuos information.

regards,

searchlight

 

[tune]

Thank you, TheBramble. Interesting and almost with you. Any pictures to go with it?

 

[tune]

Might be interesting how many can get on the list.

That's what I was thinking.

How short can an all-encompassing glossary actually be?

 

[rols]

Thank you, TheBramble. Interesting and almost with you. Any pictures to go with it?

I done one of my own.....

 

[TheBramble]

Thank you, TheBramble. Interesting and almost with you. Any pictures to go with it?

I don't do pictures.

Pictures aren't where this is at right now.

If you're a visual type, visualise all the ticks, getting together, and making a 5 minute bar.

Then the 5 min bar calls out to the hourly, "Hey, 12-reps, wanna summarise?"

Then the hourly say to the monthly "Hep, Rip, I got another bunch o' data for ya pal!".

 

[TheBramble]

Hi,

I think we always process continuous information with chosen time frame that suit our purposes.collectively we devised all kind of time frames.(year,month,day,hour, etc...).

So i really don't see where the problem is ; if someone chooses to evaluate continuous info (tick data) in one hour intervals.(or monthly,weekly intervals for that matter.)

For my purposes weekly weather forecast is good enough. For shipping industry it is a daily forecast. And when i was watching F1 racing on tv they where getting the forecast every minute.(it was a rainy day ; tyre choice is crucial) .The source was the same continuos information.

regards,

searchlight

Excellent!

If you were asked to produce a bunch of data giving maximums and minimums of temperature for any given month – fantastic – right on the money.

But if you needed to know whether or not to take an umbrella when you go shopping this afternoon…

 

[TheBramble]

That's what I was thinking.

How short can an all-encompassing glossary actually be?

All depends who's producing it.

 

[tune]

Umm, OK. No pictures. A little bizarre even by my standards but I'm sure you have a reason.

I have a seen tick or two and do get the idea of raw data gradually scribing up in whatever way that you asked it to. What I have not seen is the below invention. Although saying that, I am familiar with volume based charts which has some parallels.

I decided to compress and expand the non-typical ranges (those outside the ‘norm’) so that the ranges were near identical and in order to maintain the integrity of the information on those data points I’d also need to stretch some parts of the X-axis and squeeze others. Time would have to run slower in some places and faster in others. And as you break that process down further, you realise that eventually you need to completely reassess your model of time (for these purposes) and take the tick as your metronome – not chronological time.

 

[tune]

I think we always process continuous information with chosen time frame that suit our purposes.collectively we devised all kind of time frames.(year,month,day,hour, etc...).

Some cultures do things the other way round. e.g. using the lunar cycle as months, which, they pretty much are.

 

[Crap Buddist]

Hi,


So i really don't see where the problem is ; if someone chooses to evaluate continuous info (tick data) in one hour intervals.(or monthly,weekly intervals for that matter.)

regards,

searchlight

What about the effects of time distortion .?

 

[Crap Buddist]

Who gets the damp patch? Hold the fuzz on this one.

But what I want you to consider is, where does a change in trend actually start? If you’re on the same track as me, that one will fuzz you…

If one is in the desert and looking to corner the water market. He needs to find damp sand, maybe appearing near the base of rock, note any change in plant growth and starting digging and state his claim. If he stumbles across a big lake its likely there will be a sign saying Private Property. Water 4 sale $10 a litre.

The above inspired me when watching a survival expert looking for water. When watching it I thought about trading. And damp patches

 

[searchlight]

The Bramble,
today I used local DAILY weather forecast to decide to take umbrella or not when i was going walking. They didn't forecast any rain so i didn't take the umbrella. Of course they could have been wrong. But hey....probability game isn't it.

tune,
I know at least three other cultures that device their year differently than western calender year.(muslims,jews,hindus) . Important thing is that; time frame they constructed serve their purpose for dealing with continuos information.

Cb,
I don't think i understood your point. I'm sure your not referring to different time zones.
could you please be more specific and explain how that can be detrimental to ones trading.

regards,

searchlight

 

[TheBramble]

If one is in the desert and looking to corner the water market. He needs to find damp sand, maybe appearing near the base of rock, note any change in plant growth and starting digging and state his claim. If he stumbles across a big lake its likely there will be a sign saying Private Property. Water 4 sale $10 a litre.

The above inspired me when watching a survival expert looking for water. When watching it I thought about trading. And damp patches

Are you suggesting I'm water in the desert or a damp patch?

More seriously, although I'm terribly fond of metaphor myself, those generally used for trading tend to indicate an excessively difficult task and therefore the metaphors are positioned at this Quest-type level. Is this a function of the reality of trading or the expectation of the reality of trading?

A bar or any time period is a metaphor for the reality.

I fell into exactly that same trap of metaphors with Searchlight. We’re using weather rather than water in the desert in his examples. You get a nice warm feeling with metaphors, quite rightly, as they allow comfort in subjective interpretation of that to which is being alluded. You can never get a metaphor wrong.

But if we’re going to talk about weather, specifically rather than as a metaphor for trading, if I want to know what the weather is doing right now (tick) – I look out the window. If I’m going somewhere else and I want to know what the weather is now, I phone ahead and ask. If I’m going to be somewhere else in a time displaced significantly from now, I take umbrella, shorts, coat, sunscreen, beach ball, skis and survival pack.

To suggest different TFs for different purposes is to confuse what I’m doing here. My part 1 post on this made clear that all the things you normally hold dear, such as SR in higher TFs, trend, channels etc, all our old friends are still there. I asked two questions: What do we gain and what do we lose? Already folk are scrambling to hold onto what they think they’re going to lose. This is genuinely good. I really want to know these things.

 

[Crap Buddist]

Cb,
I don't think i understood your point. I'm sure your not referring to different time zones.
could you please be more specific and explain how that can be detrimental to ones trading.

regards,

searchlight

Hello , I'm quizzing it all myself and not deifinitive with it. But when I think of updates and the strongest denominator between tick and time bars or even what makes up the two types . Then how will this impact on ,what the trader does with the 2 ,the output he receives back ,and his decisions based on the output seen. Will there be any material difference? If i sound fuzzy with it, its because I still am.

 

[Crap Buddist]

Are you suggesting I'm water in the desert or a damp patch?

More seriously, although I'm terribly fond of metaphor myself, those generally used for trading tend to indicate an excessively difficult task and therefore the metaphors are positioned at this Quest-type level. Is this a function of the reality of trading or the expectation of the reality of trading?

A bar or any time period is a metaphor for the reality.

I fell into exactly that same trap of metaphors with Searchlight. We’re using weather rather than water in the desert in his examples. You get a nice warm feeling with metaphors, quite rightly, as they allow comfort in subjective interpretation of that to which is being alluded. You can never get a metaphor wrong.

But if we’re going to talk about weather, specifically rather than as a metaphor for trading, if I want to know what the weather is doing right now (tick) – I look out the window. If I’m going somewhere else and I want to know what the weather is now, I phone ahead and ask. If I’m going to be somewhere else in a time displaced significantly from now, I take umbrella, shorts, coat, sunscreen, beach ball, skis and survival pack.

To suggest different TFs for different purposes is to confuse what I’m doing here. My part 1 post on this made clear that all the things you normally hold dear, such as SR in higher TFs, trend, channels etc, all our old friends are still there. I asked two questions: What do we gain and what do we lose? Already folk are scrambling to hold onto what they think they’re going to lose. This is genuinely good. I really want to know these things.

When I've used tick I lose track of & time. It stands still unless a tick happens. Tick without the toc = Price ? Is that true. And how may it benefit or hinder . Im still sitting on it all.

 

[Crap Buddist]

At the time of writing this my stats say that I've made 1.35 posts per day...I should finish my posts once I start them...0.35 of a post is simply unacceptable.

Its that time again distorting the truth? Thats your moving average, should it be used ?

 

[tune]

When I've used tick I lose track of & time. It stands still unless a tick happens. Tick without the toc = Price ? Is that true. And how may it benefit or hinder . Im still sitting on it all.

Have you tried putting them side by side? Candles or bars forming on one half and ticks or multiples of ticks running in the other half, or something along those lines.

 

[TheBramble]

When I've used tick I lose track of & time. It stands still unless a tick happens. Tick without the toc = Price ? Is that true. And how may it benefit or hinder . Im still sitting on it all.

Sounds like a useful start. Absolutely correct. Yes, of course. Yes. Not sure, that's what I was hoping to find out here. Me too.