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Trading the Jam way

  #104 (permalink)

Juno Beach
 
Trading Experience: Advanced
Platform: Ninja and TS
Broker/Data: Optimus Futures / Matt
Favorite Futures: multiple
 
JamTheTrader's Avatar
 
Posts: 135 since Sep 2009

Chart types that I use most frequently


We will start with the bar types that I use most frequently first. Then add a couple more as time permits

I use mainly 3 types of bars

  • Tick Charts
  • Range Charts
  • Renko Charts
Tick Charts
Tick charts form a new price bar (or candlestick, line, etc.) every time a specific number of trades are completed. Popular numbers of ticks are 89 ticks, 144 ticks, and 233 ticks, which are all short term timeframes.
As tick based charts only form new bars when there have been enough trades, they adjust to the market, forming bars less often when the market is moving slowly. Some day traders believe that this gives tick charts an advantage over time charts, myself being one of them.

Range Bar Charts
Range charts form a new price bar (or candlestick, line, etc.) every time the price has moved a specific distance vertically. Popular short term price ranges are 5 ticks, 8 ticks and 13 ticks, and popular long term price ranges are 21 ticks, and 34 ticks.
As price range based charts only make new bars when there has been enough price movement, they adjust to the market, making bars less often when the market is stuck in a small range (i.e. not moving). Some day traders believe that this gives range charts an advantage over time charts, myself being one of them. Price range charts appear different from other types of charts, because each bar (or candlestick, line, etc.) has the same range (high - low), and therefore has the same size when displayed on a chart.

Renko
Bar Charts
Renko charts have a pre-determined "Brick Size" that is used to determine when new bricks are added to the chart. If prices move more than the Brick Size above the top (or below the bottom) of the last brick on the chart, a new brick is added in the next chart column. Hollow bricks are added if prices are rising. Solid bricks are added if prices arefalling. Only one type of brick can be added per time period, hollow or solid. Bricks are always with their corners touching and no more than one brick may occupy eachchart column.
It is important to note that prices may exceed the top (or bottom) of the current brick. Again, new bricks are only added when prices completely "fill" the brick. For example, for a 5-point chart, if prices rise from 49 to 54, the hollow brick that goes from 40 to 50 is added to the chart BUT the hollow brick that goes from 50 to 55 is not drawn. The Renko chart will give the impression that prices stopped at 50. It is also important to remember that Renko charts may not change for several time periods. Prices have to rise or fall "significantly" in order for bricks to be added.

Volume
Volume charts form a new price bar (or candlestick, line, etc.) every time a specific number of contracts have been traded. This is different from tick charts because a single trade can consist of several contracts. For example, a single trade for 10 contracts would be 1 tick on a tick chart, but would be 10 contracts on a volume chart.
Popular volume charts are 500 contracts and 1000 contracts, but any number of contracts might be suitable depending upon the market being traded. Volume charts also adjust to the market, and make price bars less often when the market is moving slowly, as there are less contracts being traded.



Last edited by JamTheTrader; January 10th, 2012 at 02:19 PM.
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