There have been a number of questions, how to use this indicator and how to get the sound files. So I will just try to respond to the question and show the way how I use the indicator.
The indicator can be used with any sound files in wav/PCM format. wav/MPEG needs to be converted to wav/PCM first.
The files need to be copied into the NinjaTrader sounds directory, which can be found under
C:/ -> programs -> NinjaTrader 7 -> sounds
For those, who do not have any sound files, I attach the files that I use below. But as I said, you can use any files you like.
The indicator cannot be used on all time frames. It measures volume and range over a lookback period of 20 bars. For intraday charts the volume progression after the opening of the market does not give any signals, because it is natural. So you need at least 10 to 15 bars into the regular session to use this indicator.
If you use it on a 30 min chart, 10 bars will be close to the end of the session, so it is not much of a help. If you use it on a 1 min chart, it will produce many signals, which are meaningless and which will be overridden a few moments later. This means that there is only a small window, where you can use the indicator on intraday charts.
I use a window of 3 to 10 minutes.
I am particularly looking for
(1) Churn Bars: Churn Bars are high volume narrow range bars which indicate that either aggressive buyers buying the ask cannot move prices up (this indicates distribution) or that aggressive sellers selling the ask cannot move prices down (this indicates accumulation). Often, but not always the churn bar precedes a reversal. A major support or resistance line may also create churning, and price may then break through that line instead of reversing, so there is no guarantee that churning predicts a reversal. But it is an alert to a nice reward-to-risk setup, as it is typically a narrow range bar that traps a sufficiently large number of traders.
(2) Combination of Climax and Churn Bars: If the churn bar follows a climax bar, which is a high volume wide ranging bar, then I consider this as an sign that the move is approaching exhaustion. It is then useful to watch price action within the range created by the climax bar. Sometimes a bull or bear trap follows, before price reverses. In rare cases, particularly on trending days, price may also continue its way in the prior direction.
The indicator basically performs volume spread analysis (VSA). On range charts the spread cannot be analyzed, because it is constant. Also you will not find any climax or churn bars, but you will just detect climax churn bars or low volume bars.
So the answer is no. You cannot perform volume spread analysis on volume charts or range (spread) charts. This does not make sense.
However, with some restrictions, the concept can be used on tick charts, although it has a slightly different meaning.
Minute Charts: Indicates a high volume per time unit within a narrow range
Tick Charts: Indicates a high volume per tick (unit volume) within a narrow range
This means that on tick chart the churning bars indicate the participation of big guys as volume per tick is higher, on minute bars churning indicates a higher volume. Often this goes together.
Minute Charts: Climax bars typically indicate a breakout or impending exhaustion of a move.
Tick Charts: You will get more breakout than climax bars, as the high unit volume becomes more important than the range. It is more difficult to use the concept on tick charts.
The following 21 users say Thank You to Fat Tails for this post:
Hi Fat Tails,
Thanks for your contribution that's going beyond pure perfection, now I will make the figure of an idiot asking you why on the explanation of churn bar the agressive seller is selling the ask and not the bid
Thanks really for what you are doing. Roberto
The following 2 users say Thank You to rcabri for this post:
just a quick question I would like to add this to my chart however im trading range bars where there is no higher/lower range I looked at the chart a little, cant get the climax runs (break outs) only churns bars. Is there even a point using this indicator with range bars?
The only thing I can think of is to use it as a warning before a reversal or/and as confirmation say for divergence..
The indicator performs volume spread analysis. On a fixed period chart - such as a 5 min chat - a climax bar is a wide ranging high volume bar. On a range chart, you will see three range bars with normal or low volume instead, so you cannot find those climax bars. In a similar way churning refers to a high volume bar with a small range. But this will be just a fraction of one of your range bars, so you will see a high volume bar, but that is all.
Range bars deliberately eliminate the time factor from the chart, so you cannot perform range analysis or volume spread analysis on a range chart.
Or did you ever find an inside bar on your range chart?
So the answer is no. This indicator cannot be used on range charts.
The following 4 users say Thank You to Fat Tails for this post:
I just started using this indicator as I learn more about the usefulness of volume movement and I really like it. In comparing it to the E-Mini Watch version, I was curious about whether you found that having just a single Break Out/Climax bar indicator was just as effective or perhaps more effective than having separate Climax Up & Climax Down bar indicators? It seemed to me that separate Up/Down Climax bars might be the way to go, but as you're the creator, I thought you might have more insight. Or perhaps it would have been just a pain in the "Tail" to program, so to speak.
The following user says Thank You to hunter548 for this post: