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I'm certainly not an expert of any kind in fundamentals. However, I think no matter what one's method involves, it absolutely helps to understand current market drivers. Recently this would include the US/China trade war, Brexit, and for many decades now, interest rates and central banks have continued to be a huge (if not the largest) driver of many different markets. Know when earnings season kicks in, know when FOMC meetings take place, understand the relationship between interest rates and currencies. Oil can at times be a driver for equities. For an intraday trader, knowing what happened with Japan and what's happening with Europe when the US market opens is absolutely essential, IMO.
I think a fundamental plan can be as simple as asking yourself questions like: (1) What companies will benefit from a particular outcome in the trade war? Look to buy those companies. (2) Which companies benefit from a strong/weak US dollar? (3) Recently I saw a story about "flight shaming" -- how will this affect DAL, LUV, etc.? (4) Disney is releasing Disney+, and Verizon is going to give it away? How does this affect NFLX? (5) What's on tap for earnings this week? If it's tech-heavy, for example, then look for beats/misses and how this might affect the nasdaq.
These are simple questions but they can lead to good trade ideas. I realize the above are equities-focused, but similar questions can be applied to fixed income, commodities, and global indexes as well. I'd say the most important fundamental thing to learn is interest rates. Interest rates drive everything. It's what the entire worldwide financial system is based on. Central banks are the most powerful economic entities on the planet.
Thanks for the advice! I'm hoping to develop a trading strategy based on a more fundamental approach before I start journaling my progress - you've given me hope that it is indeed possible.
Do you know of any members on FIO specifically who have experience in this area?
The significance of an intra day close regardless of the time is in its relationship to the other closes. True enough all arbitrary. We see what the data as the software companies decide we should see it...that is a huge issue.
I'm wondering if there is a follow on point about data or time?
I have always being challenge by this and look at many bar types and periodicities and thought long and hard about this and never came to any satisfactory conclusion. In fact what remained was confusion. This thread has got me thinking again.
What do you guys think?
Would PnF charts best represent what the market is doing?
Had this same discussion with traders in our grp, to avoid conflict of any kind I simply pushed it as an opinion gathering and the final result was basically;
"It doesn't matter, data is data, it can look and paint picture in a lot of ways if you are good at manipulating it. This is mostly preferential matter, for example; if you are a scalper you would probably pay attention to close of first 5 min, 15 min bars of day opening, and yesterday range with its close. If you are positional trader you would probably pay attention to daily closes, especially those that had some kind of significance like that of engulfing price action. If you do not give some importance to it on your own or in your system, it is not important, if you do then it is important"
Nothing intellectual to add just sharing end result of discussion in fairly large grp, so its probably worth noting.
If you are positive that it is objectively important, or is objectively not important, then you will probably disagree. But if you don't think there is only one way to trade, you probably already suspect this anyway.
For myself, I think there is more than one way to skin a cat.
Just my half-cent.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
I was indoctrinated into candles and the whole system of OHLC.
After a few years of roller coaster trading I could not see the value of such a system.
I know we are all 'time' creatures. We live and breath, wake up and go to sleep because of time.
I also know that there are a huge group that trade according to time. But as was mentioned earlier, what if your computer time is off by a few seconds or minutes? And what if a prop firm has a method to trade just before the 'most popular' candle close? How does all of that affect MY trade.
All of this was brought to view when @Fat Tails posted the thread about "Session Times". That one post changed the way I looked at candles.
Using my Laptop and my Desktop I started Ninjatrader with the same charts and workspaces. I loaded my live data feed and watched my charts. My desktop had the 'built-in" session times provided. My laptop had the new session times created from the method in the Session Times thread. The candles were totally different. The opens and closes were different and the appearance was different. I realized, if I traded against someone using my desktop while I used my laptop I would have a few seconds advantage with the time based candles I was using. LOL
But in reality, I realized the data was the same the market was the same, only the candles were different.
I went through a period of trying to find a candle that was universal, or that did not suffer from this problem.
I created Delta candle bar type (using NT with my extended data module). I tried all the candle types and even created a few of my own.
My conclusion was that candles were mostly insignificant. Time is important to many things but the close of a candle is not a fact but a theory.
So what do I use. Candles of course
I have a time based candle chart I glance at but not for trading. I use a custom 'range type' bars. They are not perfect by any means. They are not so special that they are the "Holy Grail" or even close. But ...
The only reason I use them is because NT performs better with COBC settings in my strategy.
I've thought about this problem a lot and have even considered creating a custom bar type that is not a candle at all.
The type could be a band with the high, low and largest volume (with shading or a line).
But it has to use some method to determine when to move the band across the screen (also known as a CLOSE). DUH!
So the CLOSE is not insignificant when you use a platform that is dependent upon them.
But it does not mean you must be bound to them or trade because of the close of a candle.
I've not created such a bar type because, what I use now, works for me and I'm not motivated to create a new system when this one is not broken.
After all is considered, using the bleeding right edge of the chart is really where the action is.
The candle close, moving averages, and indicators are History and only have a small significance to my trading.
Rejoice in the Thunderstorms of Life . . .
Knowing it's not about Clouds or Wind. . .
But Learning to Dance in the Rain ! ! !
I've looked at this thread multiple times in the last week or so and it always gets me thinking. In the end I think I tend to agree with this sentiment...
So we are asking if the close of a candle carries greater informational significance than other points on chart? Has greater significance than some points on the chart and less than others? I've never thought of it this way before this thread, but these seem like important questions to answer for ourselves when we choose how we want our data displayed.
One side of me agrees that the close of a candle is pretty arbitrary and that there aren't any obvious correlations in price/time that would cause these data points (bar-closes) to have greater significance than other data points. But, the other side of me thinks...time is pretty significant to humans and we make a lot of decisions based on time. Time structures a lot of our behavior.
In my own trading I've seen bar-closes act as an important magnet or act as an effective anchor for a measured move. So I tend to attach significance to some bar-closes...sometimes. But I believe that there is more than one de facto style of trading.
To muddy things up a bit...the uncertainty of markets creates an environment where behavior isn't always tethered to logic. (Just read my journal. Haha!). Thanks for creating this thread @josh, it's been a fun read!
An intraday bar close is nothing more than a definitive point in time which is extremely important in strategy development. Time is a key factor in all of my strategies. Bars just happen to be on my chart but it could be a pumpkin for all I care as long as my trades are executed on time. Of course time is not my only condition for entry/exit.
You also know the order in which they occurred and the measure from one to the other, so you can make a general presumption about the transactions that occurred during that period. With that, you can choose the higher probability direction for the next bar (based on your past experience).
Thanks for starting a great topic.
Agreed. I feel naked if I don't know where I'm at in the HTF. The popular advice of "pick a time frame and stick with it" sounds wrong in its simplicity. btw, that's the uncomfortable "naked", like naked at the grocery store. Not naked with the OL.
Agreed again.
You too?, (or should I say Him too?). Its definitely not Me, its Him. Seriously though, great point. Its all voodoo used to wrestle with demons.
...therefore, a voodoo's popularity is directly correlated to its mojo.
A very important point, imo. One that trumps LTF bar aggregations. And related to the point made by Pa Dax re the institutional use of line charts.
