NexusFi: Find Your Edge


Home Menu

 





The Close of a Bar or Candle is Meaningless


Discussion in Traders Hideout

Updated
      Top Posters
    1. looks_one josh with 13 posts (68 thanks)
    2. looks_two Palais Brongniart with 5 posts (14 thanks)
    3. looks_3 bobwest with 4 posts (31 thanks)
    4. looks_4 Botts with 3 posts (16 thanks)
      Best Posters
    1. looks_one Pa Dax with 9 thanks per post
    2. looks_two bobwest with 7.8 thanks per post
    3. looks_3 bfreis with 6 thanks per post
    4. looks_4 josh with 5.2 thanks per post
    1. trending_up 14,401 views
    2. thumb_up 260 thanks given
    3. group 20 followers
    1. forum 52 posts
    2. attach_file 8 attachments




 
Search this Thread

The Close of a Bar or Candle is Meaningless

  #41 (permalink)
 
Palais Brongniart's Avatar
 Palais Brongniart 
Paris France + Dresden Germany
 
Experience: Advanced
Platform: Proprietary
Posts: 181 since Mar 2018
Thanks Given: 41
Thanks Received: 200

I use several different tick bars for tape reading, length and closes of the bars are of great importance to me. Tick bars partition the action into traded unities, so you have short bars (high activity within small price range) and long bars (lower activity within larger price range, because of same amount of traded units as in short bars).
A wide-range-bar which closes in the upper third or lower third of the OHLC body is indicative for me, but only in it's tape reading context. E.G. a sell-off : if last and lowest bar is a WRB, but WRB closes in upper third, it could mean that the sell-off has stopped and a (at least) pullback is imminent. Swing traders' delight.

Also: Practice has proven that under certain circumstances several bar closes outside specific trend areas indicate a trend reversal.

On and on it goes.

But I agree: there is no use of the closing in time based bars. Never was. Never will be. At least for me.

I don't explain my charts. If you like to follow my trades, look for these lines.
Visit my NexusFi Trade Journal Reply With Quote
Thanked by:

Can you help answer these questions
from other members on NexusFi?
The space time continuum and the dynamics of a financial …
Emini and Emicro Index
Better Renko Gaps
The Elite Circle
ZombieSqueeze
Platforms and Indicators
NexusFi Journal Challenge - April 2024
Feedback and Announcements
New Micros: Ultra 10-Year & Ultra T-Bond -- Live Now
Treasury Notes and Bonds
 
  #42 (permalink)
 
josh's Avatar
 josh 
Georgia, US
Legendary Market Wizard
 
Experience: None
Platform: SC
Broker: Denali+Rithmic
Trading: ES, NQ, YM
Posts: 6,216 since Jan 2011
Thanks Given: 6,752
Thanks Received: 18,136


Palais Brongniart View Post
I use several different tick bars for tape reading, length and closes of the bars are of great importance to me. Tick bars partition the action into traded unities, so you have short bars (high activity within small price range) and long bars (lower activity within larger price range, because of same amount of traded units as in short bars).
A wide-range-bar which closes in the upper third or lower third of the OHLC body is indicative for me, but only in it's tape reading context. E.G. a sell-off : if last and lowest bar is a WRB, but WRB closes in upper third, it could mean that the sell-off has stopped and a (at least) pullback is imminent. Swing traders' delight.

Also: Practice has proven that under certain circumstances several bar closes outside specific trend areas indicate a trend reversal.

On and on it goes.

But I agree: there is no use of the closing in time based bars. Never was. Never will be. At least for me.

It all makes sense -- I use bars the same way, except mine are volume based. That is, a tall bar has a different meaning from a short bar. But one thing I don't get still: let's say your last and lowest bar is a WRB in a selloff, and the market rebounds higher and is trading in the upper third. Why does it need to close, to trigger a buy for you? What is it about the last trade that's so important?

Started this thread Reply With Quote
Thanked by:
  #43 (permalink)
 
Palais Brongniart's Avatar
 Palais Brongniart 
Paris France + Dresden Germany
 
Experience: Advanced
Platform: Proprietary
Posts: 181 since Mar 2018
Thanks Given: 41
Thanks Received: 200



josh View Post
It all makes sense -- I use bars the same way, except mine are volume based. That is, a tall bar has a different meaning from a short bar. But one thing I don't get still: let's say your last and lowest bar is a WRB in a selloff, and the market rebounds higher and is trading in the upper third. Why does it need to close, to trigger a buy for you? What is it about the last trade that's so important?

Thanks for asking. In this old example I get several WRB with closes even at the top. That concludes the idea, that the overall structure is a trend reversing structure, more or less. Hope you can see it. It is an old pic which I can't modify right now.

I don't explain my charts. If you like to follow my trades, look for these lines.
Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #44 (permalink)
 
Palais Brongniart's Avatar
 Palais Brongniart 
Paris France + Dresden Germany
 
Experience: Advanced
Platform: Proprietary
Posts: 181 since Mar 2018
Thanks Given: 41
Thanks Received: 200


Palais Brongniart View Post
Thanks for asking. In this old example I get several WRB with closes even at the top. That concludes the idea, that the overall structure is a trend reversing structure, more or less. Hope you can see it. It is an old pic which I can't modify right now.

Test 1 and 2 of the bottom are WRB's with distinctive closes above, whereas Test 3 (trigger signal) consists of two subsequent WRB's. I buy the first pullback...

I do a lot of bar-to-bar work, means: I step bar-by-bar forward (approx 20-40 bars) until I reach the NOW. If I get a feeling about the market, the contract is under observation, if I don't, I go to the next market.

I don't explain my charts. If you like to follow my trades, look for these lines.
Visit my NexusFi Trade Journal Reply With Quote
  #45 (permalink)
 
Palais Brongniart's Avatar
 Palais Brongniart 
Paris France + Dresden Germany
 
Experience: Advanced
Platform: Proprietary
Posts: 181 since Mar 2018
Thanks Given: 41
Thanks Received: 200

And I am not so much an intraday trader. If my trade stays 4-6 days for good, it is a very profitable trade and reflects the average swing on a daily chart.

I don't explain my charts. If you like to follow my trades, look for these lines.
Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #46 (permalink)
 
josh's Avatar
 josh 
Georgia, US
Legendary Market Wizard
 
Experience: None
Platform: SC
Broker: Denali+Rithmic
Trading: ES, NQ, YM
Posts: 6,216 since Jan 2011
Thanks Given: 6,752
Thanks Received: 18,136


Palais Brongniart View Post
Thanks for asking. In this old example I get several WRB with closes even at the top. That concludes the idea, that the overall structure is a trend reversing structure, more or less. Hope you can see it. It is an old pic which I can't modify right now.

So, if you made those bars in your chart HL bars only, with no open or close, you wouldn't have enough information to take the trade you want?

Several of the bars on the last test lower closed below your line. I don't see anywhere in there where the actual close makes any kind of difference in the overall structure.

Started this thread Reply With Quote
Thanked by:
  #47 (permalink)
 
Botts's Avatar
 Botts 
Penetanguishene, Ontario, Canada
 
Experience: None
Platform: NinjaTrader-8
Broker: NinjaTrader Brokerage, Continuum
Trading: ZB, MES, NQ, YM
Posts: 924 since Jun 2011
Thanks Given: 4,019
Thanks Received: 3,605


josh View Post
Thanks all for the great replies so far!

To be clear, this topic started is not why you shouldn't use charts (I do use them myself) or why a 233 tick chart is useless (I use a volume chart). My argument is that, on such a chart, using the actual closing price of an individual bar to make a trading decision has no basis in sound logic.

I followed this thread to see what bits of wisdom you were going to share with us beyond your original post.

So far it's been interesting to read how others have reacted to your comment(s), in some cases almost in defense of their belief.

You mentioned you think the close of a weekly bar or candle has some importance and you suggested a weekly bar close has more importance than a daily bar or candle close because the "global" markets are closed for the weekend.

I found these exceptions to your original statement interesting in that it lead me to believe you may not subscribe to the notion that the markets are fractal. I don't actually know what you believe in that regard but I found it interesting.

I don't actually know if I put any more weight on "The Close" of a bar or a candle, but I do look at them as part of my way of looking at any instrument I might decide to trade.

Not so much to assign any particular value or weighting to the close of the bar, but I do look at a bar close in concert with what the following bar does to gauge if a move is just getting started or is slowing down before a pullback or even possibly signalling that the move is coming to an end.

Regardless of what my beliefs are, we all look at things differently. Those differences are what makes the market.

Great thread, thanks for getting it going.
Trade well.


R.I.P. John Bottomley (Botts), 1956-2022.
Please visit this thread for more information.
Follow me on Twitter Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #48 (permalink)
 
Palais Brongniart's Avatar
 Palais Brongniart 
Paris France + Dresden Germany
 
Experience: Advanced
Platform: Proprietary
Posts: 181 since Mar 2018
Thanks Given: 41
Thanks Received: 200


josh View Post
So, if you made those bars in your chart HL bars only, with no open or close, you wouldn't have enough information to take the trade you want?

Several of the bars on the last test lower closed below your line. I don't see anywhere in there where the actual close makes any kind of difference in the overall structure.

Its the context, not the closes per se. I don't trade only from closes of a bar, I like to see closes, within clusters, certain structure, short term price pattern etc.
In this specific example I had 3 tests of a downside door (incorporated by WRB close-up), door did not open. Last test performs inside resilient cluster, door didn't open for breakdown. At the same time the overall structure shows lower highs which could have been upper part of descending (bearish) triangle. In my experience a descending bearish triangle does not show a base like that with distinctive rejections of price level. Again, that's discretionary perceived.
Thank you.

I don't explain my charts. If you like to follow my trades, look for these lines.
Visit my NexusFi Trade Journal Reply With Quote
Thanked by:
  #49 (permalink)
 
josh's Avatar
 josh 
Georgia, US
Legendary Market Wizard
 
Experience: None
Platform: SC
Broker: Denali+Rithmic
Trading: ES, NQ, YM
Posts: 6,216 since Jan 2011
Thanks Given: 6,752
Thanks Received: 18,136


TopGunNote View Post
I followed this thread to see what bits of wisdom you were going to share with us beyond your original post.

Sorry to disappoint you with no wisdom following :-D -- I have my opinions about this for sure, but I purposely have avoided talking about anything I do, to let this topic and thread stand on its own. This purpose of this thread really is to get people to think about what they do, and not to simply do things "by default" or because they see others doing them. In a trade, you have to follow the herd in order to avoid being trampled, but when it comes to developing a strategy, your own personal view of the market based on logic you accept because you have intentionally thought about things is critical, IMO, and it's suicide to follow the herd in this aspect.


TopGunNote View Post
I found these exceptions to your original statement interesting in that it lead me to believe you may not subscribe to the notion that the markets are fractal. I don't actually know what you believe in that regard but I found it interesting.

That's very insightful -- hopefully it's not too much of a cop out to say that I think they're *somewhat* fractal. We're talking about buying/selling patterns and the various reasons for that, and on a day timeframe, those motivations and resulting capital positioning are vastly different from an investor buying long term, for example. However, you still do see similar patterns on all timeframes -- capitulation, based in fear, happens regardless of what part of the flow of transactions you zoom in to.

Volume patterns certainly are not fractal -- there are times of the trading session when volume will almost always be higher than others, barring news. There are times of the year due to holidays and seasonality which tend to be higher in volume than others, again, all other things being equal.

The time of day regulates market opportunity, which is MP-speak; but one thing this means is that as the close approaches, those with decisions to make (do I hold this overnight? do I buy more?) come closer and closer to being forced to make that decision. So, you will often see markets do strange things during the last hour of trade, like ramp higher or sell off hard, that they don't do as often during the lunch hour, because the window of opportunity is closing. This fact alone, though basic as it is, sometimes eludes people who seem to think that getting in a trade at 12:00 is equivalent to getting in the same trade (same price, same structure, etc.) at 3pm (how many times have you gotten in a trade at 1pm, it works a little bit, comes back, bounces around your entry, stops you out for a 9 tick loss, and then near the close it suddenly works in the span of 15 minute?). They're not the same, by any stretch, and in this way, the market certainly is not fractal.

Last thought here, about your charts you posted. The top one says "multiple bar closes here fail to move higher" -- however, the bottom chart also has a consolidation which does result in a continuation higher. So, do the bar closes, which on this renko chart are simply consecutive alternating up/down closes, really matter? Isn't the key factor here that this is a consolidation? Looking at the time of day of your top chart, what actually happened immediately after was a continuation higher into the close. This proves nothing, of course, except to say that there was a consolidation, the market needed to go marginally lower to fuel one last leg higher into the close -- the close of the day, with participants rushing to position themselves, played a far larger factor, than bar closes generated as a derivation of transactions, didn't it? Increase your periodicity there by a tick or two, and you would have had a single renko candle for the entire consolidation, no closes even registered.

This choosing of the periodicity, the type of bar, all of it -- are chosen by you and me -- not by the market. Allowing the market to speak for itself is the most important thing we can do, and imposing our own structure must be done very carefully so as not to attribute some meaning to the market which is, in reality, meaning that we are ourselves imposing upon it. Yes, fully opinionated there, and not in any way to suggest your chart is somehow inferior to anything I use, simply stating my view.

Started this thread Reply With Quote
  #50 (permalink)
 
Botts's Avatar
 Botts 
Penetanguishene, Ontario, Canada
 
Experience: None
Platform: NinjaTrader-8
Broker: NinjaTrader Brokerage, Continuum
Trading: ZB, MES, NQ, YM
Posts: 924 since Jun 2011
Thanks Given: 4,019
Thanks Received: 3,605



josh View Post

Last thought here, about your charts you posted. The top one says "multiple bar closes here fail to move higher" -- however, the bottom chart also has a consolidation which does result in a continuation higher. So, do the bar closes, which on this renko chart are simply consecutive alternating up/down closes, really matter? Isn't the key factor here that this is a consolidation? Looking at the time of day of your top chart, what actually happened immediately after was a continuation higher into the close.

This proves nothing, of course, except to say that there was a consolidation, the market needed to go marginally lower to fuel one last leg higher into the close -- the close of the day, with participants rushing to position themselves, played a far larger factor, than bar closes generated as a derivation of transactions, didn't it? Increase your periodicity there by a tick or two, and you would have had a single renko candle for the entire consolidation, no closes even registered.

This choosing of the periodicity, the type of bar, all of it -- are chosen by you and me -- not by the market. Allowing the market to speak for itself is the most important thing we can do, and imposing our own structure must be done very carefully so as not to attribute some meaning to the market which is, in reality, meaning that we are ourselves imposing upon it. Yes, fully opinionated there, and not in any way to suggest your chart is somehow inferior to anything I use, simply stating my view.

Thanks for your reply.

To be clear, my screenshots (roughly 10 minutes apart) were chosen simply to help illustrate my comment: "Not so much to assign any particular value or weighting to the close of the bar, but I do look at a bar close in concert with what the following bar does..."

I wasn't suggesting it proves anything, I was simply discussing how I look at a bar close as part of what happens next.

In regards to your comment about my choice of bar type or periodicity, I prefer to use choices that "speak to me", choices that I believe help me interpret what the market is saying to me, "Allowing the market to speak for itself"

I don't want to sound defensive here, I'm not defending my choices, they are what they are, and they do change over time as my own interpretation of what I think the market is saying to me changes.

Thanks again.

R.I.P. John Bottomley (Botts), 1956-2022.
Please visit this thread for more information.
Follow me on Twitter Visit my NexusFi Trade Journal Reply With Quote




Last Updated on June 5, 2020


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts