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Range bars ... renko ... minute charts - which is best???
I just love this site!!! I joined this weekend and have already spent many hours in it. IT'S SO ADDICTIVE!!!
I've traded before and consider myself intermediate. But spending time here has already helped me a lot! In fact, I already feel like I should make another financial donation!!! As soon as I make some money : -)
Anyhow, for the last year I've been trading range bars (2, 4, 8 mostly.) I was told, and still feel that they provide the best chart information visually on price action. PRICE RULES!!!
However, from what I can see most people trade minute charts. I've really been wonder why that is so? Has anyone done an in-depth analysis between range, rinko, minute, etc. charts, pros and cons?
Also, I was wondering if anyone can provide me with more indicators and strategies that work well with range bars?
Is there a section here for range traders?
I'm hoping to pay foreward all the help I've already recieved. You people are great! Thanks Mike for such a teriffic site!!!
After putting the ForceIndex onto the forum, it has developed into so many variations and questions, with the introduction of the boomerang, all of which is very similar to the way I trade, I though it best to put a full scale model up for discussion.
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My opinion is that minute bars and tick bars give more accurate information regarding the immediate mood of the markets while range bars are good to identify channels and/or trendlines. One of the reason why minute bars are usefull is that many people use them and know what they mean. For example, a doji means something to many traders and they will act accordingly if it occurs at a key level. You will never get a doji with a range bar. Range bars do not provide any meaninfull pattern you can rely on but they are good to spot swing high/lows.
You might try putting up different types of charts for the same instrument and observe them for yourself for a while (i.e. minute, tick, range charts of ES side-by-side). You'll rapidly begin to see the different "looks" each chart type develops during various periods of market activity, and how each type can give you slightly different information on the action.
Which chart type(s) you'll ultimately prefer is very subjective. Some folks do well with range charts and struggle trading off tick charts, and vice-versa. After years of watching multiple chart types, I settled on volume and tick charts for most of my trading, but they're certainly not superior than other types, just different.
As was stated in a reply above, most of us cut our teeth on minute charts, and it takes a while to break the habit of seeing every formation on every chart as if it were on a minute chart. If you're used to seeing a minute bar virtually sit still while the volume bar below it fills up, it takes a while to get used to seeing a volume chart run sideways, giving you the same information but in a different way visually, and particularly how this sideways stretch or compression affects the signals generated by many indicators.
In short, watch a group of 'em simultaneously on the same symbol, play around... over time you'll develop an affinity for some, and have no use at all for others.
I'm new to range bars but I feel that they provide more pure price action that includes volume intrinsically. Let's say there is a big volume spike but that buyers end up countering the sellers and the net result is that price doesn't move much. The range bar will tell you all you need to know in that all that volume that went through amounted to nothing in terms of price. Pure and simple. Same with tick charts, who cares how many ticks created the bar if it results in no significant move in price. We trade price and nothing else, right? Having said that I shall now contradict myself: I like to use Buy/Sell volume in conjunction with range bars so that if the hitters way outnumber the sitters then it tends to indicate the underlying directional strength behind the price move .
I personally LOVE Range bars. I like that it is organized and filters out the noise of the market is you lose longer ranges (like 10 Range and above). All the bars are the same height so the charts are clean. I use to use minute bars, but after I made the switch, minute bar just don't look right to me anymore. During news events time bars can be so wrong, it can have a strong move up, you go in, and it reverses! Range bars show the mood of the market better for me and also displays price action speed: if it is a fast moving market, or if it take 1 hour to creat one bar, that means the market is extremly slow. They are just best IMHO to show market sentiment.
Second to that I would have to say tick bars, then volume bars. They are both somewhat even to me and second to the range bars.
