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New York NY USA
Experience: Intermediate
Platform: esignal, thinkorswim,
Trading: Stocks
Posts: 122 since Oct 2012
Thanks Given: 63
Thanks Received: 35
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First let me say that just thinking about asking this question makes me feel like an idiot. But I think it is a legitimate concern, especially for beginners. So here goes.
When you look at an indicator, like MACD for example, people will tell you that sharp strong signals are what matter. Like a cross of the zero line or signal line. You want it to occur at a sharp angle. And probably want to ignore weak crosses. When we look at price itself we are told that it is best to look for strong trending markets. You know where is price is going up or down and a clear strong steady angle. This is true and great. But here's the problem.
The angle of all the lines in all your charts. ( price, indicators, etc) is completely dependent on the shape of the box it is in. By shape; we mean the horizontal and vertical scale of the box. If you re-size your charts right now by increasing or decreasing the horizontal space, you can make trends and strong indicator signal appear and disappear like magic.
So how would anyone know, based on a visual analysis of the data, that they had shaped their charts in the optimal proportions to get the best signals and not have completely wrong ones because the box is the wrong shape?
Are there optimal scales that are known?
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