Sacrophage wrote:Seems P&F profitability is a f(x) of box size, just like parameters of an indicator. If you solve for the smallest box size that is profitable over x period, does that translate to future action, and for how long is that box size valid? Also, if you select a box size that is too large, it seems you could end up getting whipped back and forth. Any ideas to find the porridge with the correct temperature?
Since we are plotting movement, I first check to see how much movement is available.
The median of a series of ranges is far superior to the average, when it comes to trading, so that is what I use.
In the picture below you can see that there is large and small, no real median range, so I would go back further and select
something that is more in the middle of the ranges.
The box size is then a percentage of the total movement.
Trial and error has led to 5% for H4, 10% for the daily chart, & 20% for the weekly chart.
Can you make the boxes smaller? Yes, but you go from plotting movement to plotting congestion.
You will get plenty of triggers but nothing that you can hold onto with any confidence.
I would continue to plot the chart for 6 to 8 weeks without recalculating, unless volatility forces me to do otherwise.