trueblueTEX wrote:MightyOne wrote:PebbleTrader wrote:"-I no longer consider closing prices (to avoid shifts)."
What do you mean?
I use the CLOSE for these reasons:
- To better determine which way price is moving
- If I was using a line chart, I'd use the CLOSE
- To see important wicks (after they occur)
- For bumping my step chart up or down if a CLOSE takes out an extreme
It is easier to make plans based on relatively stable price ( price spends most of its time in a range where the midpoint remains fixed )
than it is to make plans based on a random closing price.
Instead of a close higher, I look to see if the midpoint is pulled higher.
Can It change course and move lower? Yes, but the low must be taken out in the current bar and move to a known price to drag it lower.
The midpoint is like a 'dynamic open' which is temporarily the same as the closing price.
The problem with closing prices is shifts (you can ignore them but they are still there):
If I said that price closed higher today then you might say 'based on what part of the world'
If I made this simple and divided the day into three equal parts then I would see three different charts (the interpretation of the three 'versions' of the daily chart says a lot more than a single random close).
Is that what the sma is for?
Its a 1 period simple applied to median price(HL/2)