WHY DO YOU USE INDICATORS THAT...

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PebbleTrader
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Postby PebbleTrader » Tue Nov 12, 2013 12:30 am

Let's take the phrase, "Wait until price closes beyond a line"...

If a trader uses this method, they are essentially making a trading decision off an arbitrary tick that has no more meaning than any other tick...

I am suggesting that it may be better to make trading decisions off a value that is not so easily manipulated or one that is more stable.
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Postby PebbleTrader » Tue Nov 12, 2013 12:33 am

The C only has more value to the extent that traders minds give it more value using standard time frames...but it's all an illusion...
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Postby Jalarupa » Tue Nov 12, 2013 3:43 am

PebbleTrader wrote:The C only has more value to the extent that traders minds give it more value using standard time frames...but it's all an illusion...


Well yes, it may be an illusion... but then again so is this body that you inhabit... so is this material atmosphere that you percieve with your 5 senses...

But this illusion has the ability to construct what is percieved to be reality... and well, it works in its designated way, to move those who are enamoured by it...

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Postby newscalper » Tue Nov 12, 2013 8:57 am

The median price is calculated from the high and the low. The high and the low will be just as arbitrary as the close, they are entirely dependent on the time slice. Change the time slice, change the high/low, change the median?

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Postby PebbleTrader » Tue Nov 12, 2013 10:20 am

The MIDPOINT is calculated from the high / low. The MEDIAN or 50th Percentile is something completely different from the MIDPOINT.

If there are 100 ticks in a 5 minute bar, than you sort those ticks in ascending / descending order, it doesn't matter what time slice they were and than you find the middle most value or the 50%.

You get a completely different value than if you just average the high and low together.

I am not talking about a 1 tick chart of the market. We really can't trade that very well because there is too much data to view. So we must use some kind of data compression. If we use data compression, like a 5 minute chart, or 2 minute period conversion, than the close is NOT that meaningful.

If you are going to make trading decisions off of a close than just know that it is just an arbitrary price value in time.
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Postby PebbleTrader » Tue Nov 12, 2013 10:22 am

"Change the time slice, change the high/low, change the median?"

Yes.

But which is more clever, stable and the most difficult to manipulate?

Which would you want to make decisions off of?
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Postby PebbleTrader » Tue Nov 12, 2013 10:25 am

If I am using a standard time frame, than I'll see the normal close in addition to some synthetic value...just so I can see what most other traders are seeing.

If I'm using some non-standard form of charting or non-standard time frame, it really doesn't matter what the close is...
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Postby newscalper » Tue Nov 12, 2013 10:28 am

PebbleTrader wrote:The MIDPOINT is calculated from the high / low. The MEDIAN or 50th Percentile is something completely different from the MIDPOINT.

If there are 100 ticks in a 5 minute bar, than you sort those ticks in ascending / descending order, it doesn't matter what time slice they were and than you find the middle most value or the 50%.

You get a completely different value than if you just average the high and low together.

I am not talking about a 1 tick chart of the market. We really can't trade that very well because there is too much data to view. So we must use some kind of data compression. If we use data compression, like a 5 minute chart, or 2 minute period conversion, than the close is NOT that meaningful.

If you are going to make trading decisions off of a close than just know that it is just an arbitrary price value in time.


Right - so you're talking about a median average: the price that was actually hit that's the middle one of prices that were hit . It's a LOOONG time since I did statistics.

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Postby PebbleTrader » Tue Nov 12, 2013 11:26 am

Yes,

I just want to clarify that it's not the middle price in a time series of data. You actually sort the ticks from some period in ascending / descending order so that you lose the time continuity and then find the middle value.

Take a look at that illustration I posted a few pages back, with that in mind. Imagine 100 ticks in 5 minutes and imagine half of the ticks in 1 of 2 boxes, again, it doesn't matter what the time continuity of the ticks was. What does it take to actually move the median? It's very hard to manipulate...
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Postby PebbleTrader » Tue Nov 12, 2013 9:54 pm

TRO started this topic to show how silly it is to use indicators that change value as you change the period.

I expanded on that by showing how silly it is to value a tick, a close on your chosen time frame, solely by what time it is on your watch!

Hopefully I have planted a seed in some of your minds...
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