There has been a lot of discussion in this thread about the discrepancies between price feeds based on standard candlestick charts versus price feeds based on H/A charts, and the resulting discrepancies between their weighted moving averages.
It should be clear to everyone following this thread that different charting packages will produce different signals if (1) they use different times to open/close daily candles, and/or (2) they use different methods for calculating the weighted moving averages (WMA’s) displayed on their H/A charts.
In my test of this strategy, I have tried to replicate the methodology outlined in post #1 (with the exception of the number of pairs traded). Captgrumpy said that his “plan” – what I call his “strategy” – uses Oanda’s H/A charts. So, I set up my test of his strategy using Oanda charts, so as to see what he is seeing.
If all of us were using Oanda’s H/A charts, all of the confusion about which WMA’s to watch would go away.
I think we should examine the Oanda charts in order to understand exactly what they display. Then, those persons who choose to use other charting packages will have the Oanda baseline to compare their charts to.
• Oanda charts open and close daily candles at 1700 in the GMT-5 time zone – that is, 5 pm NY time. This is true for every Oanda customer, everywhere in the world (although captgrumpy does not believe this). For traders in London, where the time zone is (currently) GMT, the Oanda end-of-day is 10 pm, which is precisely 5 pm NY time. For traders in Sydney, where the time zone is (currently) GMT+11, the Oanda end-of-day is 9 am, which is precisely 5 pm NY time. And so forth.
If you use a charting package in which the end-of-day is something other than 5 pm NY time, and if you cannot adjust your charts to conform to 5 pm NY time, then your charts cannot and will not look like captgrumpy’s, or mine.
• Oanda uses actual closing prices to compute indicators, including WMA’s, on all of their charts, including H/A charts. Therefore, the WMA’s plotted on standard Oanda candlestick charts are identical to the WMA’s plotted on Oanda H/A charts, even though standard candles differ considerably from H/A candles.
• The open, high, low, and close in Oanda H/A candles are calculated using the commonly accepted formulas. As with all other H/A charts, the candle bodies (representlng the open and close, and the range between them) differ considerably from the bodies of standard candles. There is one exception to this: the most recent price in the most recent Oanda H/A candle is always identical to the actual price. This remains true when the most recent price is the last price for the week. That is, when the Friday H/A daily candle closes, the close depicted in the body of that candle matches the true closing price for the week. You can see this in the charts displayed below.
The following images will illustrate these features. (Click on the images to enlarge them.)
Here is a standard Oanda candlestick chart of EUR/USD, showing the most recent 50 candles and the WMA(5) and WMA(12).
Here is an Oanda Heikin Ashi chart of EUR/USD, showing the most recent 50 candles and the WMA(5) and WMA(12).
Here is a side-by-side comparison of the standard candlestick chart and the H/A chart, showing the most recent 15 candles and the WMA’s.