The range of every pair goes on into the past “forever” with humongous vertical ranges when months, years and decades are considered; so what determines the vertical range that is displayed on a particular chart?
Allow me to clarify. I just measured the number of pips from the very top of my chart to the very bottom at two clicks less than maximum zoom with the price axis expanded to maximum for GBPUSD on the M30 as 172 pips. I used the exact same parameters for NZDUSD, and it measured 138 pips. So it’s not an equal number of pips per the same parameters.
I then experimented with the ATR with the same chart parameters. The ATR for GBPUSD was 15, and the ATR for NZDUSD was 8. For the GBPUSD, the ratio of ATR to pips was approximately 1:11 (15/172). For the NZDUSD, the ratio was approximately 1:17 (8/138). The ratios differ by a factor of approximately 50% (17 is approximately 50% more than 11); so apparently, it’s not the ATR that determines the number of vertical pips.
I threw up the stochastics (not on my desk, but on my charts ), and on both charts it measured the range of almost totally overbought to almost totally oversold. Is this evidence of how the number of vertical pips is determined? If so, I, for one, need clarification.
Is it some factor other than what I mentioned?
If we could get to the bottom of this, it should help us in our trading. If you know what it is, or have a hunch, let’s talk about it. (Even the Hunchback of Notre Dame had a hunch, and he talked.)
My charts automatically adjust their height according to the highs and lows of the candlesticks etc. displayed, so the height of the chart contracts during times of low volatility but price is displayed across the full height of the screen, not compressed into a narrow band across the middle.
This is only a problem if you “eyeball” the strengths of moves by the height of a candlestick compared to what you’re used to on charts in general - if a bunch of candlesticks are extending across one third of the screen, a discretionary trade might think they’re significant. Except that last week candlestick of the same height in pips were only 10% of the screen height.
Chart height also affects angle of slope of MA’s, trend-lines etc. Of course, it can’t reverse the direction of these, up will still be up.
Excellent point, Tommor. Stretching out and contracting the vertical price axis will also cause the same candle to look tall or short, and it’s exactly this phenomenon that’s causing me to investigate what factor, or combination of factors, determine pip height on charts of the same parameters.
The old brain is working on it, and I have a hunch. I’ll do some more tests and present my results.
I followed up on this observation, which seemed to confirm what I had previously noticed without looking for any constant that determined the vertical pip distance on charts. I randomly chose various time frames from MN1 to M1, various zooms and various pairs, including X/USD and X/JPY pairs, and threw up a stochastics on each combo, perhaps 30 of them; and in each case, the one constant I noticed was that the amplitude of the stochastics reached various levels of overbought and and oversold. In no case that I observed did it not display some levels of both overbought and oversold. However, stretching out and compressing the vertical price axis, which caused the candles to shrink and expand from liliputian to giant sizes, had absolutely no effect on the stochastics readings - but it did have a profound effect on vertical pip distance readings. When candles were stretched so that their tops and bottoms were not visible, the vertical pip readings shrunk, representing only the vertical ranges of the candles that were visible. (Whoda thunk!) I got mixed results with maximizing and minimizing zooms, perhaps I didn’t want to sit here forever working out all the kinks.
To bring this ramble back to a focus, I must conclude - as far as my testing went - that the one factor that is constant on any chart is that pair’s oversold and overbought range for that time frame; and the pip distances vary depending on how much of the candles representing that range are visible.
Any further clarification would be more than welcome.
Hope this helps some readers. It confirmed what I had suspected. I imagine that some mathematical algorithm is programmed into charting software - at least in my MT4’s - to potentially display the overbought-oversold vertical range of candles on any chart so long as the chart is tweaked to make those candles visible. To emphasize: The one thing I, for one, can hang on to more than anything else is the fact that the stochastics always showed overbought and oversold levels in every case without fail.
Of course, what’s still left up to the trader is to determine trend strength with such tools as ADX, support and resistance levels, candle patterns and the like; but understanding that each chart - at least on MT4 - displays the overbought-oversold range as long as the candles are visible from top to bottom, has got to help.
), and on both charts it measured the range of almost totally overbought to almost totally oversold. Is this evidence of how the number of vertical pips is determined? If so, I, for one, need clarification.