Simply put, just look at the blue horizontal lines. That’s the prior day range. Orange thick line is 200% expansion. Orange thin line is 150% expansion. Could plot more, but this is just to get a general idea.
Thin Red lines are 4 hour OR, since this is EU, and I’m looking at the day in 24 hours. Purple thin lines are 100 and 200% expansions.
I guess the big question is why is the market moving quicker like that? That will help us more
Not sure if we can nail down the “WHY” beyond there being motivations of an aggregate of players?
I think we can get closer with the "HOW’ price moves when it does. I.e. HOW did price reach a given High/Low, with regards to retracements, or time it takes, how many waves, WHEN it happens etc.
Just the start of some metrics I’m going to be capturing, and aggregating over various segments of time. Shown are some open%s, and expansions based on the prior daily range.
This is all very true. Before I even got back to this thread I was thinking about what I said about the why part of it and it definitely is incomplete. The why in the end doesn’t matter: what matters the most is if can we predict the price action and further if we can profit from it. Price speed and range seems to be a big part of the picture, along with average range, fundamental factors, news, and volume. Not needing to know the why for certain is definitely true and coming back to check this thread I see you’re saying this exact thing makes me glad you brought it up because it really made me think more about it and change my perspective to solidify the idea.
I do think, though, that understanding why can help us figure out which of the above important factors are coming into play and accordingly incorporate it with predict future price moves. If we know price is extra fast from a large influx of fear based on a news report, that can have different effects and consequent actions than a large market mover making a decision for whatever other reason to place some orders that end up quickly moving price. Now, we of course can’t possibly always know why it’s specifically moving, but this lets the overall concept of what actually changes price help us understand that support and resistance aren’t specific, that timeframes shouldn’t be considered heavily, and other MAJOR concepts that are encouraged in this thread and by other respectable traders. So I think that’s why I want to never let the why get engulfed in the flame that is technical analysis and the like.
Glad there are such knowledgeable and SENSIBLE traders here in this forum and this thread specifically. I’ve learned a ridiculous amount already.
Also, I read that article and really enjoy the work put into it. Sensible, mathematically sound, and reinforces what a lot smart people seem to find out through experience alone. So the W1 timeframe holds a good amount of weight to it in terms of being the best balance of speed and predictability. This will be duly noted and held dear.
Posting something up soon would be great. Including a few of the important indicators you use and why you use them would be helpful, especially since it could help us who are less familiar with the proper mindset use these tools to bring the mindset into fruition. On that note I attached the stuff I’m currently using to help anyone who thinks it’s useful and so you guys can pick it apart and tell me what you think.
I’m especially curious to see what Relativity thinks about the Recent Strength indicator which is what I’m using to judge current currency strength individually.
(also, give me a few minutes to place my last post responding to some of the other things you mentioned. this is a great discussion)
A quick key to the attached:
^-^_WC_NLR is what I’m currently using to get general channels. They’re curvy and fluid and the require repainting and can be processor heavy; beware.
Display Info All Pairs shows the following information in order: Price, D1 Movement in Pips and % of price, Range-to-Date vs. ADR (you can control the period used) followed by a % of range-to-date compared to ADR, the spread (with % of ADR), the money made for one tick on a full lot, and swap for a full lot if a long position is taken.
Market_Statistics_v4_1 shows the Volume-Weighted Average Price (and its standard deviations to three levels), the Peak Volume Price, and a volume histogram laid horizontally onto the associated prices.
ModifiedBarrosSwings this of course was provided by Relativity at the beginning of this thread. He now claims reservations about it, but it still seems like a useful tool and a good start to view market movement properly. I like switching to a line graph and changing the properties to make line graph color ‘none’, so I see nothing but the swing bars.
NewsBrk-v0 simply uses ForexFactory sourced news data and cutely displays it on your chart
Recent Strength measure the strength of each currency individually and charts them as well as displays the number (from 0 to 100). Will give different timeframes and has a lot of controllable parameters.
Current Indicators.zip (107 KB)
Just wanted to take a second here out of the quote to explain the use of the market statistics tool. The standard deviations can be helpful, but I’m overall more concerned with the main three things: Peak Volume Price, Volume-Weighted Average Price (which would basically be your VWMA except you have to choose the start point to base it on rather than have it move steadily over time, so it’d be nice to have your VWMA tool if you don’t mind sharing :P), and the histogram on the side (though this is much less important).
The big thing I’m looking for is VWAP in comparison to PVP. If the VWAP is above the PVP, that means that more on-average activity is happening above where the utmost volume-weighted price is at. These means the distribution is skewed (which you can see with the histogram so that’s where this comes in: the PVP would be on the low end of the histogram with the majority of the data above the PVP). It means that price is statistically more likely to stay up there in that region.
From there, I’d look at VWAP like any trader would use any other kind of Moving Average: look at the trend of the VWAP and/or look at price relative to that. If price is shifting upward from the VWAP, more likely to be a good time to buy; similarly if the VWAP alone is rising it’s probably a good time to buy (either scenario, price is trending upward overall as well as we know that price is much more likely at least stay up in that region). Of course this isn’t perfect, but it’s giving the edge. It’s skewing the stats in our favor. We can never always have a perfect entry. That’d be impossible. But we can skew as many of the odds in our favor so that we win over time. I think this is something that we all definitely agree on.
If there is a symmetric or evenly distributed histogram (which will result in the VWAP and the PVP to be right near each other), we have much more of a ranging market and that 50% thing you mentioned and that’s definitely what I’m not looking for; if that shows up, I wouldn’t bother trading much until some movement happens. This is actually a good way to distinguish trending versus ranging.
All of this is also there as a backlog to other events that traders would probably look at. Having it on the chart during a news event can probably give some pretty good understanding of if price is being affected by it and how so (if there’s a sudden sharp change in PVP, it was probably from the influx of trades based on this news emotion). Having it on the chart over a key support or resistance*** or fibo level or whatnot can give you insight to the minds of traders.
One final thing to keep in mind: you can plot this multiple times on the same chart. So you can have the PVP, VWAP, and histogram starting a month ago and get all that data, one from 10 days ago, and one for the day. This would go in line with always being mindful of multiple time frame analysis.
It’d be interesting to consider volume in there, though how would one do that? If the EUR/USD gets more overall volume than the EUR/NZD(which is probably true), how do we give weight? Are you rather suggesting to compare price among all the pairs with EUR but use VWMA instead of actual price? I could see good use for this. Here’s the calculation from the creator:
The calculation works as follows. Each colored line represents a given currency (see legend at right of chart). Take AUD as an example. Each ‘constituent’ AUD-based pair that you specify (and that is offered by your broker) – e.g. AUDCAD, AUDCHF, etc – has its closing price on each candle, expressed as a ratio of the closing price of the initial candle plotted (or the BasePoint candle, if specified), and multiplied by the weight you enter (see the ‘PARAMETERS’ section below for more info on weights). These values are all added together, and the total divided by the total of all the weights. The pair of the parent chart (the chart to which the indicator is attached) is used to align candle times of the constituent pairs, to help work around the potential problem of missing data. If a currency is ‘inverted’ (e.g. GBPAUD instead of AUDJPY), then the reciprocal (1/n) is summed, so that an upward plot will always indicate a strengthening AUD, and a downward plot a weakening AUD. If the SmoothingSMA parameter (see below) is set to a value > 1, then additional prior points are used to smooth the initial values being plotted. Finally the values are then re-scaled to a value between 0 and 100 (relative to ALL values being plotted in a given timeframe). See post #7 for more information.
Note that the accuracy of the plots is restricted to the pairs, and the data (on each pair/timeframe), provided by your broker. More pairs will result in a more comprehensive plot. Missing data will result in an inaccurate curve being plotted. Use MT4’s history center (press F2) and/or temporarily view charts of constituent pairs/timeframes (use the PageUp key to add more data to the left of the chart) to gather more data for plotting. Amongst MT4 brokers, FX Forex Trading | Forex Broker | Best Forex Broker�- MIG BANK is one candidate whose MT4 provides ALL possible 28 pair combos involving the major currencies (AUD, CAD, CHF, EUR, GBP, JPY, NZD, USD) from which to gather data (this is not necessarily an endorsement to trade with them, though).
***Which, by the way. support and resistance is something I’d like to talk about real quick. The idea is price will bounce from these levels, but if it doesn’t then expect a strong breakthrough, but I haven’t always seen that happen either. Would you agree (and maybe we can look back historically and find some stats on this somehow) that a better definition would very simply be increased activity at these points (especially since people put a lot of weight into them so they make decisions based on them)? Whether it bounces or breaks or hovers around there, it definitely seems like the activity (or better described as volume) would go up at these levels. This could be pretty easy to test (just check those S&R levels and then check relative volume), but a big part of the problem there is needing to have a mechanical, mathematical way to define support and resistance since it can be so subjective for people.
why it is showing page no. 159 ?Rel have u done some editing on this thread?
Just saved that above picture as the Order Flow Continuum. Should help to constantly analyze.
It’s not overkill or paralysis by analysis when we’re diving into how these things are ACTUALLY affected (versus overkill trying to use all kinds of technical indicators that are indirect).
rel,
yesterday i was googling for sb and read a guy’s comment how he has collected all sb posts in different forums over the years and made a doc file about it.Do u know from where i can download this file?
lol…is it possible to share your notes…it will be quite a time saving help for us newbies.
I am myself making notes on sb.Its really time consuming as his writing style is not very reader friendly.
Just got an idea to sort all days by price structure (8 type of patterns) and see what kind of avg range such assprtments have.Think this might be helpful in setting optimal target for each kind of day/pattern.
oh…i also have webpages saved on my pc.what i am doing is put it all together like in a text book.i seached the net for caculating fill% but couldnt find a direct dinitionyet.Just yesterday i got denitions for distinct vega from elite trader. Its tedious to read all the text without having all the definitions for ready reference.
I dont use avg itself but just check its location in the frequency dist. table.From the table i look for the values for which the probability is really high on any given day.Now i use my x pip 'safe distance 'stoploss to go for highly probable range value as target.Seem to be like i found a sweetspot.Extensive testing is necessary but idea looks good visually.
r u going to do a ‘big post’ on this ratios based targetting stuff?(if done already please give me the link to that post.)…i remember u saying about going to make a big post on something like this sometime back.
Thanx rel.
My programming isn’t up to par, but I do actually have a good handle on excel. I might do some basic analysis tonight as a test run to see how it goes. I’m thinking about using Weekly candles since that’s the only timeframe that actually deserves to be a stanard time frame: there are hard closes at the end of each week that force every trader to stop, take a break, think, enjoy the weekends off from work, etc. before the next week starts back up. It will also be easier to look at a large amount visually and draw some conclusions to try and test with stats. I’ll update you guys so you can tear apart my noob work 
Okay, gotcha! I just wasn’t very familiar with that term.
I want to point out real quick here: in my mind, when I was thinking of volume, it turns out I was visualizing contractual volume moreso than just tick volume. Tick volume lets us know the overall activity at different price ranges, but contractual volume can offer insight to how many players or how many important players are getting involved or getting out. This has a lot of ‘weight’ to it in my opinion. I’m not sure if there’s a way for us to have that data though?
Thanks! Don’t worry, I won’t come blathering to you with all/any of the issues I might run in to
This is all very true. I really thought about it and I don’t have enough information to back up the validity of using that as a good tool…not to mention that it’s way too subjective given the start date. I’m throwing that out for now. Less is more.
I definitely do like the idea of using volume to weight it. Turns out this indicator does actually have a ‘usetickvol’ function which does this. Nonetheless, I’m sure it’s flawed liked you’ve mentioned, but it does at least give me some basic market perspective on the longer time frames.
Actually, the way you worded it made me think: The increased activity is what causes these support/resistance zones. In my syntax, it was more like ‘there is increased activity at these zones’. This makes way more sense wording it the way you did. All of this, again, just has the importance boil down to speed and volume.
One quick final thought: using tick volume and contractual volume together would be a great way to determine if a single order from a big player was placed or if overall trading was increased. As a pair, they’d be a very helpful tool to get into the minds of other traders. Does that make sense?
Damn. Well, we’ll throw that idea out then haha. I’d like to add that I appreciated those videos of your live trading and explaining your approach. That helps a LOT with understanding.
What type of relationship do you think you are seeing?
Hmmm… it alludes me at the moment.
I had a different idea a while back with looking at extreme H1 as you brought up a while ago. Plotted those, and was curious to see if there was any correlation with that and say H4 or H5. I didn’t have the smarts to draw any conclusions at the time. But I’ll think about it some more.
As of late, I’ve been working soley with price though, particularly looking for some type of harmonics. Not necesarily in the way of Gann, but some other ideas.
Hi, Relativity,
I went through your main posts and I must say this is definately a great thread you have here. I like your approach and your extensive use of statistical analysis. I’ve done a lot of that for myself in the past years. Are you also a coder?
Good luck (and consider me a subscriber)!