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januson

Range/ Points Chart Usage?

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Hi all

 

Normally I use tick and volume charts in my trading, but I've recently started to look at Points Charts. I wonder why there's so little information and attention to those?

Can somebody tell me pros / cons of using Range Charts, personally I like them, it seems like they filter out the noise and only moves when there actually is some action

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Just my thoughts:

 

The kind of charts you see mostly are a graphical presentation of three kinds of information: price, time, possibly volume.

 

Think about how to present best this data in just one chart (I count a chart with an "indicator"-window below as two charts) you get into trouble because you normally loose something.

In my view, this "one chart" thing is quite important, because for our small brains it is very difficult to look at one picture, keep some piece of information in mind (eg volume) then look at another one (eg time & price) and set the two into a relation.

 

Constant time charts: At times with few trades you get strong distortions of your picture, especially your trendlines (mainly with futures that are trading around the clock). So constant volume or tick charts are much better for that. (whereas tick charts are no good for Interactive Brokers users because you cannot get appropriate backfill.)

 

Constant volume charts: You loose the time information - it cannot easily be seen how long a movement took which is sometimes surely valuable.

 

 

To answer your question:

I think with range charts you loose the time and the volume information, only price is left.

Range charts do not have a constant x-axis spacing relating to time or volume so both these informations cannot be seen with one look (though you may get them back through some indicators you define, but then it is not just in one picture).

For that same reason trendlines that may be very useful for your trading cannot be drawn correctly sometimes.

 

On the other hand, this is only theoretical thinking.

I just used range charts on some of the instruments I am trading and there I see that trendlines drawn on the basis of range charts "explain" some turning points very nicely whereas other turning points fit much better into trendlines drawn on volume charts.

I guess that comes just from the fact that there are traders out there who use tick or volume charts and others use range charts.

 

In an ideal setup you would probably watch constant volume and constant range charts in parallel.

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