The Close of a Bar is Meaningless

[SunTrader 10]

I made the same mistake after coming back to this thread after posting on the first page.

 

Would have been better to title it "short term intraday close is meaningless" although I don't for a second believe that.

 

Is it as important as a daily close? No ef'ing way. But it is not meaningless either.

 

To me a range or trendline breakout is not confirmed till a close beyond plus a couple of ticks more on next bar. Just one example that comes to mind.

[zdo 20]

The Low of a Bar is Meaningless

 

:missy:

[Patuca 13]

The Low of a Bar is Meaningless

 

:missy:

it all depends on how drunk one is:haha: :haha: :haha:

[Patuca 13]

After all of these posts, covering everything that could be said on this issue, some don't get the distinction made (and why) between a daily bar and a minute-based one?! Oy... And now new posters clearly didn't read anything earlier (though, I guess, who can blame them!)

so what is the difference mr jackrabbit? they are both contructs on data data feed. on the daily the feed stops for a few minutes..or hours...good grief what difference does that make? data feed picks back up..please hop around and tell us...enlighten..the rest of us rabbits:haha: :rofl: :rofl: :rofl: :helloooo:

[jackj 10]

so what is the difference mr jackrabbit? they are both contructs on data data feed. on the daily the feed stops for a few minutes..or hours...good grief what difference does that make? data feed picks back up..please hop around and tell us...enlighten..the rest of us rabbits:haha: :rofl: :rofl: :rofl: :helloooo:

 

I believe it was explained well enough earlier, but in case not, briefly:

Wouldn't you agree that any relevance to any indicator - including how one breaks up the flow of price/volume - the degree to which it is relevant is positively correlated to the number (and size) of traders watching it? We absolutely know that many watch daily bars, which have a set OHLC each day, and also that many of those traders are funds that buy on the open and/or close. Those funds are also some of the other time frame traders who actually move markets.

But we're much less sure about how many traders and who they are who are looking at 5 minute bars, or 10 minute, 10,000 volume, etc. Therefore, it's much less likely that they're seeing what you're seeing, and hence that you're able to trade based upon what they're seeing. For those reasons, the Daily is in a different ballpark than any intraday (I would argue). I would say that 30 minute is more likely to be of value among the intradays, though, since, aside from being a longer timeframe, the different exchanges open and close on it (save for the 4:15ET), and also it's the time frame that makes up every market profile chart (default, standard setting, at least), so you do know that whoever is trading with MP charts is looking at the same thing.

Also, a 1 minute bar may be 4-5 ticks long and hence has a 20-25% chance of closing on the low or high - just by pure luck, which some would say is significant. Whereas a 30 minute bar will span several points, and is much less likely, by pure coincidence, to close on that high or low (or as a doji). Finally, one person's computer clock may be a 1/2 second behind another's, which on a 4-5 tick bar can make a difference of closing on the high versus near the middle of the bar, but on a 30 minute bar of several points it won't make as significant of a difference.

[zdo 20]

i am so glad to have finally found a thread that is exempt from einstein's blurb about insanity

[SunTrader 10]

I don't know about anyone else but I don't trade based on what some other anonymous trader(s) out there in the trading world is looking at on their screen.

 

[jackj 10]

I don't know about anyone else but I don't trade based on what some other anonymous trader(s) out there in the trading world is looking at on their screen.

 

 

I prefaced it with "If you're trading any type of indicator...", so perhaps it doesn't apply to you. Tape reading is the only thing that I can think of where one could say that, and if that's what you're doing, then indeed, it wouldn't apply. Obviously, any other trader (even in tape reading) is anonymous, so the most you could do would be to take a guess at they type of trader one is based on volume. If you're saying that it doesn't matter to you what other traders are doing, I'd be curious what you are basing your trades on.

[SunTrader 10]

.................. If you're saying that it doesn't matter to you what other traders are doing, (Bingo) I'd be curious what you are basing your trades on.

Price action along with floor trader pivots, market internals, swing hi/lo's, fibs, and even an indicator here and there plus what else ......

 

the close of the bar, plus a couple of ticks, to confirm follow through.

 

But not on a micro level.

 

If I did that I would just use price actyion but I know from my own past experience and many others experience that only the best of the best can rely on P/A alone.

[Patuca 13]

Finally, one person's computer clock may be a 1/2 second behind another's, which on a 4-5 tick bar can make a difference of closing on the high versus near the middle of the bar, but on a 30 minute bar of several points it won't make as significant of a difference.

well slap my head against the wall and spit out my bacca..now the data from the exchange/broker/whatever is now subject to all the miilions of computer clocks? that is...it's display on a computer screen? dang... first staggered time frames now computer clocks....does the color of the computer affect the data feed too????? :bang head:

[jackj 10]

Price action along with floor trader pivots, market internals, swing hi/lo's, fibs, and even an indicator here and there plus what else ......

 

the close of the bar, plus a couple of ticks, to confirm follow through.

 

But not on a micro level.

 

If I did that I would just use price actyion but I know from my own past experience and many others experience that only the best of the best can rely on P/A alone.

 

So, among those listed, is it that when price hits the floor trader pivots, a fib level, or a swing point, that price magically changes direction (or accelerates)? I guess if a computer is trading, it isn't necessarily an anonymous person, but either way, the fact that you're expecting price to react at those levels is predicated on their screen looking the same as yours. So, with respect to the not being concerned with what an anonymous trader is looking at, that's not so. You're very dependent upon them seeing the same thing as you (at least the same swing points), so that he moves the market at those places the way that you're betting he will. Though as has previously been pointed out, highs and lows (within certain time constraints) will be the same, though, so for you small differences in bar lengths may not matter much.

[jackj 10]

well slap my head against the wall and spit out my bacca..now the data from the exchange/broker/whatever is now subject to all the miilions of computer clocks? that is...it's display on a computer screen? dang... first staggered time frames now computer clocks....does the color of the computer affect the data feed too????? :bang head:

 

Truly, hopeless... Do you have two computers? Can you get the same data feed on both? If so, have one synch with an atomic clock and the other not, and see if the bars close at different times or not. Or, simply manually adjust one computer clock to 10 seconds different (to make it clear) than another, then tell me whether the exchange determines the start/end of a bar or not.

[Patuca 13]

Truly, hopeless... Do you have two computers? Can you get the same data feed on both? If so, have one synch with an atomic clock and the other not, and see if the bars close at different times or not. Or, simply manually adjust one computer clock to 10 seconds different (to make it clear) than another, then tell me whether the exchange determines the start/end of a bar or not.

does the exchange start and end the daily bar or is that also dependent upon my computer clock?

[SIUYA 11]

Patuca - it seems that what you are saying is ----

 

if the data feed you are getting has a time stamp on it from an exchange that has all the trades registered on it. Such that if each data point is sent out in such a form then it does not matter what anyones computer is set at.

That makes sense....if then it also supposes that data providers dont interrupt that information and amalgamate trades or modify the data in some way because of the volume of data.

If the data is not the same then there can be differences.

 

Or is this missing your point? (This having nothing to do with the relevance of the meaning of a bar close)

[SunTrader 10]

So, among those listed, is it that when price hits the floor trader pivots, a fib level, or a swing point, .........

Fib points for example have worked long before anyone was even aware of them. I can post Dow charts from early 1900's if you don't believe. Floor trader pivots also worked long before the masses were aware of them.

 

When they work, which obviously is not everyday in every trading situation, they work because they are "natural" dynamic trading levels. So once again no I am not thinking about what other traders are doing, just price. Although in a sense that is from what other traders are doing.

 

But I don't expect these levels to magically work at all. I just react when they do, which is more times than not.

 

As I have pointed out previously all this is not on a micro trading level. H1 or much higher.

[Patuca 13]

whatever happened to live data that has nothing to do with my computer?? :missy:

[edgararakelyan 10]

This is completely true, I've read a 500 page book on candlestick patterns, and honestly it doesn't help unless you are looking at the close of the day/week.

[jackj 10]

whatever happened to live data that has nothing to do with my computer?? :missy:

 

Actually, you may have that; it depends upon your data provider.

Sierra Chart - Help topic 43: Differences With Data and Chart Bars Between Services/Connections

 

Of course, this was just one factor in my thinking; even with the same exact OHLC, it's still assuming that a lot of other traders - particularly the ones who move the market - are looking at the same time frame, and also that they're giving the Close the same significance as you. Hence, it's much more likely that they MAY indeed may be looking at a daily and it might have some significance; much less likely (I'd say) the smaller one gets on their timeframe.

 

"Just when I thought I was out, they PULLLL me back in....!"

[Mistagear 10]

I admit to having NOT read the previous pages.

It is my understanding that every time based bar from a 1 minute to a daily bar begin at the first transaction reported by the Exchange . Essentially a day's trading is broken down into whatever time increment the trader desires but if there is 6 hrs of trading, then everyone who is looking at a 1 min chart will see the same 360 bars as everyone else.The local time at your computer does not affect the number of bars or when each bar begins and ends. The start and stop is set by the live data from the exchange.

 

The consequence of this, it is possible in the short term to manipulate price action to give an impression which not what is actually happening.

A large trader knowing exactly when a 1 minute bar will end, could sell into the bid for say 45 seconds and then buy a smaller amount from the offer in the last few seconds. This could create an impression that high volume is entering the market and the bar closes on its high. Most traders will think this is mostly demand hitting the market when in fact it is supply heavy.

Rinse and repeat this process for 5 consecutive minutes and you now have every trader that is using a 1 min, 2 m, 3m, 4m or a 5 min chart with a false impression of what is happening. Do this at times throughout the day and even longer intra day timeframes are also affected. eg, a 30 min bar could close near the high on big volume and have the same false impression created.

 

I believe it is possible to sometimes see this happening when using a 1min chart and a volume chart simultaneously.

Because all momentum based indicators are lagging, I think it probably has some detrimental affect and creates a false impression there as well, although I dont use any so can not say for sure.

[Vince50 10]

I DISAGREE AND ALSO AGREE.

 

Bar closes are not "important" in the sense that they mean anything significant to any significant number of people, except in one major case: the close of the day. The day itself may be structured such that we subdivide it into periods which allow us to function more effectively (for example, we may define the first half hour as the opening range, the first hour as the initial balance, and we may refer to the morning, midday, and afternoon, and so on); however, the only instance in which the market really has the notion of a "close" is the close of the day, and given the global nature of markets, the true close of the market comes at the end of the week, when there is a true break from trading for 48 hours.

 

Maybe that ruffles your feathers, if you are a fan of VSA or some other strategy which pays attention to the bar close, but the logic should be clear. We are all watching the same market, but one trader uses a 5 minute bar, one uses a 1 minute bar, another a 30 minute bar, another a 10K vol bar, another a 5K tick bar, another an 8 range bar, and so on. These are just data presentation mechanisms, and the market does not have a concept of any of them; they are purely our creation. The close of a bar is a snapshot of a price traded in the flow of market activity.

 

I wish I had all the money back I lost when I was playing a system that had me entering when the bar closed across a specific moving average or price or area and I did not. How can you not do what I do, check this out. You have a simple system that if it qualifies on 2 simple rules and then closes beyond a specific moving average you "know" this pair, or this instrument respects(and no guys, all instruments dont respect the same moving averages which is why I suspect many MA system players go broke. BACK TO MY TRADE: I am playing a 60m chart and Ive already seen the previous bar close hug,enguphing and red, a real "no doubt about the direction now" kind of bar. And before that was another very small red bar which didnt call to me yet but now the chart is saying, "dummy, youve had 2 hours of downward action on this Forex Pair. The 3rd bar which has also crossed your moving average just now has already taken up half the size of the previous huge bar and 2 huge bars the same whopping size are very improbbable. If I wait for the close I might be running into exhaustion time. Why not get in now as there is 30 min left and this thing could put every indicator on earth on oversold in another 7-8 min of this kind of action. What can i lose ,plus the stop will be tighter?" So Moron me, jumps in and then runs to the kitchen to grab a piece of fruit. My stop is right above last bars close(on a solid bar) so i take my time. I come back 15 min later on purpose just so in case it runs away, I dont take "the early profit and run.' So I come back 15 min later and I see what was a solid bar is now a hammer! What do we see more often, hammers or solid bars? In fact, dont most hammers come from solid bars? Yet I still do this sometimes with the caveat that if I am in profit at bar close and its not too extended, i will add another lot but put the stop at previous bars entry, sometimes i put BOTH stops at previous bars entry and sometimes i play them independently. What I want to say is...

 

I cannot say which way is more profitable at end of year. So how can you possible say that as I bet that also fluctuates instrument to instrument or pair? I will say that when the trade doesnt work out, you feel like you cheated, and when ity does work out and it really starts running away....you made mo plans for a 2 lot stop and you will hold overnight until it crosses something else, so now you dont know whether to leave it all on the table, take 1 off or take both off. Its why i prefer swing trading. It seems to work better getting in by latest 9:30-10am because after that the big boys might be done and all you see is illusory 'gambling" done by still some of the bigger gamblers...but they are still the gamblers. So if you wont wait for bar close....for God sake dont get in after 11:30am!!!!....especially if you plan to watch it till equity market close. Its done by 1130. noon latest and then its just watching paint dry on the wall after that, all the news is already out and factored in loooooong ago. So the ansere is:

 

THERE IS NONE AND I THINK IT WOULD BE SO CLOSE, I WILL NOT SPEND MONTHS backtesting 2-3 PAIRS TO SEE A TINY DIFFERENCE...............Unless this pair had an unusually large continual amout of needles and wicks all year round. Then.........

[Patuca 13]

I admit to having NOT read the previous pages.

It is my understanding that every time based bar from a 1 minute to a daily bar begin at the first transaction reported by the Exchange . Essentially a day's trading is broken down into whatever time increment the trader desires but if there is 6 hrs of trading, then everyone who is looking at a 1 min chart will see the same 360 bars as everyone else.The local time at your computer does not affect the number of bars or when each bar begins and ends. The start and stop is set by the live data from the exchange.

 

The consequence of this, it is possible in the short term to manipulate price action to give an impression which not what is actually happening.

A large trader knowing exactly when a 1 minute bar will end, could sell into the bid for say 45 seconds and then buy a smaller amount from the offer in the last few seconds. This could create an impression that high volume is entering the market and the bar closes on its high. Most traders will think this is mostly demand hitting the market when in fact it is supply heavy.

Rinse and repeat this process for 5 consecutive minutes and you now have every trader that is using a 1 min, 2 m, 3m, 4m or a 5 min chart with a false impression of what is happening. Do this at times throughout the day and even longer intra day timeframes are also affected. eg, a 30 min bar could close near the high on big volume and have the same false impression created.

 

I believe it is possible to sometimes see this happening when using a 1min chart and a volume chart simultaneously.

Because all momentum based indicators are lagging, I think it probably has some detrimental affect and creates a false impression there as well, although I dont use any so can not say for sure.

you sir are a genuis....where have you been? Please make more posts on this forum....

 

Thanks!

 

Patuca (aka as topdipstick1)

[Vince50 10]

Mistagear,

 

5 or 6 yrs ago I would have really bit into what you posted and started backtesting and observing live to view this phenomena you speak of first hand. But we all know(?lol) now, that what you are saying can be done for a few small time frame bars but more than a few minutes and market equilibrium always steps back in. In fact I am totally blown away how in the Forex market in the last few months I am seeing on every time frame from 15-60 and daily that many times a big sell off of 4 or 5 bars will occur on small-medium volume, and then a big rally will occur for 2 or 3 bars on higher volume and the price doesnt even make it back to where it was at the first bar. So I would assume "Oh wow, its a fake sell off as the "real money" is buying, and then you know what.....50% of the time it goes up from there, and 50% of the time it goes down. Ive actually seen tiny volume control a currency pair on the daily charts for 2-3 weeks and then huge volume comes in higher in total than all the down bars for 2-3 bars and it never even gets 60% of the prior move back. And then, as you try to figure out, "where is the angle" on this?" the pair just floats sideways on brisk volume for days at a time, showing that both sides still want control!!!

 

And this phenomena to me, is why spot currency trading is not the way to make a living as a trader. I will bet you many years a pair will end so close to ehere it was at the beginning of the year, you wonder why they bothered trading it at all!!! The traders just wasted time looking at a screen for a year. Now the question arises.......do you want those bars to have huge wicks and tails as some pairs do while winding up back in the same place 2 weeks later or do you want a slow almost riskless grind. Or as I feel, I will pass altogether as big wicks on the daily shows there is too much nonsense and game playing going on. I'm still wondering why they even bother to open the asian session at all sometimes! It is absolutely an unbeatable proposition with even a 3 pip spread for a day trader, many a night.

[numbertea 10]

I have been automating my trading which looks at all data for the ES on a trade event resolution. Right there, the data I look at is per event and that negates overall need for close data.... But I also use candlestick and price movement in a 5 minute resolution where I take into account close prices as well as others. The thing that really pertains to this thread that tickles me is that I was having issues with price gaps throwing off my bid/ask calculations. I racked my brains for a while to come up with an easy solution of using mid bar price for my calculations where I was using the close previously. Now all is well.

 

Pick what works for you.

 

Cheers

[Chartsky 10]

I agree but think it's not likely that some institution with deep pockets is sitting there trying to manipulate price in order to snatch the rug out 1-5 minutes later. They don't have to. They scale into positions and that may be why you see apparently abnormal price/volume at times. You might be looking at the 1-3-5 minute charts but that institutional trader is looking at days-weeks-months.

 

As far as the OP's topic (and I haven't read-through 14+ pages either), I find value in watching where a bar/candle closes when I'm scalping as it does sometimes allow me to get in a couple of ticks better and that's a big part of the scalp trade.

 

Good Luck!

Chartsky

www.chartsky.com

 

 

I admit to having NOT read the previous pages.

It is my understanding that every time based bar from a 1 minute to a daily bar begin at the first transaction reported by the Exchange . Essentially a day's trading is broken down into whatever time increment the trader desires but if there is 6 hrs of trading, then everyone who is looking at a 1 min chart will see the same 360 bars as everyone else.The local time at your computer does not affect the number of bars or when each bar begins and ends. The start and stop is set by the live data from the exchange.

 

The consequence of this, it is possible in the short term to manipulate price action to give an impression which not what is actually happening.

A large trader knowing exactly when a 1 minute bar will end, could sell into the bid for say 45 seconds and then buy a smaller amount from the offer in the last few seconds. This could create an impression that high volume is entering the market and the bar closes on its high. Most traders will think this is mostly demand hitting the market when in fact it is supply heavy.

Rinse and repeat this process for 5 consecutive minutes and you now have every trader that is using a 1 min, 2 m, 3m, 4m or a 5 min chart with a false impression of what is happening. Do this at times throughout the day and even longer intra day timeframes are also affected. eg, a 30 min bar could close near the high on big volume and have the same false impression created.

 

I believe it is possible to sometimes see this happening when using a 1min chart and a volume chart simultaneously.

Because all momentum based indicators are lagging, I think it probably has some detrimental affect and creates a false impression there as well, although I dont use any so can not say for sure.

[symmetrics 10]

Totally disagree - i think some points that have been made miss the principle and usefulness of the this significant event.

 

the close is a singular event that can be clearly measured and provide significant detail to the markets position and "intent"

 

1 - the close whether its electronic or pit is a conclusion to the days trade, the coming together of emotion, analysis and data to an end point in time, it defines the markets position at the end of the furious or lack luster volatility & performance. as the market closes a event takes place, the bias event = the market decides is it positive, negative or undecided ( hedge both ways ) take this example, a stock which has been trending nicely upwards with closes each day in a positive and "biased " fashion, suddenly closes ! down in a negative bias - ok is this a signal - maybe ? the following day a positive again etc.. now that close down triggered a signal to any Bear person or seller there is a change from previous form , not a sell yet but a coming together of uncertainly or doubt! Yes a close at the end has true meaning to the markets position and can hand the smart investor / trader a advantage of an early signal.

 

2. the close used in the right fashion with a indicators or algorithms to determine where a close signifies change is and does work , for instance in the system i use a close is used and does signify change - 81 % of the time roughly on either direction, daily, weekly, monthly and yes even intra day - time frames are defined mathematically to have a identified reaction which is profitable

 

a close signifies a point in time that if synced to the mainstream / controlling interests in the market will identify a change in direction or a new trend momentum drive.

 

in real experience most systems i have traded use a form or actual close and work to good/ great satisfaction.

 

using a MA to wait for a delayed response with a close will more than likely smash you for being dumb enough to wait for the already clear indicator

 

hope this sheds a different viewpoint.