I recently have been taking more time away from looking at the data and formulas and more time looking at the chart. There are some things I’ve noticed and it’s helped me realize some things; why some things and theories work and why others don’t. At least, why some things don’t work in an efficient manner.
First, predicting the high/low/close. It definitely feels like something is there, however I’ve increasingly become more adamant about the idea that fixed time frames don’t work. Yet, I see a great reason why some people do. To explain why I’ll use the ‘sb flats’ indi, which i’m extremely grateful for because I feel that it’s taught me a lot. Its a bit hard to explain at the moment, but I’ll try my best:
First, observing that the flats do a decent job at highlighting turning points, indicated by the blue boxes:
Next, a rough idea of how they work internally:
Price on the left side of the chart has been moving down at a steady pace. The highlighted box gives a hypothetical situation of where a flat might be drawn. Why/how? The indicator does its best to show when price has stopped the ‘steady pace’. It’s half theory, half pure fact.
Theory: If price stalls, it might turn:
Fact: For price to turn into an up wave (given a current down wave), price must move up.
By highlighting areas where price has stalled relative to recent movement, it provides the opportunity to show turning points. Of course, never forget that price may just stall and then continue. That’s why such a simple indi is not perfect.
Why fixed time frames don’t work:
I was a bit puzzled by some of the boxes on the very right side of the chart in the first picture. Price continuing up, but ‘turning point’ boxes keep showing up? (as an aside, again I believe this is why some of the “art of the indicator” has been lost and now rendered useless. People would market the above indi as one that shows turning points; true, but misleading if you don’t actually know how the indicator works. And these days people who use traditional indicators know only the most basic idea of why they “work”). The reason is that those days are a bit smaller than average, so they practically always print as turning points no matter the movement! However, they are just more ‘slow’, and are cut as below average because 24hr is not enough time to complete the intended move.
Why fixed time frames work:
Even with the above, fixed time frames can be used (to an extent) when the market is moving favorably, or in a predictable fashion. If we assume that most days are average, or have a H-L of a certain range, then something like the flat indi will work very well. Why do some people insist so heavily on certain brokers or platforms that are based on xx:xx candle opens? To fit the ideal mold! Remember that generally, volatility is dead between NY close and Tokyo open. People like using D1 candles that are NY close because the dead period acts as a ‘reset’ and generally will protect them from cutting off the day in the middle of a wave. Generally.