If we being to look at the 3 types/methods of traders, which is most important? While all three are, if you were to create one to begin with, or one to capture the rest, Rel’s argument would be Waves. After all, volatility measures potential action(energy), levels measure potential zones, but waves measure pure price, and price is king.
Therefore, the grunt of the work needs to be put into some kind of wave tool. If the tool is wrong, everything using the tool with be wrong. If it fails to take certain aspects of the market into account, I’m screwed. Lets look at the barros swing tool.
First, Rel implied that the thread is essentially a diary. It shows the thought process, and someone who truly understands the thread will see what the all the work is trying to show. With this in mind I read the thread with the knowledge that the early tools were dumped, either because of some finding showed in the thread, or some finding not in the thread. “The tool is not necessarily obsolete, it is simply not used as is because it has evolved”. Wave analysis was not dropped, it’s just that that particular method of conducting wave analysis didn’t make the cut. Therefore, I began the thread with the headline: “What’s wrong with the barros swing?”. This is absolutely critical. The tool must be broken in some way. How? Why?
The barros swing, as I understand it, creates lines based on where price is relative to the input period. A 25 period barros will print a downswing if the current price is below the past 25 periods. The point of having 2 swings (one “set” of the indicator) is to account for multiple time frames. The minor swing would account for say the past hour while the major swing would account for the daily. This prevents the trader from, say, taking longs on the minor swing while the current major swing is down, or at least makes him aware of it. In truth, it seems that when both swings are in one direction, it’s an opportunity to trade the other side.
So back to the original question.. What’s wrong with it?.. After putting the BS on my chart and looking at it for quite some time, a few things became apparent:
1. The swings look nice and all, but I didn’t understand what I was suppose to get from it. How would I know when a swing would end? How far would the next one go? I assumed this would come with more knowledge, such as taking trades when the trend channel(Linear regression channel tool) was broken.
2. Tied to 1, the swings didn’t help me see price much better. The fact that swings basically appeared where ever they wanted to didn’t really help me. What I mean by this is that I noticed how sensitive time was. If you changed the barros tf, it could print a different swing. Duh. However, if this swing indi is suppose map price swings correctly, shouldn’t it be a bit more uniform? Shouldn’t the swings show more obvious patterns? If I wanted to create a collection of possible swings the barros makes, I feel like that would be a massive collection. If I want to trade the market based on reoccurring patterns, this indi doesn’t cut it. The time issue is actually quite important. Rel assured me later (both on skype and in the thread) that this is one of the big errors; The correct WA tool should create MTFs as needed. It shouldn’t require input on my end to look at certain time periods.
3. If this tool is to be king, it also needs to take volume/volatility into account. If I trade only EU I suppose this is acceptable.. Additionally maybe the levels tool, when created, can solve this issue as well…
In all, there needs to be a better tool than the current barros. It must take volume into account (necessary or preferably?) and take multiple time frames into account. It should also ideally print waves in such a way that there is some structure to them. The waves should be able to be classified as A, B, C, D, etc, to create the potential for projection.