Info!! Tracking Markets Inward Effect Time

Here is a nautical chart of the ES futures for the by calendar month (blue line).  Each bar is non denominated inwards fourth dimension units.  Rather, each bar is drawn afterwards 500 cost changes.  (Raw information from e-Signal).  Because at that spot are fewer cost changes inwards the overnight session together with during midday hours, at that spot are fewer bars drawn during those periods.  Busier early on forenoon together with terminate of trading 24-hour interval hours line organisation human relationship for to a greater extent than bars on average.  Movement, non time, is treated every bit the marketplace position clock.

The scarlet line represents cost alter over a moving 50-bar window every bit a short-term overbought/oversold measure.  In general, we've seen negative average returns over the subsequent 50-100 bars when we've been inwards the most overbought quartile of returns together with positive average returns when we've been inwards the most oversold quartile.  I to a greater extent than oft than non won't execute a longer-term merchandise unless we're oversold on the price-bar measure.  It's a prissy means of buying dips/selling bounces, which saves coin when trading rangy markets or choppy trends.

A psychological produce goodness of denominating markets inwards units other than fourth dimension is that the charts tedious downward every bit markets tedious downward together with choice upward every bit markets choice up.  This is a helpful means of avoiding overtrading tedious markets--and it is a prissy heads upward on when markets are slowing downward together with when they're picking up.  I besides honour the cyclical demeanour of markets to live on clearer when cycles are measured inwards displace rather than time.

The primary takeaway is that if you lot await at markets inwards conventional ways, you'll generate conventional returns.  I consistently honour that it's the creative ways of thinking close markets that concord the most hope for superior performance.

Further Reading:  Event Time
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